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Atlas WILL Shrug!!

That 99 percent of us will not, in fact, prosper in some every-man-for-himself Rand-land is a fine point that pretty much drops from view among the resurgent Right. They do not really comprehend that the only winners from a campaign to hack government down, deregulate everything, abolish taxes, and restore the gold standard would be people like that coal-mine CEO-or that the fate of most of us would be closer to that of the country's miners, toiling in a dangerous place for lousy wages and powerless to do anything about it.

Those who think they have something to look forward to in the libertarian future would do well to reread the famous scene in Atlas Shrugged where Rand ill.u.s.trates the breakdown of society with a colossal train accident. Rand arranges this disaster in such a way that the crash is attributable not to some act of negligence by the railroad but to the arrogance of one of the train's pa.s.sengers, a powerful politician who forces the train's crew to proceed into a dangerous tunnel.* And then, in a notorious pa.s.sage, the narrator goes through all the other pa.s.senger cars on the train and tells us why each casualty-to-be deserves the fate that is coming to him or her. One of them, she points out, received government loans; another doesn't like businessmen; a third is married to a federal regulator; a fourth foolishly thinks she has a right to ride on a train even when she doesn't personally own the train in question. For each one of these subhumans, the sentence is death.

For a reader like me, Ayn Rand's almost total contempt for humanity is her most repugnant point. For the master spirits of our contemporary Right, though, I sometimes suspect that's the stuff that rings truest: straightforward sympathy for the billionaire plus tangled rationalizations for the death or humiliation of everyone else. The game is finally up for the whiners of the world, they exult. The first shall be first. Root, hog, or die.

CHAPTER 9.

He Whom a Dream Hath Possessed Knoweth No More of Doubting.

One sunny morning in August of 2010, I drove up to the old Carnegie Library in Port Townsend, Washington, to work on the project that eventually became this book. Out in the rest of the country, according to a much-publicized poll, a majority of Americans now believed the word "socialist" described President Obama well. Conservative entertainers were in full-throated denunciation of the collectivists running America into the ground, and a wave of revulsion against overreaching government was fixing to deliver a huge Republican victory that fall.

And yet none of the fears propelling the country to the right were even close to being realized. Lying on one of those big, old-fashioned tables as I walked into the library was the new edition of the Guardian Weekly, the British newspaper; its headline proclaimed, "Capitalism Is Still the Only Game in Town." By then it had been three years since the first shocks. .h.i.t international credit markets, and yet politically nothing had changed. The free-market ideology was still in the saddle, the paper reported; the creed of Davos still ruled the world; the near collapse of the financial system had barely caused it to break its stride. A high official from the Bank of England told the paper that "there have been far fewer repercussions than there were after the 1930s."

"Then there was a real contest in the world about what was the right model for a modern society, and the crash convinced many people that capitalism and free markets were not the right way forward, but there has been no echo of that this time.

"Maybe India and China have slowed down on deregulating their financial industries, but broadly speaking, the direction the world had been moving in is continuing. It reflects an end of ideology. Capitalism is still the only game in town."1 I thought about the hardworking Americans who were, at that moment, dutifully responding to the Tea Party's clanging emergency call. Here they were, raging against the socialist takeover, swearing to resist the leftist usurpers in Washington, and there in the paper a central banker was explaining that none of it had happened. From the Newsweek "socialism" cover to last week's bestseller about liberal tyranny, it had all been a false alarm.

Nothing had changed. We weren't going to be rounded up for the Gulag. Capitalism wasn't going to be abolished. The financial crisis hadn't put radicals in charge of America after all. Essence was in such violent disagreement with appearance that the force of it seemed likely to snap one's neck.

This is the enigma we turn to now: the resurgent Right's epistemology; its way of perceiving the world around it-or, more accurately, its way of not perceiving; its ability to keep the fear of a Martian invasion stoked for years despite the Martians' stubborn refusal to appear.

What kind of misapprehension permits the newest Right to brush off truths that everyone else can see so plainly? What backfiring form of cognition convinces them that critics of bailouts were in fact responsible for those bailouts? That deregulation is not the problem but the solution? That Ayn Rand is the hero rather than the villain of the present disaster? What allowed this tremendous divergence between fact and appearance?

An End of Ideology?

To understand, we might want to take into consideration other examples of conservatism's dalliance with error. We might cast our eyes back over the long, embarra.s.sing story of the evolution debate or the global warming controversy. We might recall the Bush administration's various campaigns against government scientists and those who doubted the official rationale for the Iraq war. We might examine the GOP's tenacious adherence to the "supply side" theory of budget-balancing despite that theory's persistent failure to work.

We might decide to put a spotlight on the outright falsehoods that the conservative movement lists among its articles of faith: Its idea that the Franklin Roosevelt administration either caused or worsened the Great Depression. That progressives have been in control of the nation ever since the days of Woodrow Wilson. That George W. Bush was just pretending to be a conservative. That bond traders are ordinary workers. That government bears the entire responsibility for the mortgage meltdown and its every little ramification. (And I have not bothered with the strange ideas that some on the newest Right hold about Barack Obama's true birthplace, or his secret army, or who wrote his first book.) There is no level of scrutiny permissive enough to let these absurdities get by.* After reviewing such a list, a certain variety of liberal likes to apply the word "liar" to the leaders of the Right. But that's not the whole story. Yes, there have been attempts to deceive in some quarters, and even deliberate misrepresentation of the facts from time to time. But more disturbingly, there is a certain remoteness from reality, a kind of politicized groupthink that seems to get worse each year as the Right withdraws ever farther into a world of its own.

That Americans are increasingly separated from social reality is not some secret that I alone have deciphered; it is the logical result of decades of increasingly specialized market segmentation. It goes back at least to the days of sociological worries about the "ma.s.s society" and the things that TV was doing to our perceptions. Ironically, one of the most memorable expressions of this fear comes in the Tea Party's favorite movie, Network, where the Howard Beale character-the one Rick Santelli and Glenn Beck were so widely compared to-rails on about TV's fraudulence and the gullibility of his audience: "We deal in illusions, man. None of it is true. But you people sit there day after day.... We're all you know."

These days Americans are ever more busily "self-segregating" into enclaves filled with people who think and vote just as they do-little Galt's Gulches scattered all across the fifty states. The Internet, of course, has provided a gigantic playground for self-segregation-that's the reason it exists; those who don't follow the rule are "trolls." There are separate sites for conservative social networking and conservative dating. Like-minded bloggers often link only to one another-it is considered a political sin to reference the other side2-so that their readers' minds won't be contaminated by exposure to contrary views.

Conservatives inhabit a "very separate world," declared the Democratic pollster Stanley Greenberg in 2009; a place of intense group ident.i.ty where Fox News is the medium of record and the president is believed to follow a "secret agenda" that is invisible to the rest of the nation. This culture of closure also gives us the phrase "Don't Believe the Liberal Media"-the slogan of the Media Research Center, an important player in winger Washington. When you consider that, by the standards of the MRC, virtually all traditional media is liberal media, you begin to understand that the center is calling for a deliberate cognitive withdrawal from the shared world.

Although recent developments in ma.s.s communication have contributed to the malady I am describing, it is also true that times of economic catastrophe induce people to wall themselves off with airtight philosophical structures. When the credibility of tradition is shredded, it should not surprise us to see people retreat into pure utopianism, to cling to the ought-to-be when the actually-is really sucks. Despite the smug banker quoted in the Guardian Weekly story, ideology hasn't ended in the Great Recession; ideology has triumphed.

Intransigent Idealism.

"I don't read books," a Tea Party activist once told the historian Jill Lepore. "I read blogs."3 The line struck a chord with me. It brought to mind a book that I had been reading of late, Part of Our Time, Murray Kempton's cla.s.sic study of "the committed and the dedicated" during the thirties-Communists and fellow travelers, mainly-whose mind-set seemed identical to the one I saw among the blog-reading rebels of the contemporary Right.4 Kempton brought the matter into sharpest focus in a biographical sketch of J. B. Matthews, a onetime radical who turned red hunter in the fifties, performing both roles with the same evangelical zeal, the same intolerance for ambiguity, the same "singular quality always to know in a flash without ever having learned."5 "Matthews saw what he wished to see, and he had no need of books for knowledge," Kempton writes. Matthews was one of many who made pilgrimages to the USSR in those days, and Kempton tells us that on one of his visits a colleague was brought face-to-face with the spectacular catastrophe taking place in the Ukraine: the man-made famine of 1932. Here is how Matthews dealt with this embarra.s.sing situation: he "insisted that there was no such thing, and anyway, look at India. He knew how to protect himself against shocks of recognition."6 As did many of his comrades. So many, in fact, that the persistent blindness of the Americans who visited the Soviet Union in the Depression would eventually become one of the great set pieces of thirties historiography. Lefty after lefty made the trek, and even the keenest critics among them managed to overlook what was actually happening to the Soviet people. Reviewing the blithe reports of these clueless tourists many years later, the novelist Harvey Swados marveled at how "the will to believe often triumphed over the evidence of the senses."7 What made this possible, Swados continued, was that the thirties were a time of "intransigent idealism." No reports from the outside world could budge the certainty of the believers (until the 1939 n.a.z.i-Soviet Pact, that is). Malcolm Cowley, a star literary critic of the era, put it slightly differently: it was an "age of faith." With social traditions shattered, people thought they had to sign up for one side or another in a coming showdown of ideological systems. It was, they thought, "either light or darkness, but nothing between."8 And so a generation of thinkers put themselves under the discipline of a clique of political con men. They convinced themselves that the laws of history were symmetrical, mathematical, predictable, and fully at the command of some distant Soviet generalissimo. They "set out to be redeemers," mourned Murray Kempton, and they wound up as "policemen." They excommunicated one another from their tiny Marxist conclaves over completely theoretical bits of trivia, they fully expected the world to someday come marching their way, and they deliberately taught themselves to produce awful, cartoonish art.9 It was not really a malady limited to the ideological Left. There was a corporate version as well: the doctrine of positive thinking, and it was just as vehemently idealistic and as closed to the evidence of the senses as was the communist "will to believe." The "age of faith" was in effect whether one was writing proletarian fiction or making the sale by adopting a positive mental att.i.tude: both endeavors involved controlling one's mind in order to filter transmissions between oneself and the outside world.

In his towering 1937 bestseller, Think and Grow Rich, Napoleon Hill urged a kind of self-hypnosis on readers: they were to deliberately plunge themselves into a "faith" in their own success, visualizing money, imagining their future prosperity-and one day success, money, prosperity would actually materialize. Wishing would make it so. In his towering 1936 bestseller, How to Win Friends and Influence People, Dale Carnegie urged readers to adopt a system of feigned regard for others, a sort of propaganda of the smile. The catch was that the regard had to be genuinely felt, and therefore had to be deliberately cultivated: another act of faith.

The Consolation of Dogmatism.

Intransigent idealism like this has continued to thrive in the dark corners of American life, and during our own experience with economic decline it has flourished as never before. No, there has been no Marxist revival, but in their mania for Ayn Rand, the disgruntled ones have chosen the next best thing. Inflexible dogmatism is, after sociopathic shrillness and fast trains, one of the great selling points of Atlas Shrugged; the absolute, airtight correctness of Rand's views on all things is always played fortissimo in the novel, always spoken with maximum emphasis. And Rand's followers have traditionally brought the dogmatism to life with their zealous regard for the author's views. Among the Rand cult, "'objective reality' was what Rand said it was," remembers the libertarian writer Jerome Tuccille.

"Morality" was conformity to the ethic of Ayn Rand.

"Rationality" was synonymous with the thinking of Ayn Rand.

To be in disagreement with the ideas of Ayn Rand was to be, by definition, irrational and immoral. There was no allowable deviation under the tenets of [her philosophy] Objectivism-which ... quickly became a kind of New Marxism of the Right.10 When they weren't banishing one another from the inner circle of the Rand cult, the novelist and her followers were determining, by dint of pure deductive reasoning, that cigarette smoking was life-affirming. Or that monopolies could not exist absent federal regulation. Rand warred on environmentalists, whom she had rationally determined to be enemies of progress; and against American Indians, whose expropriation was deserved because their culture transgressed her philosophical system in some way.

Another place where thinking of this sort crops up constantly is in professional economics; indeed, the housing bubble itself could probably not have happened without the resolute determination of economists to blot out reality in favor of comforting myths of an all-seeing, superefficient market.

The list of heavy economic thinkers who denied that there was a bubble in the real-estate market, for example, is long and shiny with glittering names, every prestigious one of them convinced that prices were being driven upward by fundamentals, as theory says such prices almost always are.11 More disastrous by far, though, was the economists' push to roll back regulations against fraud in financial markets, on the smug belief that financiers were so keenly rational and so zealous to protect shareholder value that they simply would not allow fraud to happen. That fraud, in fact, happened in all sorts of catastrophic ways and at many different levels made no difference; theory canceled it all out.12 Abstract reasoning like this is not solely the province of advanced thinkers; another place where you find it is, of course, the Glenn Beck empire. Parsing a recent performance by his former fave British rock band Muse on his radio show in February 2011, the host declared that he had changed his mind about the group, that for all their rebel lyrics they didn't get what the conservative revival was about after all. Why didn't they get it? Because they were Europeans. And Europeans, as everyone knew, have had very few glimpses of real freedom. Even when England won the Second World War, they didn't go into freedom. That's where the Road to Serfdom came from. Because Winston Churchill and many others all said, wait, what are you doing? We're going the wrong direction. And it didn't go to freedom, it went to the Road to Serfdom.

Beck is correct that The Road to Serfdom, the famous 1944 book by the Austrian economist Friedrich Hayek, was written as a critique of British politics, a warning that Labour Party socialism might lead eventually to totalitarianism. The book's weakest point, as critics have observed over the years, is that Hayek's main prediction never came true. Although Britain did go enthusiastically socialist after the war, it never abridged its traditional freedoms of speech, a.s.sembly, the press, and so on. The country even reversed itself in the seventies and swung energetically back in the direction of the market.

But here is Glenn Beck, deleting all that because a favorite work of political conjecture published in 1944 predicted something else. Markets have to be free, or else other freedoms will disappear, Hayek had reasoned. Extending this logic was simple: markets weren't free after the war; therefore freedom must have vanished from the scepter'd isle-and from Europe generally, leaving the whole continent sadly ignorant of "real freedom."

I quote the blundering Mr. Beck this one last time because his casual bit of historical cleansing reminded me of those thirties leftists on their trips to Russia. They saw freedom in the Soviet Union because they wanted to; Beck sees unfreedom in England because that's what he believes ought to be there. That old "will to believe" still blithely overrules the "evidence of the senses."

We notice this intransigent idealism everywhere on the resurgent Right once we start looking for it. Senator Jim DeMint, for example, makes a point closely related to Beck's in his 2009 bestseller, Saving Freedom: We Can Stop America's Slide into Socialism. The nations of western Europe, he tells us, capitulated to "the siren song of socialism" after World War II and soon thereafter "declined into economic stagnation."13 As it happens, this is incorrect, and in a really monumental way. As a brief check with the annals of reality reminds us, it was during those very postwar years that France, Italy, Belgium, and Sweden-all of them called out by DeMint for choosing socialism after the war-embarked on their greatest boom periods in modern times. But according to Senator DeMint's theoretical guidelines, this is impossible: socialism always brings stagnation, and therefore socialism brought stagnation.

Throughout his bestselling book, in fact, the senator seems to advance on his quarry not by proofs and demonstrations in the conventional sense, but by a process of abstract moral reckoning. In an important pa.s.sage describing the 2008 presidential debates, DeMint criticizes the then senator Barack Obama for referring to "markets running wild after deregulation." DeMint does not counter this statement by demonstrating that markets did not run wild after deregulation; he simply points out that the future president made these arguments and is therefore a man of "socialist principles."14 DeMint's object here is not to refute; it is to unmask, to close down an unacceptable mental operation. There is only one way that believers in freedom can interpret the meltdown of 2008, and they must stick to it whether it fits the facts or not.

A taste for moral reckoning might also explain Senator DeMint's fondness for fairy tales. He introduces one chapter with a meditation on the Three Little Pigs and another with some thoughts on the story of the Gingerbread Man. We have noticed this infantilizing tendency elsewhere in the resurgent Right, and here, as well as in those other instances, its implication is obvious: that political economy can be understood as the battle of good and evil. Government is the wicked witch, while the market is the fairy G.o.dmother, magical bringer of freedom and prosperity.

What's going on here is not merely a withdrawal into simplicity. If simplicity is what you're looking for, the answers are almost too easy these days: Our leaders have been chasing the free-market dream for thirty-some years now, and for every step closer they've brought us, the more inequality has grown, the more financial bubbles have blossomed and burst, the more political corruption has metastasized, the harsher the business cycle has become. One caused the other; that's the "simple" answer.*

But the latest Right doesn't so much simplify reality as idealize it. They're in a place where beliefs don't really have consequences, where premises are not to be checked, only repeated in a louder voice. It is as though the frightening news of recent years has driven them into a defensiveness so extreme that they feel they must either deify the system that failed or lose it altogether.

In Pursuit of True Capitalism.

Writing in 1936, the culture critic Gilbert Seldes marveled at the "morbid pa.s.sion for absolutes" which then gripped the minds of his countrymen. Purists of all political stripes were in voice in those days, and none of them found the deeds of Franklin Roosevelt to their liking. To "the radical critic," the New Deal obviously didn't go far enough; it left the capitalist system intact. To "the reactionary," the New Deal reforms were objectionable for the opposite reason: they meant "the capitalist system has been destroyed."15 It is this latter complaint that concerns us today, and Seldes provided a helpful gloss on its long history. People had moaned as far back as the 1840s that allowing labor unions to exist would destroy capitalism, the author recalled, and sure enough, the form of capitalism they had in those days died, to be replaced by "capitalism modified by the right of collective bargaining." The end-time fears returned, according to Seldes, when the federal government threatened to begin regulating railroads in the 1880s, and again the end of the world came to pa.s.s. Capitalism died, to be replaced this time by "capitalism modified by collective bargaining and Federal regulation."16 Life went on.

Today, as in Gilbert Seldes's time, the fear that true capitalism is about to perish is with us again. Now, as then, only absolutes seem to matter. The panicked ones ignore the American genius for pragmatism and the long, complicated history of political compromise that actually built our economic system. Instead they yearn for some cla.s.s-war Armageddon, some wretched rapture in which losers forever lose and the honorable are finally freed from any obligation to the inferior.

That there is no such thing as pure capitalism is a subtlety that eludes them. What they pine for is a system that can never exist, that has never existed, and that will never exist. And with every inch they bring us toward that ugly utopia, our society's deterioration accelerates. But still they keep on, blinking out the facts of the past as well as the disasters their bad medicine is sure to bring. Nothing matters but the dream, and in its pursuit they will risk our prosperity, our health, and yes, even our honor.

CHAPTER 10.

The Silence of the Technocrats.

Well, reader, we've had a lot of fun poking holes in the things conservatives say, haven't we? They blow off the facts when they feel like it; they swipe symbols from the other side; they ill.u.s.trate arguments on economics with fairy tales. The reasoning you used to hear on the Glenn Beck show seems like something from a brainwashing session at Lubyanka prison. It is preposterous. It is contemptible.

But you know what it's better than?

It's better than nothing.

Let us recall, one more time, the original cataclysms whose memories today poison our every political moment: the financial crisis and the bailouts.

Remember, the culprits of those cataclysms-the ones who wrecked the economy-were not punished for what they did; they were rewarded. By this I don't mean they got away with a slap on the wrist; I mean they were laden down with billions and our blessings. Today they are rich in a way that you and I will never be able to comprehend. All of which happened courtesy of our government, the officials of which have conducted themselves ever since as though nothing really untoward happened at all. The bailout money will be recouped, they tell us. The experts understand these things.

You could not have contrived a scenario better calculated to destroy public faith in American inst.i.tutions. What is the point of hard work, of sc.r.a.pping for a few dollars more at some lousy hourly wage, when dishonest financial legerdemain is so profitable? Why play by the rules when they obviously don't apply to everyone? When louts and bullies and corruptionists take home society's greatest rewards?

The bailouts combined with the recession created a perfect situation for populism in the Jacksonian tradition, for old-fashioned calamity howlers, for Jeremiahs raging against the corrupt and the powerful.

This was the task of the moment, and one political faction, as we have seen, took to it immediately and with relish. They tossed inconvenient leaders overboard. They declared war on the ruling cla.s.s. They a.s.sembled with megaphones in the park and gave voice to the people's outrage.

But the other faction-the actual political descendants of Jackson and Bryan and Roosevelt-took years to rise to the occasion. They didn't seem to understand that circ.u.mstances called for a profound change. They couldn't embrace the requirements of the moment even though they were the ones pledged to the traditional hard-times measures (regulation, reform, social insurance) and even though responding to hard times was once their party's very raison d'etre.

Flowchart.

They were offered the chance, of course. In 2008 Barack Obama seemed to be a figure of destiny like Roosevelt himself. He took the oath of office under similarly disastrous circ.u.mstances and was for a while buoyed up by exactly the sort of popular adulation that followed FDR.

Seven months later, it was clear that Obama had lost the populist momentum. It was frustrating when he turned over economic policy to Larry Summers and Tim Geithner, two well-known friends of Wall Street, and it was maddening when he insisted on following the bailout course of the Bush administration, even after the AIG debacle. But the moment I truly understood that the Dems had blown it came during the debate over health-care reform.

In years past, universal health care had been a cause that allowed liberals to connect to their working-cla.s.s base regardless of everything else they did wrong. And since entrusting our health care to the private sector had allowed both unconscionable profits for the insurers and lousy service for sick people, the debate has traditionally taken a populist tone. The push for national health insurance was a fight, as President Harry Truman had put it, of the "everyday man" against "special privilege," meaning mainly the doctors' professional a.s.sociation, the AMA, with its predictable cries of "socialized medicine."

President Obama's strategy in 2009 was the reverse of Truman's. He would get the traditional opponents of health-care reform on board-the AMA, Big Pharma, insurance lobbyists-and do the deal as an act of cold consensus. All the experts would be heeded. All the corporate and professional "stakeholders" would be taken care of. No one would need to get their suit ruffled.

Then came the confrontations of "Town Hall Summer," when Democratic legislators talking up health-care reform faced hometown crowds of extraordinary hostility-average people yelling from the floor at the emissaries of the "grand bargain." It is true that the town hall meetings were deliberately packed by people who aimed to disrupt, but the populist spectacle they engineered was no less powerful for its agitprop origins. The Democrats appeared to be shaking hands with the Interests, while the ones screaming about "socialism" and theft through taxation this time around were Harry Truman's "everyday men."

Particularly memorable was one town hall meeting in Bremerton, Washington, when a Tea Partier named Keli Carender held up a twenty-dollar bill and challenged her Democratic congressman to come and s.n.a.t.c.h it out of her hand as "a down payment" on the health-care plan, which was surely going to soak taxpayers. (As with many of the town hall confrontations, it was not clear which plan Carender objected to.) And then she just stood there, staring at the congressman with those wild eyes, her arm in the air, immortalized in newspaper photographs like some kind of libertarian Norma Rae.

Another vivid episode was a town hall meeting I listened to on the radio in which an audience of angry Marylanders took turns abusing their U.S. senator. He had prepared a talk describing the minute details of the various health-care proposals then under consideration, but the audience didn't seem to care about that. They wanted to talk about big, philosophical things: freedom, tyranny, the Const.i.tution, and the general incompetence of government.

If you don't remember the particulars of that summer, you might a.s.sume that the Democrats waded into the fight, the way Harry Truman used to do. You might think they relished the chance to talk about big, philosophical things, that they took the opportunity to tell how the existing system pocketed your twenty bucks, how government agencies had failed because they were designed to fail, or how social insurance strengthened freedom rather than violated it.

But that's not what happened at all. In most of the town hall meetings I reviewed, the Democrat on the hot seat seemed incapable of really engaging in a dispute about freedom and the nature of government, or even of challenging the market orthodoxy that issued, in gathering after gathering, from the mouths of protesters around the nation.

It was as though the old-school liberal catechism had become forbidden language, placed on some index of prohibited thoughts. Instead, most of the Democrats I listened to brought the conversation relentlessly back to the baffling details of the various health-care proposals.

This failure led, in turn, to a second disaster. In full retreat before the right-wing onslaught, the Democrats threw themselves into the arms of their corporate allies. They jettisoned the simpler, more popular, but more government-centric idea under consideration and settled on the "individual mandate," which required that everyone in the land sign up with a private insurance company. This solution would be more intrusive than the other one, more complicated, more regulatory. But since it would not create a social insurance program, it was also more "centrist." Naturally, it delighted the private insurance companies.

That's how a populist outburst from the Right caused the inarticulate Democrats to abandon the most populist elements of their own plan and choose instead what we might call the elitist option, a crony-capitalist solution in which public choices would be diminished but corporate profits guaranteed. What had been for decades a campaign to bring security to the average citizen thus became little more than an inside deal between members of the "ruling cla.s.s," as the resurgent Right would soon be calling it.

The preoccupation with technical detail that I noticed during the health-care debate wasn't merely the failing of the unfortunate members of Congress who put on those town hall gatherings; it was the failing of the entire Democratic Party. From its silver-tongued leader on down, Democrats simply could not tell us why our system had run aground and why we had a stake in doing things differently. They could not summon an ideology of their own.

This ideological void was apparent even when the Obama administration considered the greatest liberal triumphs of the past. Take Christina Romer's 2009 speech, "Lessons from the Great Depression," a typical administration doc.u.ment that I have cited several times in these pages. In it Romer, who then chaired the Council of Economic Advisers, rummaged through the thirties seeking guidance for present-day officials, but whether she was talking about monetary expansion or the need for stimulus, each of her suggestions was presented simply as a policy choice, as a thing that intelligent people would naturally decide to do in order to solve a given problem. That monetary expansion and stimulus programs were possible in the thirties only because of an ideological change in the way average Americans thought about government and the economy went unmentioned; we were supposed to know which road to choose from our study of the academic literature. Expertise would guide us. The ideology, presumably, would take care of itself.1 And so Democratic leaders tried to a.s.suage public anger over the bailouts while barely mentioning Wall Street's power over Washington-that subject they left to the resurgent Right. They gave us a stimulus package, but not a robust defense of deficit spending. They beefed up certain regulatory agencies, but they didn't dare tell the world how money had managed to wreck those agencies in the first place. And when a clearly unsafe BP oil well poured millions of gallons of poison into the Gulf of Mexico, President Obama told a reporter that before he could figure out "whose a.s.s to kick" he had to convene a panel of experts.2 It is easy to understand how Democrats evolved into this tongue-tied, expert-worshipping species. Their traditional Democratic solutions may well have solved our problems, as Christina Romer maintained, but the ideology behind those solutions-as well as the solutions themselves, in many cases-are totally unacceptable to the people who increasingly fund Democratic campaigns. Instead, the Democrats tried to have it both ways: to deliver the occasional liberal measure here and there while studiously avoiding traditional liberal rhetoric. President Obama tries to stay on the good side of companies like Goldman Sachs and BP even as he desperately drives his hook-and-ladder around a world they have set on fire.

The nation, meanwhile, was begging for a round of national soul-searching. It wanted to know: How did the Crash of 2008 happen? How did government miss the warning signs? What are our responsibilities to our neighbors in hard times? In response, Democrats offered technical explanations. They simply could not talk about the disasters in a way that was resonant or compelling. Only the idealists of the Right did that. What the Democrats held out to an outraged nation was a fastidiously detailed flowchart for how things might be reorganized.

Good Bailouts and Bad.

The bailouts, the stimulus, the health-care debate: with each of these issues, the path of expertise led the Obama administration toward compromise with the power of wealth. And by the thinking of Washington, that is entirely as it should have been.

But in every case, the administration compromised with the wrong party. Consider the Wall Street bailouts, the draft of political poison which Obama sipped even before his presidency began and from which he has never really recovered. Although it was not widely acknowledged at the time, bailouts on the scale of 2008 had happened before, and they had been politically deadly before as well. But there had also been bailouts that succeeded, bailouts that were even popular.

The difference, in a phrase, is Wall Street. What makes bailouts toxic is cronyism, the coming together of government and private wealth, the spectacle of Washington doing special favors for its pals in the investment banks. What makes bailouts healthful is government acting as an alternative to Wall Street; government helping others recover from Wall Street's mismanagement of the economy.

It is a lesson that goes back to the earliest bailouts of them all, the ones orchestrated by the Reconstruction Finance Corporation (RFC) under Presidents Hoover and Roosevelt. Under Herbert Hoover, the bailout agency's doings were enormously unpopular, thanks to episodes that should sound very familiar to us today. In 1932, the RFC went to the rescue of railroads that were essentially fronts for Wall Street interests. (Like AIG!) Then it poured money into a big Chicago bank run by the man who had been not only the RFC's chairman a few weeks before, but also Calvin Coolidge's vice president. (Cronyism!) And it did these things while denying funds to cities that had run out of money to pay schoolteachers. (Where's my bailout?)3 Although it was almost never mentioned in our present-day debates over the legacy of Franklin Roosevelt, those bad bailouts were one of the targets of Roosevelt's famous "forgotten man" speech of 1932, in which he charged that "the infantry of our economic army" had been overlooked while Hoover dispensed billions to the "big banks, the railroads, and the corporations of the nation."4 Did FDR's criticism of the bailouts mean there would be no more of them? Not exactly. As president, Roosevelt actually expanded the RFC and changed its direction. The man he installed as its chairman, a Texas banker named Jesse Jones, was no Tim Geithner. He was, instead, a cla.s.sic populist type who regarded high finance with extreme suspicion. Jones spread the wealth around rather than dole it out to Wall Street. His RFC bailed out small-town banks, sank millions into agriculture, public works, education, insurance, and every imaginable type of small-scale financial enterprise.5 And his RFC was far tougher on bailout recipients than we were this time around. It fired top management at bailed-out banks when Jones disapproved of them. It helped organize new banks when Jones thought they were necessary. It put compensation caps on bailed-out CEOs that were far stricter than anything contemplated by Team Obama. It took far-reaching steps to ensure that the railroads it rescued didn't turn the bailout money over to Wall Street banks. Jones even once told railroad executives that they had no business living in New York City.

The most critical thing was this: Under Jesse Jones's direction, the RFC was very clearly not an instrument of Wall Street. Instead, it was a sort of compet.i.tor, helping to organize the business structure of the nation independently of Wall Street's dictation.6 While Jones's RFC did these things, the Democrats of the day regulated investment banking with the Securities and Exchange Commission, broke up the big banks with the Gla.s.s-Steagall Act, and reorganized the Federal Reserve in a way that diminished the power of the New York banks. And they repeatedly told the nation why they were doing these things.

Maybe the Roosevelt/Jesse Jones approach wouldn't have helped this time around. After all, the antibailout leaders of the last few years object when a helping hand is extended to the little guy just as much as they do when it's Wall Street that's soaking up the tax dollars. But at least such a technique would have made it impossible for the resurgent Right to present themselves as the only principled opponents of Wall Street or as the only ones who are wise to the banks' corrupt grip on Washington.

We'll never know. Obama chose the path of Herbert Hoover instead. Yes, the TARP aided regional banks here and there, but its obvious, overriding purpose was to get Wall Street off the hook for its disastrous mistakes, to stand the banks back up and get those bonuses flowing as in the old days.

Upon taking office, Obama did not break with Hank Paulson's campaign to restore Wall Street's preeminence or lay plans to reduce investment banking's power over American life. Instead, he took pains to let the world know that he embraced the Paulson strategy, appointing Paulson's ally Geithner to be his treasury secretary, retaining bailout mastermind Ben Bernanke at the Federal Reserve, and choosing as his chief White House economist Larry Summers-the man who had been treasury secretary when traditional banking rules were triumphantly overturned during the Clinton years. To this day, and despite the cries of "socialism" that dog them, Obama's crew has almost never voted the shares in the banks that the nation owns and has never replaced the management at a single one of those bungling inst.i.tutions.* And each time political adversity came in the following years, the Obama team compromised in the direction of Wall Street, as though that was who needed to be mollified.

By Washington standards, the Obama administration played it exactly right. Voting for the TARP and then continuing the bailout policies of the Bush administration were acts of political maturity, showing the world that the Democrats could be trusted to rise above partisanship, to make the hard decisions, to swallow the bitter pills, to do what responsible adults knew they had to do, and so on down the list of Power Town cliches. In any case, the thinking goes, all political battles are battles over the "center." Since the Democrats are a party of the "left," their critics can only be placated by moves to the "right." That's why, in order to appease those who fear Obama's radicalism, the president had to make concessions to business (meaning Wall Street) and bring in nonthreatening personalities to develop his economic program.

The economic folly of this strategy should be plain by now. That it might also lead to electoral disaster probably never even occurred to the president's hard-nosed political advisers. After all, catering to Wall Street had brought only victories to Bill Clinton. Coming around to the way of the market had been regarded as high-minded stuff in the nineties, a statesmanlike acknowledgment of the obvious validity of conservative economic ideas. And Democrats in Washington look to the Clinton years as a kind of golden age.

But the advent of hard times made all that reasoning as obsolete as the floppy disk. Although Democrats apparently didn't know it, the Great Recession had repolarized the compa.s.s points. Nothing worked the way it used to in the nineties. It was no longer about "left" versus "right"; it was about special interests versus common interests. This was the time for a second FDR, not Clinton II.

The Right understood this instantly, as its many movements and ideas and manifestoes attested. The country demanded philosophical guidance, and the Right provided it. Conservatives claimed to speak for a recession-battered people, and as I have endeavored to show, they adopted the tones and markings of traditional hard-times insurgencies. Indeed, by April of 2011 it was possible for National Review to depict the author of "Down with Big Business," Representative Paul Ryan, as FDR, using the same image that Time used for Obama in 2008.

But it took the Washington Democrats years to grasp that things had changed. After the "sh.e.l.lacking" of 2010, for example, President Obama's response was to replace the former investment banker and Clinton retread Rahm Emanuel with ... Bill Daley, another Clinton retread and former investment banker. Whom did the president think he was accommodating when he made this move? Your guess is as good as mine.

The low point came during the debt-ceiling debate in the summer of 2011, when the brand-new Republican House of Representatives threatened to force a default on the national debt by the U.S. government unless it received what it wanted. The Republicans followed their playbook-moving ever farther to the right, creating the catastrophe they had pretended to foresee in the preceding years-and Obama followed his. Having n.o.bly divested himself of bargaining chips some months before, Obama now declared that he would answer Republican demands by seeking some high-minded "grand bargain." He allowed that cuts to Social Security and Medicare, two of the proudest achievements of the Democratic Party, might well be necessary, and gave his a.s.sent as Republicans steered the economic policy of a stricken nation toward austerity.

Sometimes when I watch the Washington Democrats in action, my mind goes back to the tragically incompetent British general staff of World War I, ordering a.s.sault after gigantic a.s.sault, only to see their armies annihilated one after another. But still they kept at it, ordering up another round of the exact same thing, playing by the gentlemanly rules of combat, never doing anything remotely clever, and always completely surprised when the other side introduced them to twentieth-century warfare in some brutal new way.

It is that same blindness, that same fixed thinking, that we see in the strategizing of the Washington Democrats. No one among them seems to have wondered if bailouts might be done in a different way, or foreseen that Republicans might not play by the debt-ceiling rules. They try what Clinton tried; they are astonished to see it fail. And so they try it again. The Washington Democrats will no more acknowledge the possibilities of other tactics than they will abandon Georgetown and move en ma.s.se to some burned-out quarter of Baltimore. Instead they deride their liberal critics as impossible dreamers-or as "f.u.c.king r.e.t.a.r.ded," in Rahm Emanuel's famous phrase-and try what worked for Clinton one more sorry time.

It is not hard to think of ways that Obama and Company could have stopped the resurgent Right in its tracks, had they wanted to. To begin with the most obvious, Obama and Company could have put themselves at the forefront of populist anger against Wall Street rather than making themselves the embodiment of the cronyism the public despises. They could have captured the outrage of small business by promising to break up the big banks or resuming ant.i.trust enforcement. Another tactic might have built on the well-known facts that Tea Partiers hate NAFTA, and that they're hardly alone: why not announce that it's time to reexamine the nation's disastrous free-trade deals? Still another: As everyone knows, the newest Right has enjoyed amazing success spreading fears that liberal economic moves will automatically erode basic freedoms. Why not undercut this silly idea instead of allowing it to fester? End the Bush administration's domestic wiretapping program. Demand the reregulation of Wall Street and the repeal of the Patriot Act.

One reason Democrats didn't do these things, perhaps, is that it's easier to focus on the lunacy of the rejuvenated Right than on the main sources of its ideas. Tea Party leaders are so colorful, and their protest signs are so nutty, that dismissing them is more attractive than engaging them. And so the paranoid/racist moments in Tea Party history are singled out and obsessively commented upon,* while its vastly more significant free-market streak is either regarded as camouflage for what the libs know to be its real payload-some kind of theocratic white supremacy-or else simply ignored.

Unfortunately, the other side wasn't calling for theocratic white supremacy. The threat haunting our time was not some sort of Klan comeback; it was economic disintegration. Bank fraud, bailouts, bonus grabs, BP: these were the burning issues of 2010, and the Democrats pretty much left them to take care of themselves. Instead, they built an enormous Maginot Line on the antilunatic frontier and sat there waiting while the attack came down an entirely different route.

Terminal Niceness.

None of these shortcomings should be pinned on President Obama alone, despite his emotional aloofness and his academic background. They are a reflection of the party he leads and the voters for which it increasingly speaks. After all, Barack Obama is not the first Democrat to offer "competence" as the answer to a period of deeply ideological governance; that was Michael Dukakis back in 1988. And President Obama seems like Demosthenes when his remarks on health care are compared to the town hall disasters presided over by his tongue-tied, detail-dazzled Dems in 2009.

The problem is larger than him; it is a consequence of grander changes in the party's most-favored group of const.i.tuents. No one has described the new breed of Democrat better than ... Barack Obama. "Increasingly I found myself spending time with people of means-law firm partners and investment bankers, hedge fund managers and venture capitalists," reminisced the future president in his 2006 book, The Audacity of Hope.

As a rule, they were smart, interesting people, knowledgeable about public policy, liberal in their politics, expecting nothing more than a hearing of their opinions in exchange for their checks. But they reflected, almost uniformly, the perspectives of their cla.s.s: the top 1 percent or so of the income scale that can afford to write a $2,000 check to a political candidate. They believed in the free market and an educational meritocracy; they found it hard to imagine that there might be any social ill that could not be cured by a high SAT score. They had no patience with protectionism, found unions troublesome, and were not particularly sympathetic to those whose lives were upended by the movements of global capital. Most were adamantly prochoice and antigun and were vaguely suspicious of deep religious sentiment.7 "I know that as a consequence of my fund-raising I became more like the wealthy donors I met," Obama confesses a few paragraphs later.8 So he has. And so has his party. Modern Democrats don't do things the way Roosevelt and Truman did because their eye is on people who believe, per Obama's description, "in the free market" almost as piously as do Tea Partiers. Cla.s.s language, on the other hand, feels strange to the new Dems; off-limits. Instead, the party's guiding geniuses like to think of their organization as the vanguard of enlightened professionalism and the shrine of purest globaloney.