What's In A Name?
Last year, INC.'s research department polled subscribers to ascertain their political attitudes. A sample of INC. readers was asked whether they considered themselves conservative (51%), moderate (29%), or liberal (16%); and whether they were Republican (46%), Democrat (27%), or independent (20%).
Those, alas, were the good old days, because life is no longer so simple. In 1982 you can't call yourself just a conservative, or a Republican, or even a conservative Republican. That would not be specific enough. People would think you were holding back. They might wonder what you were hiding.
Take George Shultz, for example. In years past he called himself a conservative Republican, but the day after President Reagan nominated him as Secretary of State, this paragraph appeared on the business page of The New York Times:
"Shultz is a conservative, but not a real Reaganite," said Lester Thurow, a liberal economist who advises Democrats. "He's not a real dyed-in-the-wool monetarist nor a dyed-in-the-wool supply-sider."
You see how Thurow felt compelled to modify and qualify Shultz's "conservative" label. Actually, no one is even sure what a plain conservative is today, except that he probably voted for Barry Goldwater. Any conservative with a flair for political style today calls himself a neoconservative. A neoconservative, says Irving Kristol, a neoconservative himself, is "a liberal who has been mugged by reality."
Thurow says that Shultz is not a "Reaganite" conservative, which is confusing unless you understand that besides its general meaning -- someone who supports Ronald Reagan -- "Reaganite" has a technical definition as well. In the current political vernacular, Reaganite refers to an individual who voted for Reagan but would have preferred Calvin Coolidge. Thus someone who, like Shultz, is not a "real Reaganite" rejects the nostalgia theme of the current administration
Everyone understands "monetarist" and "supply-sider," but, Thurow says, Shultz is not a dyed-in-the-wool either one. A dyed-in-the-wool supply-sider would bc from the East Coast. A polyester supply-sider would be from the Midwest -- Indianapolis, for example. Since Shnltz was most recently living in California, where the term "supply side" gained prominence, no modifier is required when saying that he is not one
Those definitions should help clarify your understanding of where Secretary of State Shultz stands as a political economist, but it might also be useful to point out before getting on to the main subject that the Times made a serious error in calling Thurow a "liberal economist who advises Democrats."
More accurately, Thurow is one of the neoliberals, defined by neoconservative writer Michael Scully as "liberals who have been mugged by reality and refuse to press charges." Furthermore, Thurow does not advise just any Democrats, only rising young Democratic stars like Gary Hart (Colo.) and Paul Tsongas (Mass.), who look more like Senate pages than senators, which may be because Thurow himself looks more like an MIT student than an MIT management professor
This proliferation of labels, hyphenated modifiers, and qualifying phrases might be funny if it were not just a part of a bigger explosion. What is exploding, of course, is the American political body. E pluribus unum has been turned inside out, and instead of unity, the underlying trend in the United States now is toward factionalism -- little armed camps of single-issue soldiers ready to take potshots at anyone who violates their space. We divide ourselves by geographic region, by sex, by sexual preference, by age, by income, by color, by culture, by religion. Political analyst Kevin Phillips calls it the balkanization of America, but he isn't the first to notice the phenomenon.
Thurow wrote about it in The ZeroSum Society two years ago, observing that when the economic pie stops growing, a lot more interest quickly develops in how the pie is sliced. My piece can get larger only if your piece gets smaller.
Theodore H. White, who has written about every Presidential election since 1956, has postulated his first rule of politics: "Every one and every group want more than they deserve, and demand more than they want." Behavior that accords with White's rule creates no problems until the supply of something begins to fall short of the demand. Then the system breaks down, just as it did under the unfortunate Jimmy Carter.
Carter could not make a bigger pie, and because he couldn't, the coalition of economic interest groups that traditionally support Democrats disassembled. Some of them reassembled under the Reagan banner. Union workers were willing to watch their bosses' marginal tax rates fall from 70% to 50% if that also meant a resurgent economy would push up their own take-home pay. Consumer activists and environmentalists were willing to concede some regulations if the resulting higher productivity would put people back to work.
White says the new Reagan coalition is largely an economic one. Phillips believes it is based more on Reagan's promise of bold action. Both believe it is unstable.
Thus it is fair, probably even wise, to begin asking, What happens if Reaganomics doesn't work? What happens if executives' aftertax inconie goes up, while blue-collar workers stay unemployed? What happens when the promise of bold action is attenuated by the process of governing?
The failure of Reaganomics to induce growth in the economy would certainly cause another shift in the political center of gravity, a realignment of interest groups into still another coalition. In his current book, Post-Conservative America, Phillips characterizes the consequences of that realignment as "apple-pie authoritarianism. " He writes:
One can easily enough imagine the Sunbelt as the launch pad -- indeed, it may be already -- of a communicationsbased, high-technology, corporatelinked, frequently plebiscitary, intermittently populist conservatism. Corporatist policies would manage the economy more than is being done today, mobilizing a U.S.A. Inc. to cope with France Inc. or Japan Inc. The morality of the majority would be enforced, though, with politically convenient lapses, 'the star-spangled banner' would wave with greater frequency over many more parades. . .
The business environment in the postconservative world would be changed. There would be, says Phillips, no more talk of "unleashing" business. Rather, he writes, "if attempts to return economic decision-making to the 'invisible hand' miscarry in the early 1980s, the failure could easily provoke renewed emphasis on economic planning and business-government partnership." Real Reaganites (see definition above) might be appalled, but chief executive officers of the Business Roundtable, Phillips notes, "might even be relieved."
Corporatism, or business-government partnership, means that planning -- an industrial policy -- will replace some of the competition that is supposed to allocate resources among industries, and between staid corporations and brash entrepreneurial upstarts. In a recent book called Minding America's Business, economic consultant Ira Magaziner and Harvard lecturer Robert Reich (see Speaking Out page 12) indicate ways such an industrial policy might work. To assure the proper allocation of capital among industries, for example, they suggest that:
federal loan guarantees, insurance subsidies, [and] tax and credit subsidies for homeowners, farmers, and certain other industries should be assessed [by whom?] according to their effects on the price and availability of capital elsewhere in the economy, particularly with regard to emerging industries that promise to be highly competitive in world markets.
That is so much more tidy than the way government and industry work together now to allocate capital -- each competing group lobbying the Congress in its own narrow interest, a process that David Stockman has uncharitably characterized as "hogs feeding at the trough."
Whether such planning sets the economic pie to growing again, it is a mechanism for giving competing interest groups at least the illusion that each of them has some control over the size of its slice.
Which brings us, finally, to the point: The conservative (51%) or moderate (29%) Republican (46%) small business owner may not endorse, and probably doesn't like, the interest-group politics practiced today in a balkanized America. Phillips himself sees the trend as a symptom of national decline. But you don't have to like it to concede that that is the way things work today. And if there is a coherent interest group called small business, it ought to pull itself together, find itself a snappy new label, hold its nose if necessary, and get into the fight.
Barney Frank, who is a liberal Democratic congressman from Massachusetts, doesn't much like the idea that political action committees (PACs) are throwing increasing amounts of money at political candidates, and he would like to see PAC activity curtailed. But until that happens, he told Working Papers magazine recently, "the question we have to face... is, are we going to practice a kind of unilateral domestic political disarmament in which we let the right wing and the Republicans get all the advantage of these [PACs] while we are more high-minded and only debate policy."
Likewise, the small business entrepreneur may find planned industrial policies repugnant, but if there is going to be such a policy, it would seem prudent for him to participate in planning it. No one else is as interested in preserving his piece of the pie.