The New York Times-20080127-Old-School Economics

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Old-School Economics

Full Text (963  words)[Author Affiliation] Christopher Caldwell is a contributing writer for the magazine.

Why do presidential candidates touting their concern for the economy pose with factory workers rather than with ballet troupes? After all, the U.S. now has more choreographers (16,340) than metal-casters (14,880), according to the Bureau of Labor Statistics. More people make their livings shuffling and dealing cards in casinos (82,960) than running lathes (65,840), and there are almost three times as many security guards (1,004,130) as machinists (385,690). Whereas 30 percent of Americans worked in manufacturing in 1950, fewer than 15 percent do now. The economy as politicians present it is a folkloric thing.

If Republicans have had more luck talking about the economy for the last generation or so, it is because they were the less folkloric of the two parties. Broadly speaking, they cut taxes and regulation and trusted that entrepreneurs would hasten the arrival of the economy to come. There were Democrats who did the same, but they shared a party with others who were nostalgic for a disappearing world, reflexively backing unions and fighting management. Republican optimism beat Democratic nostalgia.

This campaign season, Republicans no longer look so confident. Mike Huckabee suggested to a group of Detroit executives that instead of talking to people in the corporate boardroom, you talk to people on the line. He aspires to remind Americans of the guy they work with, not the guy who laid them off. The latter guy, in Huckabee's view, resembles Mitt Romney, who may have triumphed in Michigan, but only after promising to restore 250,000 factory jobs lost to layoffs. Republican rhetoric about trusting the transition to a new economy is not allaying fears as it once did.

The reason is simple. It is that the transition is over. The new economy we have been promised is in place. While the economy of 1998 was a world away from the Internet-less, land-line-dependent, non-Nafta, I.B.M.-Selectric-powered, partly Communist world of 1988, today's economy is fully recognizable as the one we inhabited in 1998.

Today's economic anxiety is not the same anxiety that simmered between 1980 and 2000. Back then, recessions and slowdowns were understood as the pangs of a new economy struggling to be born. But the recession we now seem to be entering is to the information age what the recession of, say, 1957-1958 was to the industrial age -- a normal recession in the midst of an economy with stable bases, an economy that (to use a current cliche) is what it is. The jobs of the future that were promised 20 years ago are here. Choreographers, blackjack dealers and security guards have replaced factory workers as the economy's backbone, if not yet its symbol.

New economies have always required a kind of initiation fee of those who would participate fully in them. As the historian Richard Hofstadter showed in The Age of Reform, the aftermath of the Civil War was marked by paeans to the prosperity that would arise from technological change. The 19th-century farmer went to great lengths to join it. His demand for expensive machinery, Hofstadter wrote, his expectation of higher standards of living and his tendency to go into debt to acquire extensive acreage created an urgent need for cash and tempted the farmer into capitalizing more and more on his greatest single asset: the unearned appreciation in the value of his land. These problems will be familiar to many a 21st-century security guard or Wal-Mart cashier. They are the problems not of someone left behind in the old economy but of someone struggling in the new.

Economic orders have life cycles. Policies designed to unleash business in a fledgling economy offer diminishing returns in a developed one. To have overregulated or overtaxed Bill Gates 20 years ago might have killed a goose that still had many golden eggs to lay. But it seems probable that 20 years hence, regardless of tax policy, Microsoft will be intact, thriving, based in the United States and doing roughly what it is doing now.

Yet Republican prescriptions have changed not a whit. Mitt Romney recently attacked the latest federal energy bill, which mandates average fuel-efficiency of 35 miles per gallon, as an impediment to Detroit's ability to crank out sport-utility vehicles. He is quite right. But does he mean to say we're going to get out of our economic doldrums by driving 10-mile-a-gallon cars in a world of $100-a-barrel oil?

All Republican candidates want to make President Bush's deep tax cuts permanent, and even to expand on them. Rudolph Giuliani has promised to pass the largest tax cut in U.S. history. But this is yesterday's policy trying to pass itself off as tomorrow's. Americans are evenly split on whether taxes ought to be raised back to pre-Bush levels. Large majorities would gladly pay more in taxes for various purposes (notably more access to health care). Voters, it seems, have begun asking of entrepreneurs and their champions what they asked of hippies around 1971: Aren't you liberated enough already?

Cutting taxes and slashing regulations were appropriate strategies for managing a transitional economy. But we no longer live in such an economy. This does not mean that Republicans need to embrace a single-payer health system or subsidized day care. But neither can they go on automatically favoring the hypothetical needs of tomorrow's entrepreneurs over the real needs of today's dental hygienists and landscape gardeners. The future is now, as the late Redskins' coach George Allen used to say. The promise that prosperity is just one more tax cut or one more rescinded regulation away is a rapidly depreciating rhetorical asset.

[Illustration]PHOTO: Gallery Stock (PHOTOGRAPH BY STEPHEN SHORE); CHART: WORK IN PROGRESS: Numbers of employees in selected professions. (Source: Occupational Employment Statistics survey, Bureau of Labor Statistics; Chart by Charles M. Blow)