The scene: The wake of a major recession, caused by excesses
by wealthy individuals and corporations.
The nation, particularly the middle class and small businesses, has been
severely damaged. The Democratic
Party presses for reform and more regulation. The Republican Party splits between its mainstream
conservatives, who support the status quo, and a fringe group demanding a
sweeping change in the party's direction.
The time: 2013, after the Great Recession of 2008?
Nope—I am writing about the turn of the 20th
century, after the devastating Panic of 1893. Ironically, the Republican Party's fringe were then
left-wing progressives calling for legislation that would limit the power of
the great trusts and monopolies, and provide more protection for unions and the
average citizen. (Remember: the
Republican Party was at that time truly the party of Lincoln.) Fortunately, the president was Theodore
Roosevelt, one of the Republican fringe who—after being relegated to the
powerless office of Vice President by the mainstream of the party—had succeeded
to the presidency on the assassination of President McKinley. By virtue of that accident of history,
Roosevelt almost single-handedly launched the Progressive Era of the first two
decades of the 20th century.
That era is the subject of an excellent new book by Doris
Kearns Goodwin: The
Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of
Journalism. As the title suggests, it is a twin biography of Roosevelt
and Taft, the 26th and 27th presidents of the United
States. It also contains a series
of mini-biographies of the so-called muckraking journalists, notably S. S.
McClure, publisher of the influential McClure's magazine, and those who wrote lengthy exposés for
it—among them Ida Tarbell, Ray Stannard Baker, Lincoln Steffans and William
Allen White. It is a massive book
(over 900 pages, about a third being copious end notes documenting its many
quotations) but for all its length a very worthwhile read.
I need not summarize Bully Pulpit here.
That has been done in a splendid review in the New York Times by Bill Keller, formerly executive editor of
the paper. Suffice it to say that
the biographies of Roosevelt and Taft are fine pointillist paintings of the
men, their families, their philosophies and their long-term
interdependence—gripping even for those who have read about them
previously. The biographies of the
muckrakers are much shorter, but explain how each became a stentorian voice for
the people and against conglomerations of corporations and corrupt
politicians. The book illuminates
how Roosevelt, Taft and the muckrakers interacted to change the course of the
nation.
Of course, Teddy Roosevelt dominates the book, as he did the
era. Scion of a rich and famous
family, he was brash, hyperactive, and multi-talented: a prolific writer, a
consummate politician, a warrior, a rancher and a big-game hunter. He made his mark as a politician
by being marvelously open to others' insights, especially the muckrakers'
investigations of excesses in the country, always probing to get an
understanding of the thinking of the masses. Taft plays a secondary, supportive role—a counterbalance to
Roosevelt's sometimes-immoderate forays.
They both used the Congress, the courts and executive power to
break up trusts that had monopolized the oil, steel, railroad and financial
industries through bribery, corruption and intimidation; and to empower
the middle class and labor unions in their opposition to those trusts.
Goodwin's book cannot help but focus one's attention on the
repetitive folly of the business cycle, as new generations forget the lessons
of the past. We have had three
such major cycles in the United States in the past 150 years, each starting
with a period of increasing laissez faire
that led to an extraordinary disparity of wealth, income and power between the
moneyed classes and the rest of the population. Major economic crises ensued, followed by periods of reform:
• In the aftermath of the Civil War, the period of laissez faire was accompanied by the ascent of the robber barons
in railroads, steel, oil, finance and other industries. The Panic of 1893 called forth the
reformers and regulation of the Progressive Era described above.
• Subsequent laissez faire excesses
during the Roaring Twenties led to the Great Depression of the 1930s. Franklin Roosevelt's New Deal then
added massive new regulation to the economy, reining in the free-wheeling
financial and industrial sectors and empowering unions.
• In the 1970s and 1980s, laissez faire came back in favor, with many of the New Deal's
regulations being reversed.
Subsequent excesses caused the Great Recession starting in 2008. There is a still-ongoing period of regulatory
reforms, against those who purblindly again want the market to "do its
magic" unimpeded, and therefore are busy chipping away at those reforms.
Will we ever learn? I doubt it, for such madcap cycles have
been occurring with regularity since at least the Dutch tulip mania of the
early 17th century. In
this opinion, I am in the good company of John Kenneth Galbraith who in his
little gem of a book, A
Short History of Financial Euphoria,
concludes that "there is probably not a great deal that can be done. Regulation outlawing financial
incredulity or mass euphoria is not a practical possibility."
When will the next disaster hit? No one can tell, not even Nobel
Prize-winning economists, for all their expertise. As Galbraith once famously said, "The only function of
economic forecasting is to make astrology look respectable."