Remember the “new economy”?
It wasn’t supposed to be this way
Who needs another post-mortem on the 2024 election? As I wrote in my Nov. 29 newsletter, small bore analysis has some value, focusing on what might’ve tipped the balance to Kamala Harris by a point or two in the battleground states. But as time passes, the small stuff will seem less important. It is better to widen our lens – to lengthen our perspective – to understand the origins of the Age of Trump.
To this end, historian Nelson Lichtenstein returned to the podcast on Tuesday to talk about the roots of our working-class discontent after things looked so promising only a generation or two ago.
Lichtenstein is the author of a book I’ve mentioned often, A Fabulous Failure: The Clinton Presidency and the Transformation of American Capitalism. Our story begins – as do many “how did we get here?” stories nowadays – in the headiness of the unipolar moment.
It’s April 2000. President Bill Clinton is kicking off a White House conference on the “new economy.” Entrepreneurial innovation, deregulation, and new technologies – led by the personal computer and the internet – would fundamentally transform every area of economic life for the better: trade, finance, the stock market, labor-capital relations, monetary policy, government investment, everything.
“I believe the computer and the internet give us a chance to move more people out of poverty more quickly than at any time in all of human history,” Clinton said to the conference of economists, bankers, and techno-optimists. Lichtenstein cites this statement in his epilogue – and you will also hear the soundbite when listening to the podcast.
A “wondrous high-tech tomorrow”
Clinton’s words are remarkable for their optimism – or faith – that a rising tide would continue to lift all boats. The 1990s were a time of economic prosperity, but as Lichtenstein persuasively argues, the tenets of the “new economy” were built on illusions and helped lay the groundwork for disaster.
The first disaster struck shortly after Clinton left office. WorldCom went bust in July 2002, a consequence of the telecom industry deregulation. Just as when he signed the bipartisan NAFTA in 1993, Clinton touted the bipartisan Telecommunications Act of 1996 as revolutionary legislation that would lead to a better tomorrow without regard to potential drawbacks.
Has it all been so bad? Of course not. Life without the internet is simply unimaginable. Free trade has benefited us, too. Cheap imports make life more affordable. And the primary form of retirement savings – the 401(k) – has reaped the bounty of a booming stock market. I recall the day in 1998 when the Dow Jones Industrial Average topped 10,000 for the first time (I was doing newscasts at a small radio station in Pennsylvania). Today the index has surpassed 43,000!
Fortunes were made – and lost. Asset bubbles – and the catastrophes caused when burst – have defined economic history since 2000. The dot-com bubble. The telecom bubble (see Lichtenstein p. 413). The subprime mortgage bubble. Is crypto next? If not crypto, it will be something else.
Arguably most relevant of all when it comes to understanding today’s working class angst is seeing the way the “new economy” wound up being a lot like the old economy. Capital continued to seek out cheap labor. Manufacturers built new factories in China. In the U.S., “when it came to sheer numbers, occupational growth was still concentrated in low-wage, low-skill jobs in retail trade, food preparation and restaurants, hospitals, nursing homes and home health care, janitorial services, and offices” (p. 439). Meanwhile, organized labor in the private sector shrank. The unionized labor rate (private sector) is 6 percent today.
“Everyone from Alan Greenspan on the right, the head of the Federal Reserve, to Robert Reich on the left, were touting that a new economy meant old issues… were dead. We didn’t have to deal with them because the new economy was solving problems,” Lichtenstein said of the hopes tied to the advent of information technology and “neoliberal” globalization.
“This is true of all social prognosticators. Something new does happen. It is real. It is new. Cheap satellites or electric cars or A.I. And so they say that’s going to change everything – all 130 million jobs in America. You can have a new technology or innovation, but the overwhelming majority of people will still do what they were doing,” he said.
“Intellectuals project these transformations that are way beyond what’s happening. And maybe it’s in human nature to do that.” The historian mentioned how Robert Reich once envisioned computers turning Americans into knowledge workers. “That’s still a small minority of all American workers.”
Among the subjects we discuss on the podcast are: the absence of organized labor in the “new economy” vision; why Bidenomics fell flat; the problems of techno-optimism; the benefits and drawbacks of free trade; the importance of supply chain globalization; the legacy of the New Deal.
And here is some further reading:
Why Bidenomics Did Not Deliver at the Polls by Dani Rodrik (Project Syndicate).
The Decline of Union Hall Politics by Michael Kazin (Dissent)
My review of “A Fabulous Failure” for The Washington Times.
Goodbye? Good riddance, Assad
What happened in Syria over the past two weeks is a welcome reminder that we humans are terrible at foreseeing the most consequential events. Who on Oct. 6, 2023, was talking about the onset of a regional war in the Middle East? Who in November said Bashar al-Assad’s days were numbered after his family ruled Syria with an iron fist for more than five decades?
On Friday’s episode of History As It Happens, Sefa Secen, an expert on Syria and Middle East security at Nazareth University, broke down the reasons why the Assad regime crumbled to the ground when the world was not expecting it. As Secen wrote for theconversation.com, Assad’s demise leaves behind a fragmented nation. We also delve into the historical import of this region- and world-shaping event. An era has ended in Syria, a country that has seen neither peace nor prosperity for the better part of half a century. Foreign countries remain entangled to varying degrees: Israel, United States, Iran, Turkey, Russia.
Assad’s father, Hafez, an Alawite and Ba’athist military officer who came of age during Nasserism’s height, cruelly ruled from 1970 to his death in 2000. He is remembered for dousing his people with chemical weapons in the city of Hama, killing at least an estimated 20,000 Syrians for the “crime” of resisting his atrocious rule.
As you will hear in the podcast – and this is hard to believe now – when Bashar became president in mid-2000, Syrians and Western capitals greeted him with a degree of optimism. He released some prisoners and promised economic and political reforms.
In 2002, British Prime Minister Tony Blair rolled out the red carpet for Assad to win his support for the coming U.S.-led invasion of Iraq (Syria and Iraq share a 600-mile-long border). “It is important to engage with Syria because Syria is going to be an important part of building a peaceful and stable future in the Middle East,” Blair said. Good grief. Bashar, who once studied ophthalmology in London, and his wife even had a photo-op with the queen!
When people took to the streets in 2011 to call for change as the winds of the Arab Spring swept into Syria, the regime answered with lethal brutality. Henchmen in the security forces tortured and murdered teenagers. The seeds were sown for a rebellion. It took 13 years to topple the dictator. Who are these new guys? Ahmed al-Shara has quite a resume, as Sefa Sefen and I discussed in Friday’s pod.
What’s next?
On Tuesday, historian Bryan Gigantino will join us from Tbilisi, where he is following the mass protests against the ruling Georgian Dream party. This conversation will take us back once more to the heady days of the early 1990s when it looked like market economics and democratic freedoms were on the march across all of Eastern Europe. Gigantino will share his remarkable insights into Georgia’s quest for nationhood in the “post-Soviet periphery.”
On Friday, historian L. Benjamin Rolsky will bring his unique perspective on the culture wars. What happened to the Religious Left? We will seek answers by visiting the television landscape of the 1970s: Norman Lear, All in the Family, and the origins of the Moral Majority. Yes, we might be able to draw a line from Archie Bunker to Donald Trump.