What will you read on summer vacation? That may be a pointless question. No one in their right mind takes a vacation – they just go somewhere. And they work. You lug along the laptop or some iPad sort of thing and read all the emails, and review documents and send responses, and get into discussions, and you make important decisions. And your fancy far-beyond-smart phone is also a phone after all. You talk to the right people, and participate in conference calls, or even set up those calls and lead them. You are fully engaged.
And all this is necessary. You don’t want to return from a few days at the beach and find out your company has been reorganized and perhaps in a different line of business altogether, and a pink slip is waiting for you. At the very least you don’t want to give the impression that things can run just fine for a week, or even a few days, or even one afternoon, without you. That would just prove to everyone you’re quite unnecessary, really. And if you’re unnecessary you’re dead meat. They’ll let you go.
Everyone knows this. Absent a comprehensive European-style cultural agreement that August is a lost cause and everyone should just take a three-week break, only a fool would take a real vacation. And of course America is proud of its competitiveness – we’re single-minded and never quit and we always win. And we’re comfortable with our dog-eat-dog work environment, where the go-getter who puts in a hundred hours a week comes out on top, and gets the goodies, and the guy who used four hours of his yearly vacation allotment to catch a baseball game on Friday afternoon is shown the door. It’s a matter of Darwinian selection. Anyone who’s worked for a large corporation knows the real decisions are made by two or three guys at ten on a Thursday night when everyone else has gone home to the wife and kids or whatever. There are the real players, the serious people, and there are the useless losers. We are not French, after all.
And thus we do not do vacations. Maybe you’ve been in one of the water-cooler discussions where everyone vies for the bragging rights regarding who has the largest bank of unused vacation hours on the books. Back in the day, at the satellite factory down by the airport, there was the lab manager – high orbit communication gizmos or something – who had more than two full years of accumulated vacation on the books. He won. But then they changed the rules to a sort of use-it-or-lose system, so he couldn’t roll over the vacation days year to year. But we were all impressed anyway.
But it seems that President Obama is taking a vacation – Martha’s Vineyard with the wife and kids, and the Secret Service and the full staff on hand for daily or hourly briefing on just about everything, and all the electronics that connect any president to everyone anywhere, and with the Nuclear Football – the thing with all the launch codes – nearby, if they still have such a thing. Bill Clinton lost the thing for a few months – but the Cold War had been over for quite a while and no one noticed. Still, Obama will be taking a working vacation.
And what will he be reading on vacation? It seems he will be reading the Rick Perlstein book Nixonland – one of the best ever written on contemporary political history, as Nixon created much of what divides us these days. And of course Perlstein says he’s flattered:
The book is about the “separate and irreconcilable fears” over the past fifty years that have come to define the increasingly acrimonious cohabitation of Americans on the left and on the right. I assume Obama turned to it for insight about how he might help turn down the volume in our political conversation.
But Perlstein hopes Obama picks up on what is implied in the book – how the Democratic Party wins, when it does, and why it loses, and what Perlstein calls the good things that happen when the Democratic Party actually gets the formula right:
It concerns the two major axes upon which major national elections get fought. Sometimes they become battles over the cultural and social anxieties that ordinary Americans suffer. Other times they are showdowns about middle-class anxieties when the free market fails. Normally, in the former sort of election, Republicans win. In the latter, Democrats do – as we saw in 2008, when the tide turned after John McCain said “the fundamentals of the economy are strong.”
And Perlstein takes us back to 1960, when after a decade of almost giddy prosperity, 1959 saw a recession:
Richard Nixon blamed his defeat on Dwight D. Eisenhower’s failure to use government to subdue it. John F. Kennedy, meanwhile, enhanced New Deal programs like Social Security – and a promise to extend that legacy with Medicare was central to his appeal. People remember the … first televised presidential debate for the contrast between JFK’s cool and a frantic and sweaty Nixon. What’s forgotten is what made Nixon so frantic: Kennedy’s unanswerable argument that Democrats had created those programs while Republicans opposed them.
Presenting himself as the face of calm in confusing times was essential to JFK’s victory, as it is essential to any President’s victory – which is why the Democrats lost in 1968. Nixon effectively associated them with the protesters in the streets. But even then, Nixon almost lost after his opponent Hubert Humphrey enlisted labor unions in a gargantuan last-minute push concerning which party had created Social Security and Medicare and which seemed indifferent about preserving them.
There’s a lesson there. Remind folks of who did what for them. And it can actually work:
Two years later, Nixon thought he had another one in the bag – the 1970 elections, in which he campaigned tirelessly for Republican candidates, then gave an election-eve TV speech blaming Democrats for the “thugs and hoodlums” in the streets. Only he made a terrible mistake: he sounded just as frantic and ugly as the forces he claimed the GOP would subdue.
In contrast, the Democrats ran a response to Nixon’s hysterical election-eve address from Edmund Muskie, the calm, quiet Senator from Maine, who sat in an armchair and asked Americans to vote against a “politics of fear” that insists “you are encircled by monstrous dangers” and instead choose a “politics of trust.”
You might say Muskie’s was a very Barack Obama sort of speech – but with a difference. It was overwhelmingly partisan. It excoriated Republicans for the way they “cut back on health and education for the many … while expanding subsidies and special favors for the few.” In other words, it was just the kind of speech Obama will not give.
But that year the Republicans got hammered. Will Obama get it, or will Obama do what George McGovern did? There is the history:
George McGovern, following a then fashionable theory that the middle class was prosperous enough to take care of itself and that unions were pretty much irrelevant, spoke to working-class concerns less than any Democrat had before. He lost 49 states.
McGovern didn’t give what Lyndon B. Johnson used to call “Democratic” speeches – LBJ’s shorthand for talking about which party gave the people Social Security, Medicare and the Tennessee Valley Authority and which one was willing to toss them over the side. LBJ gave such speeches all the time in 1964 – and he won 60% of the popular vote.
It seems that LBJ knew something McGovern didn’t:
There are few or no historical instances in which saying clearly what you are for and what you are against makes Americans less divided. But there is plenty of evidence that attacking the wealthy has not made them more divided. After all, the man who said of his own day’s plutocrats, “I welcome their hatred,” also assembled the most enduring political coalition in U.S. history.
That would be FDR, but no matter:
The Republicans will call it class warfare. Let them. Done right, economic populism cools the political climate. Just knowing that the people in power are willing to lie down on the tracks for them can make the middle much less frantic. Which makes America a better place. And which, incidentally, makes Democrats win.
And Digby thinks that’s right:
When people are anxious about cultural change they tend to vote for the conservative GOP, for obvious reasons. When they are anxious about their economic security, Democrats are the ones with the credibility. Or they used to be. For the last sixty years the Democrats would hold up their achievements and say, “this is the deal we got for you” – and in times of economic hardship, the American people knew a good deal when they saw one.
Be she is not hopeful that Obama will get this:
I would never have thought that Democrats would greet a major economic downturn with promises to cut those programs. It increases people’s anxiety about their personal future and takes away the most important rationale for trusting Democrats. It’s extremely odd to see this happening.
Yes, it is odd, considering that the major economic downturn, as of Thursday, August 18, was looking like a free-fall:
Wall Street got socked on Thursday as renewed concerns about the U.S. and global economies sent major indexes plunging and pushed gold to a new high and bond yields to a record low.
Stocks were hit with bad news on multiple fronts. Morgan Stanley put out a dismal forecast for global economic growth. A key reading on U.S. housing came in worse than expected. And a report showed a significant slowdown in the domestic manufacturing sector.
Investors rushed to move their money into safe U.S. government bonds – and the yield on the benchmark 10-year Treasury briefly fell below 2%.
“We had a couple days to stabilize and breathe, but you forget that it’s a war zone out there and there’s just too much uncertainty about the economy,” said Frank Davis, director of sales and trading at LEK Securities.
Yep, things were awful. Moody’s Analytics has significantly lowered its expectations – economic growth for the rest of the year would be dismal, as they cited an “extraordinary reversal of fortune.” Was this just bad luck? They had expected the economy to grow at 3.5% in the latter half of 2011, but now GDP growth might closer to 2% or lower. And then there was the Philadelphia Fed index, everyone’s go-to metric for factory activity, which was atrocious this time around. See this from their description of its most recent Business Outlook Survey:
The survey’s broad indicators for activity, shipments, and new orders all declined sharply from last month. Firms indicated that employment and average work hours are lower this month….The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009.
The bottom fell out. And at Modeled Behavior Karl Smith comments – “There is just no good way to look at this.” We’re pretty much where we were during the worst part of the Great Recession, or whatever you choose to call it. And add that existing home sales dropped unexpectedly and first-time unemployment claims took a real a turn for the worse. Damn, it was a bad day.
And at the same time, to ice the cake, Morgan Stanley cut its global growth forecast for the next year by one full percentage point. Morgan Stanley cited “a policy-induced slowdown” aggravated in part by “the prospect of fiscal tightening” in the United States and Europe.
Ezra Klein explains it all:
The markets are tanking. Again. And it’s in part because they expect us to screw up. Again.
And Morgan Stanley was clear about that:
There are three main reasons for our downgrade. First, the recent incoming data, especially in the US and the euro area, have been disappointing, suggesting less momentum into 2H11 and pushing down full-year 2011 estimates. Second, recent policy errors – especially Europe’s slow and insufficient response to the sovereign crisis and the drama around lifting the US debt ceiling – have weighed down on financial markets and eroded business and consumer confidence. A negative feedback loop between weak growth and soggy asset markets now appears to be in the making in Europe and the US. This should be aggravated by the prospect of fiscal tightening in the US and Europe.
In other words: Growth is weak and policymakers are hurting rather than helping. The debt-ceiling debate hurt. The dithering response to the euro zone’s debt crisis hurt. And the expected austerity in both the United States and Europe is going to hurt even more. J.P. Morgan notes that one reason they think the United States might tip back into recession is that in the first quarter of 2012, there will be “an automatic tightening fiscal policy if, as our US team currently assumes, this year’s fiscal stimulus measures will expire.”
What we are entering, J.P. Morgan says, is a “policy-induced slowdown.” Another way of saying that is we’re entering an unnecessary slowdown. This implies that if we reversed course, we could see a policy-induced recovery, or at least acceleration.
So what has the Republican Party and its Tea Party cohort done for us recently? Steve Benen is clear enough on that:
The economy may very well be slipping back into a recession, but it’s within our power to prevent this. Too many policymakers simply don’t want to. We’re headed for a cliff, but there’s plenty of time to hit the brake and turn the wheel. Conservatives simply refuse. Their ideology demands it.
We are talking about a rare sight: a recession conservative politicians are causing through neglect, ignorance, and fealty to a misguided philosophy.
Wall Street is effectively pointing at a downturn. Republicans, who’ve been wrong about every economic challenge of the last quarter-century, are practically aiming for the disaster Wall Street is telling them to avoid.
And Benen adds this:
In case this isn’t already clear, the rules of supply and demand still exist, and the economy is lacking demand. Democrats prefer to make more public investments, which boost demand and inject capital into the economy. Republicans prefer austerity, which lowers demand and takes money out of the economy. Every time you hear some GOP politician say, “What we need right now is to cut spending,” he or she is effectively begging for an even weaker economy.
Obama should read that Perlstein book carefully. And Matthew Yglesias gets even more specific:
Many on the right and center indicate that in order to restore the economy, President Obama needs to do more to cater to the whims of rich businessmen. Many on the left feel that this is exactly wrong and that in order to restore the economy President Obama needs to do more to stick it to the rich and dispossess them. History suggests that both are wrong. Economic recovery would be good for business, but businessmen who may be good at running businesses are extremely bad judges of macroeconomic policy. Consider, for example, the Great Depression, and the monetary stimulus that economists from Milton Friedman on the right to Christina Romer on the left now agree ended it.
The Depression was not good for big business. Nor was it good for banks and large financial institutions. Ending the Depression required stepping on some toes, but fundamentally the Depression was a negative-sum experience and everyone was better off when growth returned.
So read the book and step on some toes. It only makes sense:
The fact of the matter is just that running an economy is not the same as running a nationwide network of big box retailers, or a diversified conglomerate, or a large bank, or an innovative electronics company, or any other successful business. People generally understand this in reverse. Nobody ever said “Bill Clinton was a good president, so he’d be a great replacement for Bill Gates when he steps down at Microsoft.” But it’s true the other way ’round as well. Businessmen have certain kinds of prejudices about economic management that neither reflects reality nor their own self-interest. You have to ignore them, and create the conditions where, in practice, there’s enough demand for them to expand their activities.
They won’t like it. The Republicans won’t like it. The Tea Party won’t like it. So what?
But then Corey Robin has a piece in the London Review of Books that sees things this way:
And here Democrats like Obama and his defenders, who bemoan the stranglehold of the Tea Party on American politics, have only themselves to blame. For decades, Democrats have collaborated in stripping back the American state in the vain hope that the market would work its magic. For a time it did, though mostly through debt; workers could compensate for stagnating wages with easy credit and low-interest mortgages. Now the debt’s due to be repaid, and wages – if people are lucky enough to be working – aren’t enough to cover the bills. The only thing that’s left for them is cutting taxes – and the imperialism of the peasants.
Huh? That last bit is odd, but Yglesias argues back:
Recall that Barack Obama didn’t negotiate his debt ceiling deal with the American voting public. He didn’t even negotiate it with the median member of the U.S. House of Representatives. He negotiated it, primarily, with John Boehner acting as leader of a party cartel that controlled the House. The cartel in question is deeply committed to avoiding tax increases, so a deal was struck that avoided tax increases. But the public’s resistance to higher taxes doesn’t require explanation – there’s nothing to explain.
Survey data tends to support Robin’s observation elsewhere in the piece that most people seem unenthusiastic about “the state” because they don’t perceive it to be doing much to deliver services for them. But … programs that people do perceive as benefiting them – like Social Security and Medicare – are very popular. These are also, in fact, the two largest federal domestic programs. So again, on the issues, I don’t think there’s anything mysterious happening here. If we held a referendum purely on the question of tax hikes and entitlement spending, we’d get some very left-wing answers. The American political system just doesn’t operate that way.
But maybe it should operate that way. Perlstein is clear that when the free market is failing, and when people are hurting, Democrats reminding most people who is on their side and who isn’t, can win and do wonders. They did laugh at Romney in Iowa when he told that crowd, “Corporations are people, my friend.” A bit more of that, and Obama doing his vacation reading, and we might find a way out of this mess, through growth, not shutting down the economy and hoping the market will take care of everything.
But then Obama might be too busy to read much. There are no real vacations anymore.