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From the dawn of the republic, the federal government has played a vital role in American economic life. Government promoted industrial development in the 18th century, transportation in the 19th, communications in the 20th and biotechnology today.
This version of economic nationalism meant that he and the people who followed in his path — the Whigs, the early Republicans and the early progressives — focused on long-term structural development, not on providing jobs right now. They had their sights on the horizon, building the infrastructure, education and research facilities required for future greatness. This nationalism also led generations of leaders to assume that there is a rough harmony of interests between capital and labor.
People in this tradition reject efforts to divide the country between haves and have-nots.
Finally, this nationalism meant that policy emphasized dynamism, and opportunity more than security, equality and comfort. While European governments in the 19th and early 20th centuries focused on protecting producers and workers, the U.S. government focused more on innovation and education.
Because of these priorities, and these restrictions on the federal role, the government could be energetic without ever becoming gigantic. Through the 19th century, the federal government consumed about 4 percent of the national gross domestic product in peacetime. Even through the New Deal, it consumed less than 10 percent.
Meanwhile, America prospered.
But this Hamiltonian approach has been largely abandoned. The abandonment came in three phases.
First, the progressive era. The progressives were right to increase regulations to protect workers and consumers. But the late progressives had excessive faith in the power of government planners to rationalize national life. This was antithetical to the Hamiltonian tradition, which was much more skeptical about how much we can know and much more respectful toward the complexity of the world.
Second, the New Deal. Franklin Roosevelt was right to energetically respond to the Depression. But the New Deal’s dictum — that people don’t eat in the long run; they eat every day — was eventually corrosive. Politicians since have paid less attention to long-term structures and more to how many jobs they “create” in a specific month. Americans have been corrupted by the allure of debt, sacrificing future development for the sake of present spending and tax cuts.
Third, the Great Society. Lyndon Johnson was right to use government to do more to protect Americans from the vicissitudes of capitalism. But he made a series of open-ended promises, especially on health care. He tried to bind voters to the Democratic Party with a web of middle-class subsidies.
We’re not going back to the 19th-century governing philosophy of Hamilton, Clay and Lincoln. But that tradition offers guidance. The question is not whether government is inherently good or evil, but what government does.
Does government encourage long-term innovation or leave behind long-term debt for short-term expenditure? Does government nurture an enterprising citizenry, or a secure but less energetic one?
Comments _Share your thoughts.
The sentiment that we should concentrate on what constitutes good government and not whether it is good or evil is one that is shared by liberals but not conservatives.
It is a straw man raised by conservatives that liberals want to see the Federal government expand to a point that dominates all commerce and overregulates every activity.
Consider health care: the most important consideration is that every person living in the US should have access to reasonable and affordable health care. No one should have to deplete his/her life savings or have to declare bankruptcy because he/she cannot pay. At the same time it is important for the economic well being of the nation that health care do not absorb a large percentage of the GDP. There are examples from other nations of how this can be achieved, what they all have in common is large intervention by the state, either in the form of regulations or universal public health insurance.
Hamilton lived in a simple, agricultural era. To invoke his name in the context of a modern industrialized economy is to commit an egregious logical fallacy, appeal to authority. Furthermore, you make statements about economics that are unwarranted and erroneous., e.g., your assertion that our social expenditures are economically unsustainable.
The problems we have now are that unprincipled conservatives have lied to the people and exploited flaws in the structure of our government, such as the filibuster, to block majority rule. And if one believes that, on average, the majority is more often right than wrong, this can only lead to poor decisions by government -- in this case, decisions made by politicians beholden to a twirly-eyed, ignorant Tea Party minority, and to greedy, myopic business interests.
You didn't go back far enough to point out that practically from the beginning of humanity individuals banded together to take on the caveman with the biggest club and that our history includes the constant struggle of serfs and slaves whose hard work enriched not themselves but those with power and money.
Is our current problem actually one of sacrificing long-term innovation for short-term expenditure or is it really that we are trying to bandage up a system that because of the debasement of government has returned to the bad old days where, instead of working to construct a society in which individuals are fairly rewarded for their work, a few benefit from the work of the many and then charge them usurious interest rates on the money they are forced to borrow to stay afloat? Is it any wonder the whole system is sinking?
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