BOOKS AND ARTS OCTOBER 4, 2010
The Battle: How the Fight Between FREE ENTERPRISE And BIG GOVERNMENT Will Shape America’s Future
By Arthur C. Brooks
(Basic Books, 174 pp., $23.95)
If there is one dream of the Obama presidency that died a swift, merciless death with no hope of resuscitation, it was the hope that President Obama would usher in a new era of bipartisan technocracy. As the president explained over and over, he believed he was not imposing an ideological agenda but simply responding to problems. “I’m not interested in another old debate about big government versus small government,” he would say. “I care about whether government is meeting its responsibilities to the people it represents.”
The problems that Obama proposed to address—economic collapse, global warming, the costliest and cruelest health care system in the advanced world—could hardly be called mere excuses to impose liberal ideology. They were undeniably, empirically, crises. To be sure, conservatives and liberals had different means of attacking these problems; but there seemed to be every reason to believe that the ideological gulf could be bridged. George W. Bush had initiated bailouts of the finance and auto industries in 2008, and he had employed Keynesian fiscal stimulus in 2001, when the case for doing so was nowhere near as strong. Obama’s health care plan relied upon private insurance and resembled the plan that Republicans had formulated in 1993. His cap-and-trade program closely resembled a proposal by John McCain. The new president genuinely seemed to believe that he and the opposition could look upon the same set of facts, consult with the economic experts, and reason together toward agreeable solutions.
We now know that each of Obama’s proposals was met by overwhelming and often hysterical opposition. In his new book, Arthur C. Brooks, the president of the American Enterprise Institute, both advocates for and offers anthropological evidence of the right’s embrace of totalistic rejection. The Battle is the most celebrated conservative book of the year, and probably the most feverishly promoted, Brooks having spun it off into at least half a dozen op-ed pieces, numerous lectures, some dozen interviews, and gobs of praise in the conservative press from the likes of Paul Ryan, David Brooks, and many others.
The premise of The Battle is that America is fighting a “culture war,” but this culture war is not over social issues—it is over economic ones. A culture war, of course, is a zero-sum fight between two antithetical values in which compromise is impossible. That is how Brooks portrays the conflict between statism and free enterprise that has been unleashed by Obama’s radical attack on American values. “These competing visions,” warns Brooks, “are not reconcilable: We must choose.”
It is a curious premise. After all, economics is very different from social issues precisely because it is rife with positive-sum outcomes (i.e., prosperity) and because it pertains to technical questions amenable to data and difference-splitting. What’s more, Democrats do not advocate communism and Republicans do not advocate anarchy. Both parties favor some mix of market and state. Even Paul Ryan, whose purist small-government vision has enthralled the conservative movement (and who forms a mutual admiration society with Brooks), advocates a federal government that consumes 19 percent of the economy. Democrats advocate a government that consumes, in the long run, around one-quarter of the economy. Is it really not possible to imagine a compromise between these two visions?
It depends. If you conceive of Obama’s domestic agenda as Obama does, as an attempt to solve technical challenges such as rising carbon-dioxide emissions or a health care system that delivers mediocre outcomes at exorbitant cost, then the frenzied and unremitting Republican opposition is an expression of blind fanaticism and partisan calculation. But if you view the situation as a culture war, as Brooks does, then unremitting opposition is the only permissible response.
Indeed, Brooks sounds certain that Obama and the liberals likewise see themselves as engaged in a culture war. Rush Limbaugh has asserted, as have other conservatives, that Obama’s economic stimulus program is not even intended to address the economic crisis at all, because economic panic benefits Obama. Brooks does not go quite this far, but his argument is at the very least consistent with Limbaugh’s. The only motive that he imputes to the president and the Democrats is hatred for rich people and the free enterprise system. Did Obama appoint top economists to his administration? Well, yes, concedes Brooks—but “he had to if he wanted the public to believe . . . government understands the financial crisis and can solve it with aggressive action.” That is, not because Obama thinks that top economists can help him develop more effective policies. And when he describes the Democrats’ response to the economic crisis, it is not as an application of misguided Keynesian policies, but as a plot to increase their own control. “Obama’s objective has been to tell a story about the financial crisis that leverages it into a game-changer for American culture,” he declares. Brooks does not entertain the possibility that Obama blames deregulation for the financial crisis because he actually believes that deregulation caused the crisis.
There is obviously no reason to compromise with Obama to solve a problem if you think that the problem is merely a pretext for him to seize power. In his belief that American economic policy is a binary choice between two indivisible philosophies, and his immunity to appeals to break down issue disagreements into specific empirical problems, Brooks perfectly captures the Republican spirit of the moment.
The Battle is organized as an answer to a mystery. Approximately 70 percent of the public thinks that “generally” people are better off in a free-market economy with ups and downs. An even higher percentage has a positive image of free enterprise and entrepreneurs. “This is a puzzle,” concludes Brooks. “If free enterprise is so dominant in America, how did someone with so little regard for free enterprise get elected president of the United States in 2008?” But this is not a puzzle at all. Obama almost certainly believes that a free enterprise system is generally superior, and that entrepreneurs are wonderful. Obama has called himself an “ardent believer” in free enterprise, and he follows in a long tradition of Democrats who believe that the free enterprise system functions best with regulation of its excesses.
Brooks assumes that Obama’s policies abrogate all vestiges of the free enterprise system. But he is operating with a purist definition of free enterprise, and it is clearly not a definition shared by Obama or by those who voted for him. Nor do the poll questions that he cites define “free enterprise” as incompatible with universal health care, progressive taxation, regulation of Wall Street, and so on. It is simply bizarre to read a book whose central question rests on such an obviously flawed premise. At no point does Brooks consider the possibility that Obama is not a to-the-death opponent of capitalism. Instead he charges ahead with the premise that Obama heads a “30 percent coalition”—that is, the dissenters from the 70 percent who believe in capitalism and entrepreneurship—that has somehow seized control of American politics despite its hatred for a free economy and entrepreneurship.
Brooks does attempt to show that Obama hates capitalism, but his proof is rather unpersuasive. “Here’s what you need to know about President Obama’s views about the free enterprise system,” he writes, before unveiling the smoking gun, the killer piece of data demonstrating the president’s disdain for free enterprise. It consists of a single passage in a commencement address that Obama delivered at Arizona State University in May 2009. Here is the passage that Brooks cites:
You’re taught to chase after the usual brass rings, being on this ‘who’s who’ list or that top 100 list, how much money you make and how big your corner office is; whether you have a fancy enough title or a nice enough car. . . . Let me suggest that such an approach won’t get you where you want to go. It displays a poverty of ambition.
That small bit of advice in one speech—a banal observation that money and fame are not everything—is the entirety of Brooks’s proof!
Does Brooks believe that money and fame are everything? Brooks certainly does not cite the numerous times Obama has praised the free enterprise system or the importance of entrepreneurship. Nor, for obvious reasons, does he mention that Obama’s speech at Arizona State was not an attack on the idea of getting rich, but rather an attack on following conventional and short-term measures of success. Indeed, in that very speech Obama extolled “two guys in a garage named Hewlett and Packard” as visionary entrepreneurs setting the standard for the kind of fresh thinking he was urging upon his young audience. In short, “what you need to know about President Obama’s views about the free enterprise system” tells you exactly nothing about his views about the free enterprise system.
Proceeding from this exceedingly flimsy reed, Brooks sketches out the apocalyptic “battle” between the diametrical points of view. When he says at the outset that there is no middle ground, he means it. Either you utterly abhor even the mildly redistributive character of the United States tax code, as he does, or you abhor capitalism itself.
The liberal platform, in Brooks’s description, strives not for slightly less income inequality, but for “income equality.” The “30 percent coalition” desires a “world in which we all end up in roughly the same place.” Brooks perceives no meaningful distinction between liberalism and Marxism. Here is his description of Bill Clinton’s economic worldview: “Private markets are never just. They are always a ruse for hurting the vulnerable and helping the powerful—and government always needs to fix the problem.” The italics are mine. The wild exaggerations are his.
In one passage, Brooks categorizes the Democrats as advocates of leveling down the rich: “For Obama and his colleagues, bringing the top down is as good as bringing the bottom up, because greater equality is the goal, and it doesn’t matter all that much how you get there. One influential left-wing economist explains it like this. . . ” Who is this influential left-wing economist? Biden adviser Jared Bernstein? Larry Summers, perhaps? The footnotes reveal him to be a British economist named Richard Layard. He may not be a totally obscure figure, but the notion that his work can be cited as indicative of the philosophy of the Obama administration is, to put it mildly, far-fetched.
Brooks cites one other example of Democrats’ alleged hatred for the rich:
For the sake of their notion of fairness, leaders of the 30 percent coalition are almost as happy to bring the top down as they are to push the bottom up. Occasionally, some of them will admit it. Political philosopher Michael Walzer advocates “market constitutionalism,” which would, like constitutional democracy, “set similar limits on the economic power of the wealthiest men and women.” He advocates this simply because he is offended—and believes we should be, too—by the idea of people having too much money.
Now, Michael Walzer may be a brilliant and esteemed philosopher, but even if he were inclined to boast, he would not call himself a “leader” of the Democratic coalition. And the essay referred to by Brooks says nothing of the sort. Walzer argues that limiting the rewards of economic success reduces the incentive to flout economic rules, just as limiting the power of elected officials reduces the incentive to steal elections. Nowhere does Walzer state, hint, or imply that he is offended by the idea of people having too much money. This is a total fabrication.
In his general approach, Brooks is a prototypical member of the modern Republican elite. His ideology is rooted centrally in the class war, a struggle between what he calls “the makers” and “the takers.” He inhabits an imaginary world in which the former are being hounded nearly to extinction by the latter. “At some point,” he sorrowfully predicts, “the rich (as defined by the 30 percent) will pay all the income taxes in America. For the 30 percent coalition, this is fair and just.”
Brooks’s portrait of a world in which the rich are ruthlessly exploited in the name of absolute equality is long on hysterical rhetoric and very short on data. What little data Brooks presents is almost invariably wrong. “In America,” he declares, “the top 5 percent of earners bring in 37 percent of the income but pay 60 percent of the taxes.” This is false. The top 5 percent of income earners pay 38.5 percent of all taxes. And a system where the richest 5 percent earn 37 percent of the income and pay 38.5 percent of the taxes is not, I would submit, a draconian left-wing imposition.
Where does Brooks get this wildly wrong figure? The number he cites describes the share of federal income taxes paid for by the richest 5 percent. But the American tax system is a mix of regressive and progressive taxes. State and local taxes, as well as federal payroll taxes, tend to levy higher rates on the poor and middle class than on the rich. The income tax, which is steeply progressive, helps to tilt the balance of the burden back in the other direction. When conservatives portray the tax code as unfair to the rich, they usually cite just the income-tax burden, calculating that their audience will fail to notice that “income taxes” do not mean taxes as a whole. Brooks uses the term “taxes” when he means “income taxes.” He has fallen for his own ruse.
Brooks further claims that the oppression of the rich is getting worse. “From 1986 to 2006,” he complains, “the proportion of taxes that the top 1 percent of income earners paid grew from 26 percent to 40 percent.” A footnote points to a table compiled by the Tax Policy Center. I do not doubt the accuracy of the figure. But why are the very rich paying a higher share of the tax burden?
If you consult two other lines in the same Tax Policy Center table, you can see that the conclusion is the opposite of the one that Brooks draws. From 1986 to 2006, the highest-earning 1 percent of taxpayers went from collecting 11 percent of national income to collecting 22 percent of national income. Meanwhile, their average tax rate dropped from 33 percent to 23 percent. So: their tax rate fell sharply, but their share of income rose even more sharply, and the net result is that they have paid a higher share of the tax burden. This is Brooks’s evidence that the system has gotten too redistributive!
In opposition to the punitive leveling agenda of the 30 percent coalition, Brooks puts forward what he calls the “moral case” for free enterprise. This case rests upon “equality of opportunity.” Brooks is unequivocal about the centrality of equality of opportunity to his argument. “As long as everyone has the same opportunities,” he argues, “the free enterprise movement should have no qualms about trumpeting our values as deeply American and profoundly fair.”
Equality of opportunity is an extremely radical, even utopian proposition. The Battle betrays no signs whatsoever of having considered what equality of opportunity would mean. It is, alas, a nearly impossible ideal to fulfill, since one of the most valued ways for parents to spend their wealth is to impart greater opportunity to their children. Affluent parents can pass on money or assets to their children. They can finance private education; subsidize internships, travel, or other valuable opportunities; raise their children in safe communities that help impart middle-class values; or simply offer them stable two-parent families. All these things create massive inequality of opportunity.
Just how hard is it to go from poor to rich in the United States? A person born into the poorest fifth of the income distribution who manages to obtain a college degree is less likely to wind up in the top fifth of the income distribution than a person who was born into the top fifth but did not obtain a college degree. That is to say, even after the financial and social deck has been stacked so as to impede the poor child’s educational opportunities and ease the affluent child’s educational opportunities, the overcoming of those odds is still not enough to erase the advantage of a favorable starting position in life.
Creating actual equality of opportunity—that is, a world in which a child of extremely poor parents is just as likely to succeed as an equally talented child of rich parents—is probably an unrealizable goal. Even creating substantially more equality of opportunity would require, at a minimum, confiscatory inheritance taxes and dramatically more egalitarian educational policies. Of course, Brooks does not advocate anything like such a radical program, which only a handful of left-wing utopians would favor. His advocacy of “equality of opportunity” is limited to assuming that such a thing exists already (but is under attack), as a justification for unchecked income inequality.
Brooks does not attempt to demonstrate that the United States offers equality of opportunity, or any faint approximation thereof. The closest he comes to doing so is his airy assertion, in the midst of a peppy section extolling equality of opportunity, that “Americans are the most egalitarian people in the world.” If this is meant to describe the ability of a poor person to get rich, the statement is flatly untrue: intergenerational mobility is lower in the United States than in any other advanced nation save Great Britain. If this is not meant to describe any specific possibility of going from poor to rich or vice versa, then it is mere puffery, and Brooks has not even bothered with any serious assertion that equality of opportunity exists. Remember, Brooks argues that extreme income inequality is morally justifiable only if equality of opportunity exists. But given that opportunity in the United States is far from equal, and that there is no realistic plan to make it anything remotely close to equal, this leaves Brooks’s moral argument against redistribution in shambles.
The central question of The Battle is how the “30 percent coalition,” despite its anti-capitalistic, anti-entrepreneurial views, managed to gain control of a democratic political system. The feverish, incoherent explanation that Brooks offers is a nice illustration of the extent to which Republicans view Obama’s presidency not merely as wrong, but as essentially illegitimate.
Brooks defines the 30 percent coalition as academics, the media, Hollywood, minorities, young people, and a few “predictable geographic enclaves such as San Francisco, California,” along with Seattle, Boulder, and the like. (If you have ever visited those places, you know how deeply entrepreneurship is despised. Just try attending a party there and admitting that you’ve started, oh, a software business. They will spit in your face.) Versions of this vaguely conspiratorial theory, which portray the Democratic coalition as a minoritarian and fundamentally alien and cunning alliance, have been circulating for years. Brooks updates the theory to explain the astonishing fact that those whom Republicans saw as a permanent minority won a majority. Having suggested his “puzzle” of how an opponent of free enterprise could have won the presidency of a staunchly pro-free enterprise country and ignored the obvious explanation—that Obama does not disdain free enterprise—Brooks settles upon a different one. “The real answer,” he concludes, “is the economic crisis of 2008–2009.”
The 30 percent coalition won power, Brooks argues, by seizing upon the economic crisis in 2008. Like many conservatives, Brooks believes Obama could not have won the election if not for the collapse of Lehman Brothers. The argument goes like this: in early September 2008, John McCain had the lead in the polls. After the financial crisis Obama took the lead, and never lost it. Ergo, Obama won as a circumstantial fluke result of a once-in-a-generation disaster.
The argument, while offering comfort to conservatives unable to understand how the country they loved could elect such an alien figure, ignores reams of confounding facts. Obama led in the polls almost the entire campaign, a predictable result given the unpopularity of the incumbent party and terrible wage growth of the previous year. McCain briefly seized the lead in early September because that was the aftermath of the Republican convention, which almost always creates a temporary polling bounce. Numerous other events—a series of disastrous interviews by Sarah Palin, three presidential debates which the public overwhelmingly believed Obama won, and the simple passage of time—helped to ensure that McCain’s bounce disappeared.
In Brooks’s narrative, though, Obama and his 30 percent coalition have managed to gain control of the government because the economic crisis temporarily confused the capitalism-loving public. Then they managed to enact their agenda through a campaign of intimidation. “When Republican Congressional leaders objected to the scale of the spending, the new president sought to silence them with two words of fact: ‘I won,’ ” Brooks recounts. “Across the country, those who complained or urged restraint were marginalized.”
Silenced? Marginalized? There is a distinctly Chomskyite ring here, an imputation that we have a public debate that is free in name only. But Chomsky’s opinions are mercifully confined to a few cult books, alternative broadcasts, and tiny-circulation magazines, so that his radical critique of American democracy, his self-pity, is at least psychologically understandable, if not philosophically or politically persuasive. Brooks’s worldview, by contrast, blares twenty-four hours a day on Fox News, talk radio, and countless other organs of mass communication. Chomsky may misunderstand the cause of his ideological marginalization, but he is not imagining the fact of his marginalization. Brooks and his positions, by contrast, are everywhere to be found. His claim that they have been silenced is comic.
The notion that Obama has shaken the very foundations of the American system quickly runs up against the fact that most elements of his allegedly radical left-wing agenda—establishing a health care entitlement, bailing out the automobile and financial industries—were first undertaken, with only modest complaining on the right, by none other than the Bush administration. Conservatives are happy enough to denounce Bush as well, of course—all the better to show that true conservatism did not fail, because it was never tried.
Brooks takes this line as well. “The sad truth is that the 30 percent coalition did not start governing this country with the advent of Barack Obama, Nancy Pelosi, and Harry Reid,” he laments. “They’ve been in charge for years.” So wait. Now this small minority has been governing the country not just as a result of a “temporary panic,” but for years? And a collection of hippies, minorities, and liberal professors was somehow pulling the strings of the Bush administration?
If this explanation appears muddled and unsatisfying to you, you are not alone. The most inadvertently damning indictment of Brooks’s argument was made by Newt Gingrich, a senior fellow at AEI. Writing generously of his boss, Gingrich gently notes that “he sets the stage for someone (maybe another AEI scholar) to develop the historical explanation of how this usurpation of the people by the elite came to be.” But of course that explanation is supposed to be the central argument of Brooks’s book. And more puzzlingly, this damning passage appears in Gingrich’s foreword to The Battle. It is very odd to see a book purporting to explain why an event happened that includes a foreword expressing the desire that some other author step forward to explain why the event happened.
One other oddly subversive detail stands out. Brooks cites a study showing that “only 8 percent of economists can be considered supporters of free-market principles; less than 3 percent of them, strong supporters.” This fact strikes me as a devastating indictment of Brooks’s worldview.
He has it backwards here. Economics may not be a purely technical subject, like engineering, but it is a highly technical field, and the overwhelming rejection of Brooks’s simplistic market model by economists suggests to me that perhaps his model is flawed. All that Brooks takes away from this statistic is evidence of academia’s liberal bias. If economists reject his economic principles, all the less reason to trust economists.
Brooks is not exactly hostile to economists—he employs several of them at his think tank—but his central belief, on display throughout his book, is that ideology trumps all. In a recent op-ed piece in The Wall Street Journal, co-written with Paul Ryan, Brooks defends his method of interpreting all public policy questions as a binary culture war between freedom and socialism. It is true, he concedes, that some government programs may sound sensible and attract public support:
Individually, these things might sound fine. Multiply them and add them all up, though, and you have a system that most Americans manifestly oppose—one that creates a crushing burden of debt and teaches our children and grandchildren that government is the solution to all our problems.
Which is to say, it does not matter to Brooks if an individual program makes apparent sense. More government is simply more government. The “road to serfdom,” write Brooks and Ryan, “starts with smooth-talking politicians offering seemingly innocuous compromises, and an opportunistic leadership that chooses not to stand up for America’s enduring principles of freedom and entrepreneurship.” No compromise is enough of a compromise, and no innocuous program is truly innocuous.
And this, of course, is why Obama’s notion of technocratic compromise has failed to find a willing partner. No amount of evidence or technocratic brainpower can convince Brooks that a particular problem requires some new government intervention. Oh, sure, he might grudgingly accept already-existing government programs, which after decades of existence can no longer be portrayed as socialist plots. But no new endeavor of this sort can be tolerated. The only response is to throw your body against the gears of the machine and bring it to a halt. Never mind what comes crashing down as a result of your simpleminded heroism.
It would not be a surprise to find such a frankly anti-empirical attitude expressed by an angry demonstrator. But Arthur Brooks is the president of a think tank—in fact, the most intellectually prestigious think tank associated with the conservative movement. What we have here, then, is the emergence of the anti-empiricist think tank president. And this is a notable signpost, not on the road to serfdom, but on the road to idiocy.
Jonathan Chait is a senior editor of The New Republic. This article will run in the October 14, 2010, issue of the magazine.