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    More Equal Than Others: America from Nixon to the New Century
    More Equal Than Others: America from Nixon to the New Century
    More Equal Than Others: America from Nixon to the New Century
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    More Equal Than Others: America from Nixon to the New Century

    By Godfrey Hodgson

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    During the past quarter century, free-market capitalism was recognized not merely as a successful system of wealth creation, but as the key determinant of the health of political and cultural democracy. Now, renowned British journalist and historian Godfrey Hodgson takes aim at this popular view in a book that promises to become one of the most important political histories of our time. More Equal Than Others looks back on twenty-five years of what Hodgson calls "the conservative ascendancy" in America, demonstrating how it has come to dominate American politics.


    Hodgson disputes the notion that the rise of conservatism has spread affluence and equality to the American people. Quite the contrary, he writes, the most distinctive feature of American society in the closing years of the twentieth century was its great and growing inequality. He argues that the combination of conservative ideology and corporate power and dominance by mass media obsessed with lifestyle and celebrity have caused America to abandon much of what was best in its past. In fact, he writes, income and wealth inequality have become so extreme that America now resembles the class-stratified societies of early twentieth-century Europe.



    More Equal Than Others addresses a broad range of issues, with chapters on politics, the new economy, immigration, technology, women, race, and foreign policy, among others. A fitting sequel to the author's critically acclaimed America In Our Time, More Equal Than Others is not only an outstanding synthesis of history, but a trenchant commentary on the state of the American Dream.

    LanguageEnglish
    PublisherPrinceton University Press
    Release dateJan 10, 2009
    ISBN9781400825950
    More Equal Than Others: America from Nixon to the New Century

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      Book preview

      More Equal Than Others - Godfrey Hodgson

      More Equal

      Than Others

      Politics and Society in Twentieth-Century America Series Editors

      William Chafe, Gary Gerstle, Linda Gordon, and Julian Zelizer

      A list of titles in this series appears at the back of the book

      More Equal Than Others

      America from Nixon to the New Century

      Godfrey Hodgson

      A Century Foundation Book

      PRINCETONUNIVERSITY PRESS

      PRINCETON AND OXFORD

      The Century Foundation

      The Century Foundation, formerly the Twentieth Century Fund, sponsors and supervises timely analyses of economic policy, foreign affairs, and domestic political issues. Not-for-profit and nonpartisan, it was founded in 1919 and endowed by Edward A. Filene.

      Board of Trustees of the Century Foundation

      Richard C. Leone, President

      Copyright © 2004 by The Century Foundation Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 3 Market Place, Woodstock, Oxfordshire OX20 1SY

      ALL RIGHTS RESERVED

      Library of Congress Cataloging-in-Publication Data Hodgson, Godfrey. More equal than others : America from Nixon to the new century / Godfrey Hodgson.

      p. cm. — (Politics and society in twentieth-century America) Includes bibliographical references and index.

      ISBN: 978-1-40082-595-0

      1. United States—Politics and government—1945–1989. 2. United States—Politics and government—1989– 3. Political culture—United States—History—20th century. 4. United States—Social conditions—1980– 5. Equality—United States—History—20th century. 6. Social conflict—United States—History—20th century. I. Title. II. Series.

      pup.princeton.edu Printed in the United States of America 1 3 5 7 9 10 8 6 4 2

      For my family

      Hilary, Pierre, Francis, Lindsay, Jessica, Laura, and Angus

      Contents

      FOREWORD

      ACKNOWLEDGMENTS

      INTRODUCTION Disappointment and Denial

      1 State of the Union

      2 New Politics

      3 New Technology

      4 New Economics

      5 New Immigrants

      6 New Women

      7 New South, Old Race

      8 New Society

      9 New World

      10 New Century

      NOTES

      SELECT BIBLIOGRAPHY

      Foreword

      By any measure the United States is a stupendously successful nation. Its citizens have been blessed with vast natural resources, renewed by waves of diverse and energetic immigration, guarded by two great oceans, and fortunate in the size and dynamism of their domestic marketplace. It is fair to say they have made the most of it. Today, the United States is recognized as uniquely powerful and influential.

      Moreover, at least since John Winthrop’s City on the Hill vision in 1630, a good deal of our national self-consciousness has involved the notion that we should be widely admired and even emulated. When we have found that others do not share our high opinion of ourselves, the explanation that comes readiest to hand is that the erroneous views are a consequence of ignorance, envy, or probably both. Serious hostility to America, in this view, often is understood to reflect the fact that America’s enemies are, well, simply evil. This opinion has been reinforced by the fact that, for most of the past sixty years, virtually all of the major enemies that America actually confronted had in fact committed atrocities against their own people. They also were clearly foes of Western democracy and of liberty in general. In these circumstances, sustaining this rosy self-assessment has been relatively easy.

      From time to time, however, the abiding self-confidence of the nation has been put to the test. The Great Depression was one such period. The tumult during the 1960s and early 1970s was another unsettling era of transition. During the past three decades, wage stagnation, the decline of the manufacturing sector, growing inequality, several painful recessions, and the sudden emergence of a terrorist threat have again raised questions about whether all is well with the Great Republic. There are scholars who have argued that, in the area of economic progress and equity, some aspects of American preeminence in recent years have been more theoretical than actual. And among foreign observers, there is an even more commonly held view that Americans are mistaken in the fervor with which they believe in the superiority of the structure, effectiveness, and leadership of their nation’s government.

      Some of those who raise these issues are among America’s best friends in the scholarly and journalistic communities. Their work should be prized by Americans, for it often provides the missing perspective that is needed to understand our nation and its needs. Prominent in this group of Americanists is Godfrey Hodgson, a writer who has provided exactly this sort of friendly, thoughtful, and insightful writing.

      Hodgson, a noted British journalist, has served as Washington correspondent of the Observer, the editor of Insight in the Sunday Times, the presenter of the London Programme and of Channel Four News, and foreign editor of the Independent. He also has taught in several universities in Britain and in the United States and explored the state of our nation in a number of important books, including America in Our Time; The World Turned Right Side Up: A History of the Conservative Ascendancy in America; and All Things to All Men: The False Promise of the Modern American Presidency.

      One of Hodgson’s most telling points in this book is the recognition of the reality that government and government regulation are the necessary foundation on which capitalism can flourish. As he puts it in his introduction: Americans might dislike government, as many of them never ceased to repeat. But they experienced more government than anyone. This vast display of individual and institutional opportunities was organized and protected by the most elaborate and opulently funded pyramid of government in the world. One might add that American business has always looked to government for favorable treatment, from subsidized re-search to land grants to protection from competition—at home and abroad.

      Hodgson stresses the dominance of the corporation both in economic and political fact and in the popular mythology about the way business functions. The most pervasive of these myths is that of the empowered stockholder as the functional equivalent of the citizen and the operations of the market as a surrogate for democracy. But as recurring corporate scandals remind us, the system is full of practical imperfections. More broadly, Hodgson’s work emphasizes the costs and persistence of economic inequality as a central American problem. He asks: Is the United States becoming, or has it become, a class-based society? If so, what does this mean for the future? The raising of this question (which American commentators typically skirt) is a major contribution of his book.

      The Century Foundation has supported numerous studies of various aspects of these issues, including Robert Kuttner’s Everything for Sale; Edward Wolff ’s Top Heavy and his forthcoming book on skill, work, and inequality; Jeff Madrick’s Why Economies Grow; Jamie Galbraith’s Created Unequal; and Paul Osterman’s Securing Prosperity.

      In addition to an insightful analysis of the American economy, Hodgson has a keen eye for political developments in the United States. His review of the rise and fall of southern power within the Democratic Party, fol-lowed by its rise to even greater heights among Republicans, is a central theme of the book. Thus one practical explanation for the growing strength of conservative politics in America during the past generation is the altered allegiance of the states of the old Confederacy. Indeed, the shattering of the liberal consensus, even as wages were stagnating and in-equality was growing, can be understood only in these terms.

      This is not a pessimistic book. Hodgson believes that the prospects for American progress remain bright, but he does raise a warning about the present course of the nation. At a time when patriotism is often equated with uncritical acceptance of the status quo, his arguments could not be more timely. On behalf of the Trustees of The Century Foundation, I thank him for this important contribution to our understanding of these critical issues.

      Richard C. Leone, President

      The Century Foundation

      July 2003

      Acknowledgments

      The origin of this project was a phone call from The Century Foundation in New York, asking me whether I might be interested in writing a sequel to my 1976 book, In Our Time. My answer was to the effect of: Can a duck swim? This exchange led to a commission to write the book as a re-port for the foundation, with the idea that it would find a trade publisher for it. My gratitude therefore goes in the first place to Richard C. Leone, president of The Century Foundation, and to his colleagues, especially Leif Wellington Haase, Beverly Goldberg, and Greg Anrig; and then to my editor at Princeton University Press, Brigitta van Rheinberg, and to her colleagues.

      I would like to thank all who agreed to be interviewed, too many to be mentioned individually; those cited in the book are identified in the notes. In a sense, of course, the book was made possible by all the friends in the United States who helped me with information, anecdotes, suggestions, and hospitality. In particular I would like to thank James V. Risser, James R. Bettinger, Henry S. Breitrose, and Henrietta Grant-Peterkin at the Department of Communications at Stanford University; Lee H. Hamilton and his colleagues at the Woodrow Wilson International Center for Scholars in Washington. The presence of the late senator Daniel Patrick Moynihan made the Wilson Center feel like home. As ever, I am more grateful than I can easily express for hospitality and advice to Harry and Tricia McPherson.

      I am also indebted to Alan Ryan, the warden of New College, Oxford, and director of the Rothermere American Institute, for appointing me as a fellow and then as an associate fellow there, and to my colleagues there and among the Oxford Americanists generally. Thank you, too, to all the staff of the institute’s Vere Harmsworth Library, an efficient and pleasant place to work.

      Adam Fairclough, of the University of East Anglia, brought together a cast of friendly critics for a conference on my earlier book, In Our Time, which provided vital help with the revision process.

      Brian Hickman, of Information Workshop, Oxford, has made it possible for me to keep in touch with the world’s knowledge through the Internet.

      My agent, Robert Ducas, has been a reassuring adviser as well as an old and valued friend.

      I am grateful to those who have read parts of the book in manuscript, especially Professor Desmond King of St. College, Oxford, Professor Jay Kleinberg of Brunel University, and Professor Nelson Lichtenstein of the University of California at Santa Barbara. I don’t know what confusion I might have fallen into but for the clear head of my friend Rosemary Allan.

      My greatest thanks as ever go to my wife Hilary, a professional copy editor and proofreader as well as a beloved motivator, comforter, and counselor.

      All animals are equal, but some animals are more equal than others.

      —George Orwell, Animal Farm

      Introduction: Disappointment and Denial

      This book is an attempt to understand what has happened in the United States over the last quarter of the twentieth century. More specifically, it is an attempt to say some things that—I think—need to be said because they are not part of either of the two ruling narratives, the liberal recessional or conservative triumphalism. It is widely asserted that politics has become irrelevant to modern Americans and that government is not part of the solution but part of the problem. On the contrary, my central contention is that the power of democratic government, restrained by the American tradition of constitutional law and legitimized by fair and tolerant political conflict, to address troubles at home and internationally has never been more needed if we are to build a fairer and safer world.

      I argue that the experience of the years from Richard Nixon’s resignation of the presidency until the millennium, in contrast to the advertisement that was so often screened, of universal prosperity at home and cost-free triumph abroad, were in reality for many, probably for most Americans, years of disappointment and denial.

      The most striking fact about the domestic economy was not that it grew, and for at least one brief period at the end of the 1990s quite rapidly, but that it grew far more slowly than had been the case in the previous quarter century, and far less equitably. The fruits of that growth were reaped by a small, and disproportionately by a relatively tiny, proportion of the population. Great and growing inequality has been the most salient social fact about the America of the conservative ascendancy. It is hard not to ask whether that was not one of the conservatives’ strategic goals.

      The existence of inequality, of a winner-take-all society, was widely acknowledged. But American media were generally in denial of its implications. Resentments were calmed by the idea that, if Americans were substantively more and more unequal, they had greater opportunities than ever to acquire status and possessions. The reality has been that gross and growing inequality, in a society where the rich were increasingly segregated—from the middling as well as from the poor—by geography, education, culture, and politics, amounted to nothing less than a reemergence of the class divisions that most Americans were proud to have put behind them decades before. Beyond a certain point, inequalities of money, especially in a society where so much was measured in terms of money, implied human inequality too. About this, however obvious it was, little or nothing was said in public discourse.

      The high hopes held during the years of the liberal consensus for growing equality and broadening opportunities for excluded groups, above all for women and for ethnic minorities, were to a surprising extent resisted and substantially disappointed. And this, too, was denied. Progress for blacks, especially, simply slipped down the agenda. Labor unions, once cherished for the protection they afforded the citizen against business rapacity, lost much of their industrial power and with it their public credibility. Altruism, once again, as in the 1920s and 1950s, earlier decades of business hegemony, became suspect.

      Domestic disappointment and denial were mirrored by a narrowing and hardening of American attitudes toward the outside world. This too, like the resurgence of class division, was a break with the best of American tradition. Where Woodrow Wilson called for a struggle against militarism (read Germany) and navalism (read Britain), by the end of the twentieth century the United States was spending more on defense, or—to avoid euphemism—on military power, than the rest of the world put together. When the United States, better late than never, entered World War II, its armed forces were still smaller than those of minor European powers. America in 1940 was a profoundly civilian society. Well before the end of the twentieth century people spoke without discomfort of the national security state, a euphemism, again, for a significantly militarized polity. But where in the late 1940s and the 1950s Americans shared their wealth and strength to build institutions to protect the common good, after the millennium allies were no longer wanted. The international institutions an earlier generation of Americans had built were derided. Unilateralism and power politics were in fashion.

      If this account of what happened seems to stress disappointment and frustration, as opposed to the achievements of the world’s greatest economy and the military triumphs of the lone superpower, it is in part because it seems to me that there has been no shortage of writers keen to celebrate (transitory) rises in the stock market or (easy) military glory.

      In part, too, this is no doubt due to the fact that, while I have been a student, an admirer, even a disciple of the United States for almost fifty years, I am not an American. Some Americans, it seems, have difficulty with the idea of a foreigner who is not either an immigrant or an enemy; I am neither. I have spent a total of some fifteen years in the United States over the past forty-eight years. In many ways, I have been proud to be treated as an insider. I have been privileged to have held a White House press card, teaching posts at Berkeley and Harvard, and contracts from the most respected publishers. I have been accorded an extraordinary measure of generosity from many American institutions, from the Woodrow Wilson Center in Washington to great American libraries to the Washington Post, from a desk in whose newsroom I was able to observe the world for years. I have been fortunate enough to know personally some of the most influential Americans of the later twentieth century, from Martin Luther King to Daniel Patrick Moynihan, and from Robert Kennedy to Irving Kristol. But I remain an outsider, not an American.

      As a consequence, I am naturally skeptical of what is called American exceptionalism, the essence of which I take to be the belief that the United States is not merely the richest, the most powerful, and the most successful of political societies, but at the same time the most virtuous and the most innocent, and one whose destiny it is to spread the enlightenment of its ways to a darkling world inhabited by the other 95 percent of the world’s population.

      Even I must admit, though, that there is indeed something exceptional about the American self-image. Americans do see themselves as pilgrims on a national spiritual journey. Nationality, nationhood, the idea of the American nation, are the altar of something akin to a political religion. It is a commonplace to observe that American patriotism shares many of the attributes of an organized cult: symbols like the flag, rituals, sacred texts (the Declaration of Independence, the Constitution, the Gettysburg Ad-dress), prophets, martyrs, apostles, and missionaries. Even a non-American must feel that there is something admirable and generous in the values and the aspirations of that tradition. (Senator Daniel Patrick Moynihan once wrote memorably about his hopes for an architecture to match thedignity, enterprise, vigor, and stability of the American National Government. ¹ Many of those who hold office in that government today might not understand that sentiment and, if they could, would recoil from it in horror.) Here, too, I sense a coarsening and a trivializing that has taken place in recent decades of the ideals of Woodrow Wilson and Franklin Delano Roosevelt, even of Lyndon Baines Johnson. Instead, a drum-banging triumphalism and commercialized populism seem to be what the men and women around George W. Bush most want to offer the world.

      No doubt some of the fervor of American patriotism is due in part to the fact that Americans are a self-chosen people. To the general proposition that Americans are all immigrants or their descendants, there are, of course, two great exceptions, and there is also one less well known footnote. The twin exceptions are the one-eighth of the population descended, wholly or in part, from men and women brought to America as slaves against their will, and the smaller group of Native Americans, descended from those who were there all along. (It is a reflection of growing tolerance that the number of Americans who acknowledge native roots has more than doubled in a quite brief span of time.) The footnote is that, over almost a century and a half, roughly one-third of all immigrants to the United States went home again. Life for immigrants, as the black mother in Langston Hughes’s poem put it, ain’t been no crystal stair. Whatever the multiple explanations of that fact, and the lesson it teaches about not sentimentalizing the struggle it took to build America, it remains essentially true that America is a nation of immigrants.

      Immigration, as I have long thought, is only the first of the four great historical experiences that have shaped the American character and American society. None is exceptional. Each has been shared by many other countries. But together, in specific forms and ways, four strands have woven the distinctively American pattern.

      The second formative experience, for better and for worse, was the epic of the frontier. The mobility of American society, and its persistent, imperfectly achieved aspiration toward equality, can be put down to the steady westward thrust of the frontier of settlement. So too can a certain hardness and a willingness to forget that the imperial resources on which American society has been built were taken from Native Americans and from Mexico at gunpoint. In the past few decades, the mighty course of empire westward has been tamed to the daily rhythm of the commuter suburbs. But the impulse to move on, to solve problems by leaving them behind, together with the daring and the aggression, has remained.

      Third, just as Europe has been shaped and brutalized by five centuries of colonial expansion, so the United States has been indelibly marked by the historical fact of African slavery. That made inevitable the great conflict to preserve the Union. It shaped the political and economic geography of the continent. It also left a stubborn legacy of segregation and racism, and of subtle, deeply engrained devices for perpetuating them. One of the surprise developments of the past thirty years has been that, where it was once assumed that the South would become more like the rest of the country, in politics and in many aspects of culture, the rest of the country has come to resemble the South.

      The fourth distinctive historical experience is that American political society and the American political religion have been guided by the values, one can even say by the ideology, of a noble eighteenth-century political experiment. The United States was born of a revolution against a distant and unreformed imperial power. But its founders brought with them from Britain and from Europe a rich heritage of law, political institutions, and ideas that were early codified into a new political system, founded on constitutional law and on the then novel idea of popular sovereignty. The world of the Founders has long crumbled away. But the ideas of Thomas Jefferson and James Madison are as lively as ever.

      The ideas and ideals of the American Revolution have proved durable, because flexible. The paradoxical consequence of their success is that the titanic dynamism of a society, always driven by the push of immigration and the pull of the frontier, and haunted by the guilt and fear of racial conflict, has been contained and guided by political institutions that are relatively unchanging and in many ways remarkably conservative. One of the conservative ideas that has grown in influence over the past twenty-five years is the elevation, not of capitalism, which in its essentials, the coming together of buyer and seller in the market, and the concept of investing for the future in trust for a return, is arguably as old as human society, but of a particular, unregulated American version of capitalism as almost the consort of democracy on the throne of American belief.

      This book attempts to chart, in what can only be the roughest of rough outlines, how these enduring experiences and forces operated upon American society in the last quarter of the twentieth century, that is, from the perceived crisis of the mid-1970s to the proclaimed coronation of the American Millennium.

      The first four chapters seek to contrast the complacent political rhetoric of late-twentieth-century American politicians and media with the more checkered pattern of what was really happening: in politics, in the economy, in technology. Chapter 4 argues that, so far from being the child of the unregulated graduate-student capitalism of the myth, computers and the Internet were the long-gestated offspring of investments made by an alliance between the national security state and the institutions of social democracy. Chapter 5 examines the changes likely to be brought about by the new immigration. Chapters 6 and 7 show how the high hopes bred by the women’s movement and the civil rights movement have been partially frustrated by division, resistance, and reaction. The reality for the majority, chapter 8 argues, may be full of pleasure, variety, and achievement. It is hardly the shining idyll portrayed by advertising or ideology, though, but rather an intricate pattern in which four ambiguous strands predominate: the emergence of the suburb, segregated by income, as the typical American habitat; the coronation of corporate power; the pervasive influence of both advertising and news media, themselves largely in the service of the corporate elite and its interests and beliefs; and the consequent slide toward a society horizontally divided by money and education into increasingly unequal social classes.

      This, I believe, is nothing less than a betrayal of the society’s long cherished and best instincts, those instincts that first drew me to it. All Americans may be equal, George Orwell might now say. But some Americans are so much more equal than others that the abyss between them can hardly be bridged, let alone stepped over as was once possible.

      One large difficulty, suggested in chapter 9, is the growing slippage be-tween how Americans see the rest of the world, and how the rest of the world sees them. The chapter makes the point that survey data show clearly that the harsh confrontational stance of modern Republican conservatives is not shared by the majority of Americans, even in the aftermath of September 11 and of war in Iraq. Nonetheless, the chapter suggests that, where once the United States was unquestioningly held up as a beacon by progressives everywhere, now it is the friend and guarantor of the relatively wealthy and conservative. The word reform, once the banner of the champions of progress and equality, is now suspected as a weasel word for such changes as may profit American corporate business. Too often, a United States with conservative ideologists in the saddle is identified chiefly with the self-interest of the self-satisfied.

      The major theme, left for the last chapter, is that growing inequality brings its own punishment. A small class of owners of wealth and their attendant corporate managers, professionals, publicists, and tame ideologues has steadily accumulated financial, industrial, media, and cultural power. These people are not well equipped to see clearly the reality of what is happening. What do you mean, everyone is not rich and happy? their spokesmen ask indignantly. Why, everyone I know is doing just fine! A society that does not see its own situation clearly, and is in denial about vital aspects of what is happening to it, must be storing up problems for its own future, and no doubt for others. Still less will it be able to command the respect, let alone the affection, in which it was held by the rest of the world in the days when it was a byword for equality and openness, generosity and candor. These virtues have not disappeared from the Republic. But they are not conspicuous among those into whose hands its power and its fortunes have fallen.

      More Equal Than Others

      1

      State of the Union

      And so we have gone on, and so we will go on, puzzled and prospering beyond example in the history of man.

      —Thomas Jefferson to John Adams, January 21, 1812

      IN THE YEAR 1975, the mood of the United States was perplexed, morose, and uncertain. For the first time in the modern era, the nation had lost a war. For the first time, a president had been driven from office in dis-grace. It was said that the American Dream would be denied to many, be-cause for the first time a generation of Americans would be worse off than their parents.¹ For the first time, Americans, people of plenty,² used to a culture of abundance, confronted the prospect of not being self-sufficient in energy and in some key raw materials.³

      A quarter of a century later, the national mood was buoyant. The Soviet Union had disintegrated, and its communist creed was utterly discredited. Americans had not so much come to agree with one another about politics, as to lose interest in the political process. By the end of the twentieth century there was an echo in the air of that epoch in nineteenth-century French politics whose motto was enrich yourselves.⁴ Americans were busy enriching themselves, and a significant minority did so to impressive effect.

      Most striking of all was the transformation of the nation’s public philosophy from liberal to conservative. By the 1990s, few cared to identify themselves as liberal. In 1992, for example, a poll showed that only 20 per-cent of the voters regarded themselves as liberals, compared with 31 per-cent who identified themselves as conservatives.⁵ Whereas in 1973 only 32 percent agreed with the proposition that the best government is the government that governs the least, by 1998 56 percent agreed.⁶ In the middle 1970s Americans were just coming to the conclusion—painful for some, liberating for others—that the ideas of the New Deal had served their time.⁷ People were turning from the warm inclusiveness of the liberal consensus to the energizing astringency of a new conservative philosophy. By the 1980s free-market capitalism was being enthroned, not just as a useful system for wealth creation that needed to be kept under watchful scrutiny, but also as one of the twin keys, with democracy, to the American belief system and the American future.⁸

      In politics and journalism, and in a welter of what can only be called corporate propaganda, the idea was ceaselessly reiterated that giant corporations and the stock exchange were the true democracy, and that anyone who dared to challenge their hegemony was no friend to the working families of America, but an elitist and, as such, a traitor to the nation’s best traditions. Thus a college professor or working journalist living on a few thousand dollars a month was condemned as an oppressor, whereas a CEO, who paid himself—with the connivance of an intimidated or collusive remuneration committee—several hundred times as much as his average employee, was held up to sycophantic praise as the working man’s friend.⁹

      By the late 1990s Americans had put the hesitations of the 1970s far be-hind them. They had made it, the majority felt. Whatever private fears or misgivings individuals might have, the public mood was robustly confident. It was never more trenchantly expressed than in the State of the Union Message with which President Bill Clinton celebrated the millennium on January 27, 2000, his last after eight helter-skelter years in the White House.¹⁰

      His tone was triumphant, not to say triumphalist. It was as if the United States had finally attained a state of economic and social perfection, nirvana now.¹¹ We were, he said to an applauding audience of senators and members of Congress, fortunate to be alive at this moment in history. Never before, Clinton went on, has our nation enjoyed, at once, so much prosperity and social progress with so little internal crisis and so few external threats. Never before, he said, have we had such a blessed opportunity to build the more perfect union of our founders’ dreams.

      This was, of course, political rhetoric. But it was not mere idle bragging. The United States really did enter the new millennium with impressive achievements to look back on, and exciting prospects for the future. The economy seemed to have overcome all hesitations. Clinton could claim, with some exaggeration, that under his administration the nation had achieved the fastest economic growth in more than 30 years. In sober truth, the economy really had created some 20 million new jobs in a few years. As a consequence, the number of poor people had fallen to the low-est figure in twenty years and the unemployment rate to the lowest level in thirty years. What was more, unemployment for African Americans and for Hispanics was also lower than ever before. For the first time in forty-two years, there had been budget surpluses in two consecutive years, and—the president accurately predicted—in the very next month America would achieve the longest period of economic growth in its entire history.

      That was not all. Economic revolution, Clinton claimed, had been matched by what he called a revival of the American spirit. That might be hard to measure. But crime, for example, was said to be down by 20 percent, to its lowest level in twenty-five years. The number of children born to teenage mothers had fallen for seven years in a row, and the welfare rolls, those stubborn indicators of hidden misery, had been cut in half. Such statistical measures of societal, let alone spiritual, advancement are always suspect. But at home there certainly was a widespread sense of pride and optimism.

      Abroad, the United States in 2000 was dominant in the world as never before. American military power was arguably greater, relative to all possible rivals, than ever. Even in 1945 the Soviet Union had formidable military forces under arms. At the beginning of the millennium the United States stood unchallenged. It had put down such truculent breakers of the peace as Iraq and Serbia with little help from allies and with few casual-ties. Less than two years later, American military supremacy was challenged once again, this time by terrorism. Once again, at least so far as war in Afghanistan and Iraq was concerned, it was confirmed.

      The American economy, at least temporarily, had outdistanced former rivals in Europe and Asia.¹² Moreover, never before, unless perhaps in the first few years after World War II, had America been so much admired around the world. American fashions, American music, even American movies, were seen as the last thing in cool. America basked in the prestige earned, from Budapest to Bangalore, by American domination of the new frontiers of computing, information technology, and the Internet. The continued rise of the stock market seemed to confirm that the American economy defied the law of economic gravity.

      President Clinton was quick to claim some of the credit for these achievements for his own administration. To renewed applause, he said, We have built a new economy, and proceeded to set forth his vision of a social utopia as well: We will make America the safest big country on earth, pay off the national debt, reverse the process of climatic change, and become at last what the Founding Fathers promised: ‘one nation, under God, indivisible, with liberty and justice for all.’ With dollars cascading into the U.S. Treasury in a profusion that was unimaginable when his second term began, commented R. W. Apple Jr. in the New York Times, Clinton spoke with all the expansiveness of a man who had hit the lottery.¹³

      The president’s euphoria was no doubt sharpened by relief, and his triumphant tone by an understandable desire to have his revenge on ruthlessly vindictive political opponents. Only weeks previously, after all, he had been acquitted in an impeachment trial before the United States Senate, the first chief executive to face that humiliating ordeal since An-drew Johnson more than 130 years earlier. He would not have been human if he had not taken advantage of the opportunity to confound his enemies and rub the doubters’ noses in his success.

      Yet Clinton’s millennium speech by no means reflected a mere personal or partisan version of how things stood as the twentieth century ended. As early as 1997, Fortune magazine, for example, hardly a mouthpiece for the narrow political contentions of Democrats, claimed that the U.S. economy was stronger than it’s ever been,¹⁴ something it could in truth have said at most points in the past fifty years. Business Week consistently preached the gospel of the new economy. Gurus like Nicholas Negroponte of the Massachusetts Institute of Technology and innumerable brokers drummed away at the idea that, between them, the Internet and the stock market had changed the rules of the game of success.¹⁵ From Wall Street the same message came drumming from the million hooves of Merrill Lynch, the thundering herd of people’s capitalism. The broker proclaimed in a circular to its happy investors, that this was Paradise Found: The Best of All Possible Economies—except, presumably, for the next day’s.¹⁶ Later Merrill Lynch admitted to the government that its salesmen had been urging clients to buy or accumulate stocks its analysts privately regarded as crap, a dog, and even a piece of shit.¹⁷ Late in 2002 ten banks, including Credit Suisse First Boston, Merrill Lynch, and Salomon Smith Barney, agreed to pay $1.4 billion in a settlement that revealed that published research on stocks was essentially bought and paid for by the issuer. One supposedly independent analyst at Goldman Sachs, the settlement found, was asked what his three most important goals for 2002 were. The response was 1. Get more investment banking revenue. 2. Get more investment banking revenue. 3. Get more investment banking revenue. Another analyst, at Lehmann Brothers, said that misleading the little guy who isn’t smart about the nuances was the nature of my business.¹⁸

      Much media discourse in the 2000 election campaign took as real the idea that the country as a whole was enjoying unimaginable prosperity. This was an exaggeration. It might be more credible in Washington or Manhattan, Boston or Seattle, or the San Francisco Bay area, than in some less favored parts of the country. It might be truer of lawyers, doctors, and editorial writers than of Nebraska farmers, laid-off Indiana machinists, or Hispanic immigrants to southern California, let alone African American single mothers on the South Side of Chicago. But it was true enough for enough people that it became the key signal of the year, and even of the decade of the 1990s.

      It was against this bass line of euphoria and optimism that Clinton moved to his peroration: After 224 years, he declaimed to his applauding audience—made up in its majority of the Republicans who had op-posed his policies every inch and actually prevented him from carrying out many of the policies he had advocated—the American revolution continues. We remain a young nation. And as long as our dreams out-weigh our memories, America will be forever young. That is our destiny. And this is our moment.

      LESS THAN TWO SHORT YEARS LATER, that shining moment was tarnished in many ways. Clinton’s Democratic heir, Al Gore, had been defeated in the 2000 presidential campaign. The election itself was so close that its result was doubtful through weeks of litigation. On balance it is likely that the victor, George W. Bush, was not elected. One of the most careful and authoritative of the many analyses of the election result concluded that Gore was denied victory by a Supreme Court opinion doomed to infamy and that the wrong man was inaugurated on January 20, 2001, and this is no small thing. No small thing, indeed, for a country that would be the teacher of democracy to the world.¹⁹

      At the heart of the optimism so fervently expressed by Clinton in his State of the Union Address, but very widely shared in the nation, were two beliefs that had been sharply challenged, if not discredited, within months. One was the upward march of the stock market, rewarding the talent and enterprise of the few but also spreading its beneficence over the many. The Standard & Poor’s composite stock price index, corrected for inflation, which trotted along modestly by comparison through the crash of 1929 and the boom of the 1960s and 1970s, soared dizzily from 1995 on to spike in the very month of Clinton’s millennium speech.²⁰ The second idea behind the irrational exuberance of the market was the confidence that the new technology of the computer and the Internet promised a New Economy. By early 2001, the Dow Jones index of common stocks had fallen from its high by some 40 percent. The Nasdaq index, dedicated to charting the heroics of the new technology stocks, had fallen even more catastrophically. The Nasdaq composite index, to be specific, which passed 5000 in early 2000, had fallen below 2000 by late 2001, or by more than 60 percent in less than two years.²¹ After the September 11 attacks, the markets rallied to the point where some investment analyses claimed to see the green shoots of a new bull market. Even if that were so, the idea that the new technology had simply abolished the laws of economic gravity had been exploded for good. And by the summer of 2002 the market had fallen to the point where it threatened the health of the economy as a whole.

      The other heartening economic statistics Clinton cited had also been swept away. By March 2001 the economy was technically in recession.²² Unemployment was rising, from 3.9 percent in October 2000 to 5.4 per-cent a year later. In October 2001 alone it rose half a percentage point, the biggest increase in a single month since February 1996.²³ And the economic climate was harshest for those very high technology sectors that had led the way in the boom of the later 1990s. Dot.com startups were worst hit. The major winners of the high-technology market—Yahoo!, AOL, Compaq, Sun, even Intel and Microsoft—all announced profit warnings, layoffs, even in some cases actual losses, and their stock fell heavily. Indeed, contradicting a central assumption of the boosters of the New Economy, the stock market would have done better without the new technology companies than with them.

      By the summer of 2002 any talk of a New Economy would have appeared fatuous. The Dow Jones indeed had fallen below 8000. Disillusion had spread far beyond the overhyped dot.com stocks to most sectors of the market. Worse, the collapse of Enron and World com, and serious problems in many other major corporations, had shaken public faith in Kenneth Lay of Enron, Bernie Ebbers of Worldcom, and Jack Welch of General Electric, all of whom, two short years earlier, had been credited with virtually magical powers. Those corporate meltdowns, in turn, ex-posed the collusive behavior of major accounting firms, especially Arthur Andersen.

      In the summer of 2002, the economist-turned-columnist Paul Krugman, writing in the New York Times, drew a political moral from the economic events: The current crisis in American capitalism isn’t just about the specific details—about tricky accounting, stock options, loans to executives, and so on. It is about the way the game has been rigged on be-half of insiders.²⁴

      As Krugman and many others pointed out, the Bush administration was full of insiders. George W. Bush’s secretary of the army, Thomas White, came from Enron, where he headed a division whose profits were manipulated to the tune of $500 million, and who sold $12 million of stock before the company collapsed. His vice president, Richard Cheney, was chair-man and chief executive of Halliburton, whose stock was one of the hottest counters in the boom, and where dubious accounting turned a loss into a profit. The president himself was not above suspicion. He had been a typical player in the same corporate world. He profited from insider knowledge to unload stock in his own company, Harken Energy. He made $15 million personally out of the sale of the Texas Rangers baseball club, which benefited from favors squeezed out of a suburban community government. And as governor of Texas, he allowed a friend and major political contributor, Tom Hicks, to benefit financially from the privatization of a large portion of the University of Texas’s substantial endowment.²⁵

      So

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