Tales of a New America

by Robert B. Reich

  “The effort he has undertaken here is an ambitious and intellectually honest one.… And when he is diagnosing … he is a popularizer in the best sense: sharp and clear.”

  —The New York Times Book Review

  “[An] ambitious and fascinating book.… Reich displays his talents as an original thinker and creative analyst.”

  —Commonweal

  “This informed, technically competent and wide-ranging survey of politics and economics, current and prospective, tells, as have his earlier works, how well-grounded is his public and academic reputation.”

  —John Kenneth Galbraith

  “Occasionally a book comes along that is so good that even an experienced reviewer can’t wait to spread the word so he picks up the phone and starts calling friends about it. That is the case with Tales of a New America. Reich’s book is extraordinary because it spells out very clearly the roots of America’s declining competitiveness and tells precisely what we must do to change that.”

  —Dallas Times-Herald

  “Robert Reich has written a canny, provocative and original book, in which he relates the problems of the U.S. economy to the dynamics of American national myth.”

  —Irving Howe

  “A collection of powerful insights … Mr. Reich’s work is a vital antidote to the ‘political technician syndrome’ that has overrun liberal politics. It is a plea for liberals to look up from the charts, throw down the white papers and wade deeply into the political culture. If Mr. Reich’s intuition is on target (and I think it is), the next few years will offer an opening unmatched in the last two decades.”

  —Wall Street Journal

  First Vintage Books Edition, March 1988

  Copyright © 1987 by Robert B. Reich

  All rights reserved under International and Pan-American Copyright Conventions. Published in the United States by Random House, Inc., New York, and simultaneously in Canada by Random House of Canada Limited, Toronto. Originally published, in hardcover, by Times Books, a division of Random House, Inc., in 1987.

  Library of Congress Cataloging-in-Publication Data

  Reich, Robert B.

  Tales of a new America.

  Bibliography: p.

  1. United States—Politics and government—1981—

  2. United States—Economic policy—1981—

  3. United States—Foreign relations—1981—

  4. Public welfare—United States. I. Title.

  [JK271.R39 1988] 973.927 87-45915

  eISBN: 978-0-307-83062-3

  v3.1

  FOR ADAM

  CONTENTS

  Cover

  Title Page

  Copyright

  Dedication

  Introduction

  PROLOGUE. THE AMERICAN STORY

  1 Four Morality Tales

  2 The Prevailing Versions

  3 The New Context

  PART ONE. THE MOB AT THE GATES

  4 The Boomerang Principle

  5 America’s Two Competitors

  6 The Rise of the Japanese-American Corporation

  7 Locking the Gates

  8 Reprise: The Ecology of the World Economy

  PART TWO. THE TRIUMPHANT INDIVIDUAL

  9 Of Entrepreneurs and Drones

  10 Collective Entrepreneurialism

  11 The General Theory of Gridlock

  12 Triumph Reconsidered

  PART THREE. THE BENEVOLENT COMMUNITY

  13 The System of Social Benevolence

  14 The Limits of Benevolence

  15 A Matter of Responsibility

  16 The Fable of the Fisherman (Revised)

  PART FOUR. THE ROT AT THE TOP

  17 The Cycles of Righteous Fulmination

  18 The Miasma of Regulation

  19 The Mythology of the Market

  EPILOGUE. RETELLING THE AMERICAN STORY

  20 New Versions, New Visions

  Notes

  INTRODUCTION

  I write this at a time when many Americans are confused about what America stands for. Many of the courageous souls who still call themselves “liberals” find that they are without bearings. The ideals that had guided them since the 1930s and through the postwar decades seem less clear, and the premises of public debate in recent years, strangely disorienting. Many who call themselves “conservatives,” although more confident in their assertions than at any time since the start of the New Deal, are bedeviled by the possibility that their self-assurance may be vicarious—attributable to the ebullience of the man now occupying the White House rather than to the discovery of any fundamental moral truths. On the horizon is a presidential election that may determine which set of concerns endures longer.

  You may ask: Is it really necessary to probe the public consciousness and examine the reigning public philosophy? Are not most of us guided by a gritty pragmatism that eschews any overarching approach to our society’s problems?

  Between the transient moods elicited by political advertising or lofty rhetoric and the detailed policy prescriptions manufactured by the inhabitants of Washington think tanks and universities spreads the conceptual terrain in which public problems are defined and public ideals are forged. This is a realm of parable and metaphor, the source of our collective vision. To dismiss this realm as “ideological”—meaningless because irrational and unempirical—is to miss the point that value, not fact, is the currency of the realm. It is to neglect the importance of values for motivating a society. It is to preempt or cheapen all discussion about whether we are motivated in the right direction.

  The current confusion reflects turmoil and change in this realm. Our collective vision is slowly shifting in response to a radically different world. Hence the importance of examining what the prevailing vision has been, and what it might be.

  Since this is a realm of values and purposes, a journey into it must follow a route marked by interpretations and illustrations rather than formal proofs. In this book I have drawn from several disciplines, selected from a wide range of examples, and connected ideas and phenomena not normally juxtaposed. But I am relying on you, the reader, to be an active explorer as well. You will need to ask yourself: How do these illustrations resonate with my experience? Are these interpretations plausible and meaningful to me? Do they help me better understand my own values, or lead me to question them?

  In undertaking this journey, I have relied on the help and insights of many people. The enterprise has come as close to collective entrepreneurialism (a term with which the reader will become acquainted) as is possible without relinquishing single authorship. Only in an academic environment as marvelously disrespectful of traditional academic boundaries, and as supportive of interesting but risky intellectual ventures, as the Kennedy School at Harvard, would I have found a group of people willing to take on the topic and encourage me forward. I am particularly grateful to Michael Barzelay, whose interest in the relation between ideas, politics, and economics continues to kindle my own; to Ronald Heifetz, whose insights into group psychology and cultural avoidance have influenced my thinking about political mythology; and to Bill Hogan, whose hard-nosed approach to public policy has forced me to connect these larger concepts to practical policy questions. I have benefited from Steven Kelman’s understanding of American political institutions, and Mark Moore’s continuing interest in the capacity of myths and visions to mobilize public action. Howard Frant and Rob Muller, graduate students here, donated their time and perspectives. I am especially indebted, as before, to Jack Donahue, whose tenacity forced me to rethink and rewrite, and whose insights added immeasurably to whatever strength the book now possesses. Several colleagues and students at the Harvard Law School, where I have been teaching about the relationships betwe
en law, politics, and industrial structure, have also aided in the venture. I am particularly grateful to Phil Heymann for sharing with me his insights into law and political ideology and for his continuing interest in probing these dark corners.

  In addition, I am grateful to a number of people who took an early interest in this project, and offered valuable advice and counsel along the way. Larry Smith and Hendrik Hertzberg got me started; Jack Beatty and Bill Whitworth encouraged me to write an essay for The Atlantic that foreshadowed several of the themes in this book; Paul Erickson, Mark Koerner, Robert Bell, and David Kastan provided background on American myth, literature, and politics. The manuscript benefited from readings by Robert Ball, Sidney Blumenthal, Samuel Beer, Nancy Bekavac, Lincoln Caplin, George Gilder, Ray Dalton, Jim Dillon, Doug Dworkin, David Ellwood, John Isaacson, Robert Kuttner, Marc Lackritz, Nancy Altman Lupu, Herman Leonard, George Lodge, Shelley Metzenbaum, Richard Neustadt, Michael O’Hare, Rafe Sagalyn, Paul Starr, Phil Steele, Richard Stewart, and Jim Verdier. Jon Segal, as before, brought to bear his unique blend of enthusiasm and moral support. Above all, I owe thanks to my intellectual partner, friend, and wife, Clare Dalton, whose insights into critical theory and feminism have enriched my perspectives on economics and politics, and whose grace under fire has been an inspiration.

  —ROBERT B. REICH

  Cambridge, Massachusetts

  October 1986

  CHAPTER 1

  FOUR MORALITY TALES

  1

  You’ve heard the story a hundred times, with different names, different details. George was a good man, the son of immigrants who had made their way to Marysville. They came with no money, with nothing but grim determination and hard-won freedom. Dad worked all his life in the mill; he was union, hard, and proud. George was quick by nature, dogged by necessity. He studied hard at school, and after school worked long and well at anything that would bring in a few dollars. George was good at sports, but he had little time for games. He had few close friends, and yet he was fair and decent with everyone, and quietly kind to anybody in real trouble. He never picked a fight in his life. But in eighth grade, when the town bully Albert Wade was slapping around the smallest kid in the class, George stepped between them without saying a word. He let Wade throw the first punch, then put him away with one straight left, turned around, and walked away.

  George finished high school in 1943, and joined the army the day he graduated. Four months later he was in Europe. On the sixth day of the Normandy invasion his squad was on patrol, passing through a French orchard when a German machine-gun nest opened up from behind a stone wall, picking off the squad one by one. George broke from cover and, dodging from tree to tree, raced toward the Nazis as bullets chewed the bark and ground around him. He took out the nest with a grenade and his rifle, and he saved his buddies, but he never wore the medals they gave him and he never talked about it much. After the war he came back to Marysville and married Kate, his childhood sweetheart. He raised three kids, and he started a little construction business, which his hard work and integrity gradually made into a big construction business. By and by, George made a lot of money. But his family continued to live modestly, and he gave generously to the local boys’ club and an orphanage he founded. He was generous with his time, too, and headed the community chest. Still he kept pretty much to himself until Albert Wade inherited his father’s bank, the only bank in town. Wade risked his depositors’ money on shaky loans to his cronies, bought and bullied his way into power with Marysville’s political leaders. When he was elected mayor the election smelled bad to everyone, but only George openly accused Wade of corruption. For six months Wade’s bank refused every mortgage on houses built by George’s company, and George risked everything in the showdown. But in that tense town meeting, one of the city councilmen Wade had paid off could no longer hide his shame under George’s steady gaze and simple question from the back of the room. He spilled how Wade had rigged the election. Albert Wade went from city hall to county jail, and George went back to his family, his work, and his quiet service to Marysville.

  George’s story is an American morality tale. It is a national parable, retold time and again in many different versions, about how we should live our lives in this country. George is the American Everyman. He’s Gary Cooper in High Noon. He’s Jimmy Stewart in It’s a Wonderful Life. He’s the American private eye, the frontier hero, the kid who makes good. He’s George Washington and Abe Lincoln. He appears in countless political speeches, in newspaper stories, on the evening news, in American ballads, and sermons.

  Everyone has a favorite variation, but the basic theme is the same and speaks to the essence of our national self-image: Ours is a nation of humble, immigrant origins, built out of nothing and into greatness through hard work; generous to those in need, those who cannot make it on their own; a loner among nations, suspicious of foreign entanglements, but willing to stand up against tyranny; and forever vigilant against corruption and special privilege.

  The American morality tale defines our understanding of who we are, and of what we want for ourselves and one another. It is the tacit subtext of our daily conversations about American life. It permeates both American conservatism and American liberalism. And—the essential point—it is a fundamentally noble, essentially life-affirming story. Much is made of the American political distinctiveness of a Constitution inspired by theory rather than by tradition. But there is a subtler yet equally profound cultural distinctiveness as well, a national sense of identity rooted not in history but in self-told mythology. Political scientist Carl Friedrich captured the distinction in 1935: “To be an American is an ideal, while to be a Frenchman is a fact.”1

  This basic mythology, however integral to the American identity, is so vague as to admit of many interpretations, to present itself in multiple manifestations over time. At different times in our history, different aspects of the parable have come to the fore while others receded. Some variants of the myth are more faithful to its essence than others; some variants are more supple accommodations to current American reality than others. Our history is punctuated with wrenching national contests between competing versions of the ideal; both world wars, for example, forced us to decide whether we must love peace more or justice more. Indeed, these episodes of editing our common mythology, as painful as they may be, are themselves affirmations of the American distinctiveness. This book is premised on the observation that another such episode seems to be at hand.

  2

  The most important aspect of political discourse is not the appraisal of alternative solutions to our problems, but the definition of the problems themselves. This simple truth is easy to miss because what we see when we look at politics is a series of particular problems and possible remedies: How to contain Soviet aggression? Improve American competitiveness? Eliminate poverty and hunger? Manage the size and curb the intrusiveness of government? Editorial pages overflow with worries and suggestions. Political candidates brandish new ideas. Economists diligently tally the costs and benefits of the various proposals. Congressional committees hold hearings. Television documentaries present experts pontificating from behind desks. Disagreeing specialists abuse each other for the edification and entertainment of the populace at large. Public opinion, as measured in the latest poll, swings to and fro. This is what we take for public discourse.

  But in the background—disguised, unarticulated—are the myth-based morality tales that determine when we declare a fact to be a problem, how policy choices are characterized, how the debate is framed. These are the unchallenged subtexts of political discourse. We debate specifics, and on almost every issue we instinctively define a spectrum ranging from “left” to “right” and align ourselves along it. But our varying readings of the American morality tale condition how this spectrum is drawn. And the basic contours of our mythology organize the way we think about issues; they bound the field of argument.2

  Public problems don’t exist “out there.” They are not
discrete facts or pieces of data awaiting discovery. They are consequences of our shared values. Without a set of common moral assumptions we would have no way of identifying or categorizing problems and their possible solutions. Some questions are rarely asked. What is at the root of our quarrel with the Soviets? Does it make sense to speak of American economic competitiveness? Is a citizen’s poverty his own misfortune, his own due, or a social problem? What precisely do we mean by government intervention, or the market? These questions do not enter public discourse because so much of the ground from which they spring is taken for granted. To ask them directly is often to end a conversation, because there is nothing left to say; on such basic questions we have collectively, albeit tacitly, reached either essential agreement or stalemate. And yet it is that which we leave unsaid in our debates, not the words that fill the air and the pages, that says the most about us.

  As good American pragmatists, wary of grand themes, we prefer the ellipses of metaphor. To the extent that we reflect upon these deeper premises at all, we do so through the stories we tell one another about our lives together—stories like that of George. These tales embody our public philosophy. They constitute a set of orienting ideas less rigid and encompassing than an ideology but also less ephemeral than the “public mood.” The stories interpret and explain reality and teach what is expected of us in light of that reality.3 They situate us, allowing us to understand where we are in an otherwise incomprehensible sea of facts and events. In so doing, these stories give meaning and coherence to what would otherwise seem random phenomena: a new Russian missile, a shuttered factory, a starving child. Our morality tales inform our sense of what our society is about, what it is for.

  Every culture has its own parables.4 Conveying lessons about the how and why of life through metaphor may be a basic human trait, a universal characteristic of our intermittently rational, deeply emotional, meaning-seeking species. Cultural parables come in a multitude of forms. In modern America, the vehicles of public myth include the biographies of famous citizens, popular fiction and music, movies, feature stories on the evening news, and gossip. They may also take more explicitly hortatory forms in judicial opinions, political speeches, and sermons. In whatever form, they are transmitted constantly, and all around us—in our schoolrooms, dining rooms, poolrooms, and newsrooms. They shape our collective judgments. They anchor our political understandings. The specific details of the stories we tell need not have any particular connection to fact, an insight that some political orators grasp instinctively. What gives them force is their capacity to make sense of, and bring coherence to, common experience. The lessons ring true, even if the illustration is fanciful.