Dat's Capital

Alan Greenspan and Adrian Wooldridge - Capitalism in America: A History

National Review, December 20, 2018 (December 31, 2018 issue)

New York City, March 1989 © Andrew Stuttaford

With 29-year-old “democratic socialist” and imminent congresswoman Alexandria Ocasio-Cortez widely seen as the harbinger of a future that, with luck, I may be too aged to see through to Caracas, Capitalism in America may come to be regarded as an obituary as much as a history. Not that its two authors, Adrian Wooldridge, political editor of The Economist — a magazine now closer to Davos liberalism than to the classical kind — and Alan Greenspan, who needs no introduction, would see it that way. Capitalism in America is a celebration — some of it should be read to music, Sousa, say, when the narrative reaches the Gilded Age — of the economic system that took the U.S. to the top of the world and could, maintain Greenspan and Wooldridge, still keep it there. They may warn of “America’s fading dynamism,” but they conclude that the country “is trapped in an iron cage of its own making,” to which it “has all the keys that it needs.” The question is whether it has the “political will” to use them. Indeed.

Messrs. Wooldridge and Greenspan possess a sharp understanding of the political foundations of American growth — as they must. There were, after all, other large countries blessed with rich resources and abundant land, and, as the 19th century drew on, the ability to exploit them. Argentina’s great liberal president, Domingo Sarmiento (1811–88), dreamt of emulating the developing colossus to the north. By the 1890s, Argentina was among the wealthiest places on earth (on one measure, briefly the richest), and European immigrants were pouring in. And yet the U.S. now stands where it now does, and Argentina is, well, Argentina.

“Anyone who regards economic history,” caution Greenspan and Wooldridge, “as history with the politics left out is reading the wrong book.” America’s economics would have been impossible without its politics, and the latter were, the authors emphasize, profoundly shaped by the happy timing of the country’s founding, born in the age of enlightenment. Although they do not explicitly say so, the variant of the Enlightenment that weighed most on the Founding Fathers, for ancestral as well as intellectual reasons, was British, the fruit of an incremental process dating back to (at least) 1688, rather than its more radical French alternative. Moreover, it was buttressed by having inherited what Greenspan and Wooldridge refer to as “many of Britain’s best traditions,” from the common law to a certain respect for individual rights. In that sense, “the American Revolution was only a half revolution.” The nascent republic was marked by a suspicion of both monarchical rule and unrestrained popular government. Commerce was able to slip through the gaps, helped by, as the authors explain, the insights of Adam Smith, the prohibition of internal trade barriers, and — a critical incentive for the enterprising — the strong defense of property (including intellectual-property) rights enshrined in the new Constitution.

This settlement was made easier to sustain by the United States’ birth in “an age of growth — an age when the essential economic problem was to promote the forces of change rather than to divvy up a fixed set of resources,” a summary that is on the crude side — fighting over the proceeds of growth can be ugly enough — but works well enough for a country that, more than anywhere else at that epoch, was a land of opportunity.

And what allowed America’s inventors, innovators, and entrepreneurs to make so much of this opportunity was the extent to which creative destruction (to Greenspan and Wooldridge, “the ‘perennial gale’ that uproots businesses — and lives — but that, in the process, creates a more productive economy”) was allowed free rein. In this heroic retelling — Howard Zinn, avert your eyes — of America’s expansion (the Gilded Age is rechristened “the Age of Giants”), creative destruction — the hammer in the invisible hand — is the mightiest hero of all, “the principal driving force of economic progress.” The government’s job, the authors note approvingly (did I mention that Alan Greenspan was a part of Ayn Rand’s circle?), was to protect property rights and the sanctity of contracts and then, rather than “tame” creative destruction, enable it and get out of the way. Less was more: “The old nations creep on at a snail’s pace,” wrote Andrew Carnegie. “The Republic thunders past with the rush of an express.”

While praising America “as a huge positive” not only for itself, but for what it has given the wider world, the authors don’t gloss over the darker side of “numerous disgraces” that have marred its rise. Slavery was a system resting “on foundations of unfathomable cruelty” that brought riches to the South but condemned it to economic backwardness as well as moral squalor. They also acknowledge that the state played a more active role in America’s economic explosion than it might be polite to mention in Galt’s Gulch. Railways, in many respects the Internet of the era (though, in a testimony to a time of remarkable innovation, there’s also the telegraph to think of), benefited — as, subsequently, did the Internet itself — from Uncle Sam’s largesse. Vast land grants offered railway companies the chance to risk a fortune building rails “in the middle of nowhere” in the hope of making a fortune by turning a “piece of nowhere into a part of the global economy.”

The authors write snappily and memorably, but not at the expense of subtlety. Thomas Edison’s “greatest claim to fame is arguably not as an inventor but as a systematizer of invention.” He created the first industrial laboratory and staffed it with “German PhDs, skilled craftsmen, and ‘absolutely insane men,’” the last category a preview, perhaps, of the pizza-munching Asperger’s army taking a (silicon) valley to fresh peaks.

By outlining the backgrounds of these economic pioneers, an impressively recurrent tale of creativity, social mobility, and sometimes uncontainable energy (Isaac Singer, of sewing-machine fame, sowed very widely, fathering at least 24 children, and, at one point, ran three households simultaneously), Greenspan and Wooldridge highlight the extent to which the American story was one of individual achievement. Those individuals did, Mr. Obama, build this.

But as the country grew richer, its politics changed, reflecting the growing electoral clout of those at the rough end of creative destruction, mounting alarm at escalating oligarchic and corporate power and its abuse (Teddy Roosevelt’s “malefactors of great wealth”), and a broader shift in opinion away from laissez-faire. This transformation in sentiment was accelerated by the Depression and two world wars but was well under way from the beginning of the 20th century, not least due to the size, complexity, and problems — “pollution,” relate Greenspan and Wooldridge, “on a terrifying scale” — of a country growing at an astonishing rate, a new kind of society that, it seemed self-evident, required steering by more than an invisible hand. There was also an early flowering of what has become an endemic phenomenon: “By producing prosperity, capitalism creates its own gravediggers in the form of a comfortable class of intellectuals and politicians” able to use the negative side of creative destruction to sell their own agenda.

The final two-thirds of the book details the evolution of American capitalism since the assault on laissez-faire first gathered speed. Adaptive, protean, and endlessly inventive, capitalism has proved to be more resilient than its early-20th-century champions might have expected. Government activism may have ebbed and flowed (this is not, incidentally, a book for FDR fans), but even if the Constitution acted as a restraint on the state’s encroachments, it never returned to low tide. Nevertheless, America’s private sector remained re­markably productive, famously through the 1920s, but again in the long post-WWII boom. Revived by Ronald Reagan after the stagflation of the 1970s, it flourished during what Greenspan and Wooldridge dub “the age of optimism” until the arrival of lean years marked by the dotcom bust, the runaway spending of the George W. Bush years, and the financial crisis, a catastrophe about which these authors have disappointingly (considering the identity of one of them) little that is novel to say.

Looking, however, beyond the proximate causes of the Great Recession, the authors are right to see signs of a deeper malaise in the economy, a creeping sickness that shows up in many ways, including lower productivity, declining social mobility, and unhealthy concentration in many industries. They attribute much of this to a decline in American exceptionalism. Creative destruction’s wild ride is being replaced by excessive risk aversion and overregulation. And they fret about swelling entitlements, both for their ultimate unaffordability and for the way they encourage consumption over the saving that is essential to fund productivity growth.

In an attempt to bring back a little cheer as their book draws to a close, Greenspan and Wooldridge observe that “America leads in all the industries that are inventing the future,” including artificial intelligence and robotics. But that future comes with a catch that they may have missed. Neither those industries nor their immediate digital predecessors, prime examples of creative destruction, are replacing the jobs or the wage rates to which they are laying waste. That could well account for more of America’s malaise than Greenspan and Wooldridge would care to admit, and may — Donald Trump, Bernie Sanders, or even Ocasio-Cortez could all be straws in a very different gale — herald an era of destruction with nothing creative about it.

Not Too Tricky To Be Ike's Veep

Irwin F. Gellman: The President and the Apprentice - Eisenhower and Nixon, 1952-1961

Standpoint, March 1, 2016

The thing about “archive rats”, to borrow Stalin’s useful insult, is that they unearth facts that unsettle the authorised version of history. It’s a label that Nixon scholar Irwin Gellman can wear with pride. He has been burrowing in the archives for decades in obvious places (the National Archive, the Nixon Library), overlooked places (the Cabot Lodge papers), and in places (he none too subtly implies) that other historians could not be bothered to inspect — every one of the approximately 845 boxes of the “largest part of the Nixon manuscripts, called the 320 series”. 

The result is The President and the Apprentice, a somewhat obsessive, intriguingly contrarian retelling of the story of Nixon and the Eisenhower presidency. Traditionally, Eisenhower’s time in office has been regarded as a wasted opportunity, only partly redeemed by the supposed disdain he felt for his vice-president, Richard Nixon. More recently, academics have been re-rating Ike (it probably helped that doing so made his Republican successors look bad) but that re-rating has yet to percolate through to a popular consensus still shaped by dim memories of high-school history lessons and, more vividly, media depictions of Eisenhower’s America as a land that progress forgot.

Nixon has also benefited, to a degree, both from the attention of revisionist historians and the passing of the decades since his disgrace. His funeral was attended by President Clinton and all his surviving predecessors (Clinton was representing, he declared, “a grateful nation”). For all that, to most Americans Tricky Dick remains a President Evil, snarling while he plots dark deeds and incriminating tapes whir. He has never been forgiven by liberal opinion-formers for his role in exposing the traitor Alger Hiss (“vindicated” again, I note, in a book published last autumn).  Nor have they forgiven him for his style — or styles, all those “new Nixons” — for his abrasiveness, his awkwardness, his embarrassingly obvious striving and, worst of all, for a series of election victories that announced that America was more like him than them.

Even those historians willing to look beyond the standard caricatures of this complicated man’s complicated career have struggled to put Nixon’s relationship with Eisenhower in a positive light, something that Mr Gellman, previously the author of The Contender, an account of Nixon’s Congressional career, sets out to correct. This is no hagiography; it is a scholarly work, but a combative one too. Reinforced by what he has mined from all those archives, Gellman debunks myths, he challenges the comfortably liberal narrative, and when people have lied he says so. Nixon was brought down by his lies, but to no small extent his reputation has been trashed by the lies of others. To take just one: No, Mr Truman, he didn’t call you a traitor.

While The President and the Apprentice leaves a generally favourable impression of the Eisenhower administration, it is not a broad rethink of this already rethought presidency. It is too narrowly focused on the Nixon vice-presidency for that. But Gellman does attempt to address what has become a central criticism of those years: that Eisenhower did too little too slowly to come to the help of African-Americans, at the wrong end of institutionalised racism across the country and, in the South, victims of something very much worse. Nixon, whatever his private thoughts on racial matters (the much later White House tapes do not make pretty listening in this respect), had no time for Jim Crow, segregation, or the petty (and not so petty) viciousness of the racial discrimination of the era. And nor, despite some attitudes that might dismay in 2016 (as a father, he would not have been too happy to discover who was coming to dinner) did Eisenhower, a man, it must be remembered, brought up in turn of the 20th century Kansas. That said, even allowing for a difficult political environment, the duo’s reluctance to make more use of the bully pulpit in support of civil rights must count against them. And their hopes that changing attitudes and improved African-American access to the voting booth would be enough to do the trick were at best wishful thinking.

True to form, Gellman does not let the Democrats off the hook, highlighting what was once in plain sight, but is now often consigned to the memory hole. Democrats did much to obstruct and (in LBJ’s case, for a characteristically calculated blend of reasons) dilute the 1957 Civil Rights Act, the first legislation of its kind since 1875. This was a reflection of the priorities of their southern redoubt, as was the unwillingness of many Democrats (including, Gellman points out, both JFK and LBJ) to offer public support for Eisenhower’s decision to send in the army to enforce the integration of Little Rock Central High School, Arkansas.

To be sure, President Truman ordered the desegregation of the military (although it was the Eisenhower administration that essentially implemented it), but, after reading this book it’s hard to deny that Truman, later an opponent of the sit-ins at segregated lunch counters (organised by “Communists”, apparently), and no stranger to the N-word, has been credited too much, and Eisenhower too little, for what they each did to push the US further down the long march to racial equality, an imbalance that, of course, fits all too neatly into the historical perspective of the American Left.

To FDR’s first Veep, “Cactus Jack” Garner, the vice-presidency was “not worth a bucket of warm piss”, but Gellman makes a strong case that Nixon made far more of this unloved position than might have been expected. He was not any sort of co-executive; the Dick Cheney vice-presidency lay far in the future. But he was valued for his contribution to, and coolly objective analysis of, the frequently rough political scene at home (a melée that the grand old general preferred to be seen to soar above, but understood enough about to know — usually — what he didn’t know) and, as the years passed, also for his thoughts on abroad. Nixon was, so to speak, a youthful understudy whom Ike (conscious of how ill-prepared Truman had been when he took over from FDR) felt a patriotic obligation to train, but he was also a real force within the White House, given real jobs to do.

Not unreasonably, Gellman sees this as proof of the faith that, particularly in the second term, Ike put in Nixon: “The president gave assignments to those he trusted, and he trusted Nixon.” That’s true, but, in the case of Eisenhower, cold behind that five-star beam, that word “trust” should be read as conveying a faith in Nixon’s competence rather than anything with more emotional resonance. Gellman backs up his more upbeat take on the relationship between president and vice-president with a series of letters and obiter dicta from Eisenhower signalling the respect and affection the president had for Nixon. Maybe, but they can also be interpreted as pats on the head for a promising young subordinate by a man who knew how to motivate those under him. And Gellman cannot avoid the reality that Eisenhower let Nixon twist in the wind, not once, but twice. 

The first time was when, during the 1952 election, a scandal blew up over a fund that had been raised by some Californian businessmen to help the far-from-wealthy Nixon with his senatorial expenses, an arrangement that did not deserve to be labelled as corrupt. A larger, possibly more questionable fund that benefited Adlai Stevenson, the liberal icon running against Eisenhower for the presidency, received rather less coverage: how odd! Eisenhower made clear Nixon was on his own, but even when Nixon had vindicated himself with the brilliantly manipulative “Checkers” speech, still hesitated to stand by his man. The second occasion, four years later, was when Eisenhower effectively made Nixon beg for his slot on the re-election ticket, a position that he had clearly earned, a cruel spectacle that the normally indefatigable Gellman finds “baffling”.
And then, four years after that, there was the moment during a press conference when Eisenhower was asked to cite a major contribution that then presidential candidate Nixon had made to his administration. Ike replied that, given a week, he “might think of one”.

Gellman fillets these incidents with his customary diligence, handily demolishing some of the mythology that surrounds them and adding some detail  often omitted from the historical record (for example, Eisenhower promptly apologised for that remark). But, despite Gellman’s best efforts, the sense that something was awry between the two men lingers.

If I had to make a guess (and when it comes to the enigmatic Ike, one can only guess) the key to Eisenhower’s behaviour was partly the sense, not unusual among the great, that no one could be good enough to succeed him. But there was something else at play, and Gellman points to it with his argument that Ike’s leadership style was in peace as it was in war: “he led a team of subordinates, who were expected to go where Ike sent them, be his eyes and ears, provide intelligent and informed advice, deliver his messages, and occasionally become casualties.” They were, therefore, in the end, disposable.

But Nixon hung on.