The word liberal is thrown about so much these days, it is difficult to get a firm grasp on its meaning. Paul Krugman does not beat around the bush however, though he certainly gives President Bush a good beating. Forgive the pun. In any case, this book is an unabashed declaration of liberal/progressive objectives in modern politics and a clear and concise discussion of modern economic and political ailments as seen from the left.
In looking at the past American century, Krugman sees a rise and fall of liberal economic thought. First, the Great Depression and resultant New Deal policies of FDR led to the "Great Compression," where progressive taxes, wage controls, and union strength ushered in an era of political and economic dominance by the American middle class. The blue collar worker of the 1950s was in control of his destiny and felt secure in his position in life; Republicans had no choice but to accept the dramatic social safety net created by the New Deal because it was so popular and appeared to be working so well. However, as "movement conservatives" slowly captured the Republican party in the 1970s and achieved political dominance with the rise of Reagan in the 1980s, inequality started to rise and with it the great bipartisanship and agreement on the modern welfare state. The great unraveling of economic progress for the middle class was a political feat promoted by the economic elite who enjoyed great gains in their relative standing in the country. For Krugman, modern America looks strikingly like the previous Gilden Age in the 1920s.
Why would a majority of Americans support the Republicans if they represented only the rights of the elite at the expense of the majority? Racism plays a key role for the author who describes the great switch of the south from staunchly Democratic to staunchly Republican. Since the modern welfare state assists minorities disproportionately, anti-welfare state policies are easily supported by racists. Disenfranchisement of immigrants and others on the receiving end of a welfare state is also to blame. To a lesser degree, the Republican strategy of tying moral, religious, and security issues to their banner has also rallied others to their cause even when it is not in their economic interests to do so.
For Krugman, the solution to such a concerted conservative movement is an equally concerted progressive agenda. Additional taxes levied on a more progressive scale, a rebirth of unions, and a united and strong liberal voice are all needed to promote an alternative agenda and create a New New Deal. Health care is the linchpin in such a strategy. America has seen what conservative do with government; now it is time to show how liberals can make America better.
As stated before, I really appreciate Krugman's candid assessment of what modern liberalism truly is. He is clear in his rhetoric and ideological positioning. Unfortunately, he is rather flippant in his handling of facts and data. To be fair, the book is written for a broad audience. But considering his impressive resume, I was hoping Krugman would be able to weave complicated economic principles into the rhetoric of the left. Instead, he offers some quick references, a few tables, and no rigorous examination of some of the legitimate concerns with a more liberal policy. For example, he only provides one page of lip service to each of the following issues that have dramatically changed our society in the past century: globalization, personal health behavior and its implications for health care costs, the oil shocks of the 1970s and stagflation, international trade, the fall of the Soviet Union, and the fiscal surplus of the 90s. In my mind these are all crucial elements of any story that seeks to describe the economic and political development of our country.
In fact, Krugman's casual use of numbers and selective use of studies is so egregious that I have no choice but to place this book in the same category as those on the right that use frightening rhetoric and misleading facts. It is a shame because I think his textbook on international trade and monetary policy is the best economics textbook I ever read (right next to Mankiw's) and his New York Times columns are great. Krugman has the potential to show how liberal policies are both economically and politically achievable; his Nobel prize and prolific contributions to economics are proof enough of that. But although I had hoped to say that Krugman's book embodied the basic economic argument of the left, but I cannot. I think there is certainly a stronger case to be made for social welfare principles and the progressive agenda than the one made here.
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