Politics

The Politics of Memory

What's too painful to remember we simply choose to repeat.

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I am just old enough to remember inflation. As a kid, I didn't really feel the sting and uncertainty of constantly rising prices, except when waiting in a gas line while the guy in the kiosk manually changed prices. But the fear of too many dollars chasing too few goods was in the headlines enough that I distinctly recall poring through the business pages, crunching the numbers, and concluding that it was scientifically "impossible" to get interest rates, unemployment, and inflation each under 10 percent. Of course, I was 10 years old. 

In the bizarre climate of contemporary Washington, D.C., my 10-year-old self probably would be employed as an economic policy blogger by The Washington Post. But at the time I was merely sponging up the pessimistic malaise America was marinating in. Richard Nixon had tried his disastrous wage and price controls, Gerald Ford (our cover boy this month) wore his desperation on his jacket lapel in the form of a "WIN" (Whip Inflation Now!) button, and Jimmy Carter alternated between blaming the American people and openly wondering whether low inflation was even possible in the modern world.

It is one of the enduring curiosities of current economic discourse that inflation—which, along with crime, was consistently one of the two biggest American worries throughout the 1970s—has been almost erased from our collective memory banks. The best and brightest Keynesian economists who helped inflict it on the country have done their best to ignore the subject in subsequent decades, preferring to denounce a new series of totemic hate figures, from Ronald Reagan to George W. Bush. And the generation of liberal commentators who have never lived through a period of constantly rising prices are delivering snotty lectures to German central bankers (of all people) about being too "paranoid about inflation," lamenting that Reagan broke the perfectly workable nexus between inflation and expanded government, and trying to marginalize anti-inflation commentators as half-mad cranks. "I think the inflation rate should at least be above zero before we start worrying that it's gotten out of control," blogger Matthew Yglesias of the Obamaphile think tank the Center for American Progress wrote in June.

It turns out Yglesias' precondition was met that very month, when consumer prices jumped 1.1 percent for the 30-day period, putting 12-month inflation at 5 percent, the highest annual level in 17 years. As of press time, the Treasury Department had just bowed to the inflation concerns of foreign U.S. debt holders by dramatically increasing the sale of inflation protected U.S. bonds. "Inflation is the No. 1 worry," Marc Chandler, global head of currency strategy for Brown Brothers Harriman & Co., told The Wall Street Journal in early August.

As most of the participants in our "Inflation Returns!" forum (page 22) agree, the reappearance of inflation is not an if; it's a when. It is probably impossible to engineer what one of our panelists, San Jose State economist Jeffrey Rogers Hummel, has called in our pages "the most dramatic peacetime experiment in monetary and fiscal stimulus in U.S. history" without that money bomb being digested at some point. And the more those in or close to power still think in terms of if, the sooner when will come.

An analogy: By March 2003, the last time the United States faced a military outcome far worse than predicted was the Vietnam War. After 1975 the country was very tentative about engaging in major combat operations overseas. But then the first Gulf War succeeded much faster, and with far fewer U.S. casualties, than just about anyone predicted, and was then followed by similarly surprising (though less dramatic) successes in Kosovo and Afghanistan. By the time of the Iraq war, this string of better-than-advertised performances had lulled policy makers and voters alike into forgetting the lessons of the 1970s, becoming reckless with the exertion of power and failing utterly to concoct a plausible Plan B. 

Living in Washington these days is like experiencing the 1970s all over again, just without the great music and bad clothes. Barack Obama is on the verge of unleashing the biggest wave of alternative energy boondoggles since Jimmy Carter. Commentators like Yglesias are proposing, as if it's never been tried, "What if we had a 95 percent marginal tax rate on income over $10 million? What dire consequences would flow from this?" And everywhere you see evidence of presumed (though highly questionable) short-term gain being offered in place of the longer-term reforms needed to convincingly reverse the worst economic crisis in at least a quarter century.

Instead of accepting the short-term pain of industrial bankruptcy, Obama (like his predecessor) keeps shoveling taxpayer money at failed companies. Instead of scaling back the government incentives that encourage Americans to take on more risky debt (see Tim Cavanaugh's "The Debtorship Society," page 62), the administration is expanding them. And in a move that looks like an attempt to illustrate Frédéric Bastiat's parable of the broken window, the federal government is not only bribing the middle class with $4,500 checks to destroy their perfectly functional old cars but claiming credit for rescuing the economy in the process.

Memory loss, while potentially ruinous to the U.S. economy, does have its momentary political advantages. Already we are seeing some of the most vociferous critics of George W. Bush's awful civil liberties record simply turn the other cheek at the sight of Obama extending more of the same (see Jacob Sullum's "The Right to a Guilty Verdict," page 9). "Things have been looking pretty good," New York Times columnist and former editorial page editor Gail Collins wrote in an assessment of Obama's first 200 days in office. "American influence is rising abroad, and at home nobody in the White House appears to be plotting to undermine our civil rights on a daily basis."

And in an act of short-term memory loss as predictable as it is despicable, partisans of both major political parties have completely swapped their views about public protest now that power in Washington has changed hands. The same Republicans who for years ridiculed every anti-Bush protest (including the mammoth, 100,000-strong anti-war march at the 2004 Republican National Convention) as a festival of America hating lunatics are now complaining bitterly about sparse and negative media coverage of comparatively tiny Tea Party protests from coast to coast. The Obama administration and its media allies, meanwhile, are portraying protests against health care reform and other economic policies as the shadowy works of a moneyed cabal staffed by the insane.

"Members of Congress are getting yelled at about socialized medicine by people who appear to have been sitting in their attics since the anti-tax tea parties, listening for signs of alien aircraft," Collins wrote in a column typical of the genre. "But on the bright side, they've finally got something to distract them from the president's birth certificate." 

This effort at marginalization—of lumping everyone who opposes the president's complicated and expensive overhaul of the health care system with fringe conspiracy theorists—is something we should all get used to. As Jesse Walker demonstrates at length in his marvelous essay on "The Paranoid Center" (page 30), exaggerating the threat posed by fringe movements and then conflating them with workaday political opposition has long been a favorite method for the political center to exert and expand power, often at the direct expense of liberty and even life. It's the ugly instinct of overdogs everywhere. And it's a category of memory I wish I could forget.

Matt Welch (matt.welch@reason.com) is editor in chief of reason.

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  1. Well, maybe this means we’ll get Reagan 2.0 after the Obamanation tries his best to destroy our country. I doubt it but it’d be nice.

    And yes, the marginalizing of those who disagree will get even worse than it is now.

  2. As long as economics remains in most people’s minds a dismal science where there cannot be a concrete unified theory people will continue to use it to justify whatever action is in their political advantage. Speaking of memory, hopefully the next central bankers will remember Greenspan and that easy money during a boom time leads to overheating.

  3. the 1970s all over again, just without the great music and bad clothes

    The clothes are just as bad. You wait.

  4. Bernake has mentioned keeping an eye on inflation and increasing rates as necessary to prevent it. Every rate cut has an explanation that inflation was considered.

    I would say the fed reserve is aware of the risk, though I wouldn’t bet them preventing inflation after their current policies.

  5. Good work Matt!

    I keep beating my head against the wall watching people like Yglesias run through such idiotic ideas that are terrible all on their own, but which have already been tried with disastrous results. “Hey – what if we impose price controls?” “What if we increase taxes?” “What if we impose 35% tariffs on Chinese tires?”

    Ugh.

  6. “Well, maybe this means we’ll get Reagan 2.0 after the Obamanation tries his best to destroy our country.”
    So we’re still screwed. Thanks for reminding of that.

  7. Matthew Yglesias is one of the many special ed children of political and economic commentary.

  8. We don’t need a Reagan 2.0, but we’ll probably get one anyway. No, what we need is more like a Ron Paul 1.0, or whoever the libertarian party puts up next. But, yes, I know that a libertarian will never win, since the mainstream dumbfucks like to flip-flop every other election.

  9. What if we had a 95 percent marginal tax rate on income over $10 million? What dire consequences would flow from this?”

    It caused me real physical pain when I read this. Real. Pain.

  10. So we’re still screwed. Thanks for reminding of that.

    Why is it I’d rather be screwed under Reagan 2.0 than Carter 2.0?

  11. I should point out that much of the deregulation that led to the economic expansion of the 1980’s was done under Carter’s watch.

  12. I should point out that much of the deregulation that led to the economic expansion of the 1980’s was done under Carter’s watch.

    Proof? Link? Marginal tax rates came down under Reagan.

  13. Tarran, looks like you’re correct in that Carter began the deregulation process with Airlines and trucking, and some oil indusstry deregs, so hat tip to you.

  14. “…The same Republicans who for years ridiculed every anti-Bush protest (including the mammoth, 100,000-strong anti-war march at the 2004 Republican National Convention) as a festival of America hating lunatics are now complaining bitterly about sparse and negative media coverage of comparatively tiny Tea Party protests from coast to coast…”

    1) Attendance at last weekend’s march on Washington was easily over 100,000, carefully estimated by several analysts. Perhaps you wrote this piece before that.

    2) Estimates for total number of teaparty attendees across the country during the week of April 15 was somewhere between 300,000 and half a million, based on both police crowd counts and aerial photography.

    I think it’s much more impressive to get 200 to 5000 people to come out on the same day in over 100 locations, in all 50 states, than to get thousands to all converge on the same location.

    3) There is a big difference between “ridicule” and “sparse media coverage.” The anti-war protests were very well-covered, and many of the local teaparties were not. In fact, there were several cases of local media giving lots of attention to small a leftist protest in a particular city while a much larger teaparty took place at the same time.

  15. re: the 9/12 march. I’m an avid NPR listener and I’m not saying they haven’t said anything about it, but I haven’t heard word one on it.

  16. Yehudit — This article as at the printer long before 9/12. We, and I, have also covered the 9/12 protests, which you can find all over the site.

  17. Matt – that doesn’t answer the half million people who showed up in April. And these rallies are the essence of grass-roots – all hand-lettered signs and many people with children, unlike the factory-printed paraphenalia of the anti-war crowd.

    But I agree that inflation is a wild tiger, just around the corner, about to gobble up much of our savings. My gold mining stocks are booming – how do YOU plan to survive?

  18. I predict hyperinflation. The dollar will be practically worthless within 2 years, max. And no it’s not all Obama’s fault. In fact, the conditions for this were already in place by the time he took office. He’s only going to continue the same policies and make the inflation worse.

  19. Yehudit

    If I read your post correctly, you’re saying the Republicans should be exempt from their own standards of hating protesters?

  20. WIN? The buttons we wore in high school said NIM.

  21. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets.

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