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Medieval Economics
How concern is the currency of the realm.


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Jonah Goldberg

Man, do I hate the federal budget. Oh, I don’t mean the one Bush is going to “unveil” tomorrow night, or any particular budget at all. In fact, I don’t think I’ve liked a single budget since, I guess, Calvin Coolidge was in office — when my father was a twinkle in my grandfather’s eye. As a matter of principle, for a guy like me, who’d like a much, much, much smaller federal government, pretty much every budget — Republican or Democrat — is a case of shuffling deck chairs on the Titanic.

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It must agonize true libertarians just as it annoys me: You have to put a big chunk of principle in cold storage simply to take budget fights seriously at all. Since even the most “conservative” budget is still going to be draconian by any reasonable definition, you end up having to choose between the lesser of two evils. Like a guy with high cholesterol having to choose between a chicken-fried steak and a chocolate shake and a chicken-fried steak and a Diet Coke.

Then there’s the inconvenient fiction that the president of the United States “runs” a $10 trillion economy. All of the metaphors and verbs used by the press leave you with the impression that the president sits in some giant cockpit, fidgeting with flashing lights and humming doodads as he “drives” the economy. Meanwhile, the White House itself, somehow, “creates” jobs. “The White House created 200,000 jobs in the last quarter…” Is there a Play-Doh job factory next to the White House bowling alley? And — gird your loins! — if the president is “asleep at the switch,” the economy could “derail” and “plunge into a ditch.” Of course, others see the president as some sort of farmer who can “grow the economy,” so long as he “focuses like a laser” on doing just that.

When you think about it, such language betrays an almost medieval understanding of economics. If the king doth prosper, so doth the land. It reminds me of John Boorman’s Excalibur. Once King Arthur is restored by the Grail, so too is all of England. Does any serious person believe that if a president “pays more attention” to the economy, it will necessarily do better than it will if he “ignores” the economy? Well, actually a lot of serious people seriously believe that. Me, I think too much meddling is always a bigger hazard than too little (see “Being and Nothingness” for my macro-view on this). Jimmy Carter was a micro-detail guy, and few people would say he ended the debate on how to manage the economy (let alone the White House tennis-court schedule, another detail he focused like a laser on).

Of course, it’s not so much that political journalists have a medieval understanding of economics as that they have little understanding of any kind. And, even those who do know something about the dismal science invariably use economics to make political points. How else can so many smart guys on the right and the left look at precisely the same economic data and come to such wildly divergent, often antithetical, conclusions?

“Clinton Greed”?
Other than laziness, this is why I don’t get too bogged down in Washington arguments about economics. The arguments never get settled. What I do think are interesting are the more explicitly political assertions about economics.

Take this Enron thing. Every day, I agree more and more that what Enron’s management did wasn’t merely immoral or unethical, it was illegal (contrary to what some in Congress think, the three aren’t the same thing). It may turn out that someone in the White House did something very wrong, but I still doubt it. But I can’t help but believe that this story would play very differently if a Democrat were in the White House, and we’d just finished eight years of a Republican presidency.

Compare, for a moment, the 1980s and 1990s. In the 1980s, the economy boomed. In the 1990s, the economy boomed. Both decades began with recessions and ended with recessions. Both saw financial scandals, bubbling-over-expansions in various sectors, etc., etc.

But, for some reason, relatively similar circumstances were portrayed very differently by the experts, and by the journalists who quote them. During the recession of 1981-82, “Reaganomics” was synonymous with economic failure. In what must have seemed a great nod to fairness, the New York Times White House correspondent, Steven R. Weisman, wrote in 1982: “[N]o economist lays the entire blame for the current recession at the doorstep of Reaganomics.” The “entire blame.” In 1984, when the economy was booming, Karen Arenson, also of the Times, concluded: “…the current economic recovery is clearly making Americans feel better; what is less obvious is what brought about the upturn and who should get the credit.” Then, once it was clear that the economy was prospering, Reaganomics was redefined as not so much an economic failure as a moral one. Here’s how William Schneider — now with CNN — put it in The New Republic in 1984: “Reaganomics is economic elitism. It is the view that hunger in America is merely anecdotal, that the homeless are homeless by choice, and that only the morally unworthy have been hurt by the Administration’s policies.” And, of course, the wealth being generated under Reagan was morally dubious. Consider that “junk” bonds (which James Stewart, author of Den of Thieves, called “the greatest criminal conspiracy the financial world has ever known”) were constantly associated with Reaganomics generally. And never mind that junk bonds created MCI, Fed Ex, and other real businesses.

Steven Reed, a reporter for the Houston Chronicle, wrote in 1992, “Wall Street stock manipulator Michael Milken earned $550 million in 1987, and ghetto teens unable to find jobs joined gangs instead.” That’s true. But Bill Gates made a lot of money in various years of the 1990s, and ghetto teens who couldn’t find jobs still joined gangs instead. Indeed, there were bigger “junk” bond sales in 1993 alone than there were from 1982 to 1986 — the term of Mike Milken’s entire junk-bond career. But we rarely heard, anymore, about sudden wealth and ghetto teens. And we never heard about the “Era of Clinton Greed.”

In fact, despite the fact that the dot-com bubble — we’ve learned — was vastly more speculative than the junk bubble, being super-rich wasn’t immoral in the 1990s (even though executive compensation, income inequality, and all of the other things we associated with “Reagan greed” either got “worse,” or at least didn’t improve). Let’s pick on Newsweek. In 1988, the magazine wrote that during the 1980s “The money culture ruled, and Ivan Boesky was some kind of hero.” The Reagan years were “…a time when avarice got respectable, poverty expanded and wealth became a kind of state religion.”

Fast forward to June, 1999. Newsweek ran a huge story on the beneficiaries of the Wall Street boom. And while it had a nice class-warfare title — “They’re Rich (and You’re Not)” — the authors reflected a more buoyant view of wealth. “In another, earlier era — the go-go 1980s — many Americans tended to make villains of such arrivistes. But the suddenly wealthy are no longer bogeymen… The rich, at long last, are very much like you or me: they’re an idealized version of ourselves.” The question occurs:

Who does Newsweek think demonized the “arrivistes” in the first place?

I’m picking on the media, but every single one of these stories pointed to some “expert” who “proved” what the journalists wanted to say. And, of course, it doesn’t have to be economics. You can name almost any social ill — no matter how nebulously defined — and you’ll find journalists who define the macro-situation through the prism of their micro-understandings of what conservatives and liberals are like (see this ancient G-File on homelessness, for example).

In fact, once you cut through all the verbiage and expert-ese, it invariably boils down to the fact that “concern” matters more than anything else. If a president is “concerned” (i.e., a Democrat) about the homeless or inequality, etc., the press no longer finds the topic interesting — and that makes it disappear, like magic. Which, I guess, proves that the medievalists were right after all.



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