The 70’s are a Roadmap for Our Social, Economic and Political Future

For all the talk about current chaos, it is rarely the case that, “This time is different”.

Rather than throwing up our hands in despair at “unprecedented times” or impugning our opponents, we need to remind ourselves that political divisiveness, social unrest, and economic hardship are nothing new — then we can learn and reasonably assess the way forward.

The 60’s and the 70’s were times of turmoil

In November of 1969, the “Moratorium to End the Vietnam War” drew 500,000 demonstrators to the nation’s capital with other large demonstrations around the country. The following May, the White House was ringed by city buses to repel attempts to storm the Executive Mansion. Some present-day commentators (see for example, Clara Bingham, “Witness to the Revolution”) described the atmosphere as close to an overthrow of the government.

Concomitantly, numerous cities had paroxysms of rioting and destruction due to the social and economic repression of minorities. In addition to cities, the Cuyahoga River in Cleveland burned on several occasions as highly polluted water turned flammable. Smog was intense in large cities — the sun was a dim orb and the air was filled with particulate matter. Even the economy stalled — by the end of the 70’s, interest rates exceeded 20%.

Many felt American society had lost its way. One explanation was that our society had been taken over by a military-industrial complex — oblivious to ethics and societal costs in pursuit of profits.

While the times were ripe for change, it was anything but smooth or uncontested.

Despite lying during the 1968 campaign (yes, other presidents lied) about having a plan to end the war, the Nixon Administration prosecuted it for an additional 6 years before he was removed by the Watergate Scandal. The American public did not immediately embrace those who protested the war. Instead, Nixon and his minions smeared the opposition (sound familiar) and pointed to a “Silent Majority” that supported the war and the cultural status quo. Nixon won re-election in 1972 by an electoral landslide against the peace and change candidate, George McGovern.

But political healing did take place — Nixon was forced from the White House and the war ended when the North Vietnamese rolled into vanquished Saigon. The Republican candidate for president in 1976, the unelected President Gerald Ford, sought healing. While he was defeated, his opponent, Jimmy Carter was a political outsider and perceived as an agent of change.

The economy became more fractured as the 70’s wound on — it went from sluggish to the edge of disaster. Inflation spiked in the early 70’s, from too much fiscal stimulus from the war’s costs and new social programs — Medicare, Medicaid, and the War on Poverty to resurrect the cities were initiated. Wage and price controls were tried but failed. The Arab Oil Embargo led to long lines to buy gas, an enormous increase in the price of gasoline, and the economy was riven by inflation. By the end of the decade, home mortgage rates were at 15%. Manufacturing ground to a halt, and Chrysler Motors needed a bailout by the government to avoid bankruptcy.

But progressive economic proposals were never legislatively enacted. Since the Depression and the social and economic programs of the New Deal, the economic theories of John Maynard Keynes had been ascendant. However, the inflation of the 70’s seemed without a solution from Keynes or economic progressives. Government intervention, a key aspect of Keynesian theory and the driving force of socialist economies, had no answer for the inflation unleashed by astronomical increases in fossil fuel costs. Instead, the new monetarism of the Chicago School of Economics and Milton Friedman gained adherents. The Republican right lead by Ronald Reagan portrayed government as being the source of problems, not the solution.

From an economic policy standpoint, it is hard to overstate the future significance of policies by Reagan and the Federal Reserve Board at the beginning of the 80’s. The Federal Reserve Board instituted interest rates topping 20% and inflation was tamed. At the same time, Reagan pursued “Supply Side Economics”, which touted reductions in income taxes as key to restarting the economy. (All income earners got lower taxes, but the wealthy did best -the highest marginal tax rate on income went from 70% to 28%!)

The success of the economic measures is inarguable. The economy picked up in the early 80’s and growth continued for the rest of the 80’s and 90’s.

The economic changes significantly influenced the political environment. The new Republican slogan directed at Democrats became that they were, “tax and spend liberals”. The slogan persists to the present, with tremendous success. Walter Mondale, who promoted a tax increase to close the budget deficit, was annihilated by Reagan in 1984. Clinton and Obama enacted moderate tax increases, but Clinton but cast himself as a “New Democrat” by restraining spending. Conversely, Republicans enacted three more tax decreases between the second Bush and Trump and set the austerity tone, led by the Tea Party.

LESSONS FROM THE 70’S

Trying to unwind a decade so chaotic and multi-faceted is complex. Nevertheless, it appears the majority of the American public is socially liberal, but fiscally conservative.

Social Progress Took Place

Vast problems remain in race relations and discrimination persists, but some African-Americans have succeeded financially, politically, and culturally beyond what might have been imagined at the dawn of the 70’s. The same can be said about women in society. Gay marriage was unfathomable in the 70’s. The polluted Great Lakes were cleaned up, and air quality in cities is much improved. Many have tried to block these changes or to roll things back, such as with abortion. However, the social chaos of the 70’s seems to have led to major changes in American society. Furthermore, present calls for progressive social change find large sections of the public who are supportive. It seems like the tide of history is against attempts to slow down social change.

Economic Changes were fostered by Conservatives, not by Progressives

One looks in vain for progressive economic changes brought about by the 70’s. While government spending has grown, the demonizing of government by Republicans and the pervasive dissatisfaction with government demonstrate that growth in spending was by stealth or the result of social changes rather than overt desire to expand government.

The early 70’s saw some call for emulating the social and economic success of social democracies in Europe. No steps whatsoever were taken in the U.S. to mimic socialist economies, or even to implement industrial policy such as that in Japan. And the stagnation of Europe has taken away evidence to support implementing socialist policies.

From the early 1900’s to the 70’s, the government had a robust regulatory presence, normally associated with progressive economic agenda. Numerous regulations subsequently were rolled back. Starting with airline deregulation, paradoxically started by the Democrat Carter, it spread to other areas, most notably in antitrust. Recent years have seen consolidation in industry after industry waved through government antitrust agencies, while possibly restraining competition.

The current progressive economic agenda has been narrowed to tax increase proposals, but the experience since the 70’s does not hold out great hope for that agenda. Rather, the opposite, tax decreases, have been the rule.

Absent a major trauma or calamity, it is hard to envision significant tax increase programs succeeding. Medicare for All may entail major changes in taxation, which may torpedo proposals. Ditto the Green New Deal. Calls to raise the marginal tax rate to 70% for incomes over $10 million and taxes on wealth face the same uphill battles.

CONCLUSIONS AND PREDICTIONS

Nothing here is to advocate against progressive economics.

Per the Wall Street Journal, “…the richest 0.1% now own 19% of national wealth, almost triple the concentration of the late 1970’s…” (note that date and recall what has transpired). Taxes on the wealthy should go up, antitrust needs to be reinvigorated, and the middle class needs to be resuscitated. But historical precedent and the success labeling the left as reckless and spendthrift will make a progressive economic agenda politically difficult to implement. For progressive economics to succeed, measured, moderate steps are more likely to find support. Progressives also must go on the offensive by pointing to the increased wealth concentration and mammoth increases in the national debt caused by multiple tax decreases.

More hopefully, progressive social agendas have a much higher chance of success, based upon historical changes.

The political landscape is likely to remain divided, though may be less acrimonious. While the animosity cultivated by Nixon subsided, the country remained politically divided and the Presidency and the Houses of Congress were swapped numerous times. Given the political stasis created by the enormous amounts of money donated to and expended by the political parties, it seems doubtful that the mere departure of Trump or the changing of the Old Political Guard will be enough to lessen political dysfunction.

The Ship of State in Stormy Seas (Image — Pixabay)

Interested in Economics, Philosophy, Politics, Business, and Religion. I believe we can learn from each other.

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