Despite gloomy consumer sentiment, President Joe Biden is proud of the economy he has created.
"[I]t wasn’t that long ago we were losing jobs in this country," the president said at a Labor Day event with a Philadelphia metal workers’ union. "In fact, the guy who held this job before me was just one of two presidents in history that left office with fewer jobs in America than when he got elected office. By the way, do you know who the other one was? Herbert Hoover."
The line works on two levels: by comparing President Donald Trump to Hoover, a presidential failure, but also by analogizing Biden to Hoover’s successor, Franklin Delano Roosevelt. The implication, delivered to a union audience, is not an accident. FDR was a union-backed president who oversaw passage of the Wagner Act, ushering in decades of union dominance. Biden has sought to pick up that mantle, walking picket lines, barnstorming union halls, and otherwise signaling that he is, in the words of former AFL-CIO chief Richard Trumka, "the most pro-union president in history."
This affinity, furthermore, is just part of the Rooseveltian picture Biden has tried to paint of himself. His moderate image (if only by comparison to the far-left flank of his party) is a gesture at rebuilding the center-left coalition that sent Roosevelt to the White House. His massive spending programs—the "Build Back Better" agenda and the Inflation Reduction Act—are routinely compared to the New Deal. The Biden thesis is that "the era of big government is over" is over; big government is back with a vengeance.
To draw the Biden-Roosevelt connection is to assent to a particular theory of the past century of American economic history. Perhaps the most effective statement of that theory, and certainly the most timely, is Ours Was the Shining Future, the new book by New York Times writer David Leonhardt.
In the book, Leonhardt covers roughly a hundred years of history, from the early days of the Roosevelt administration to the present. He does so to argue that "capitalism remains the best system for delivering rising living standards to the greatest number of people—but only a certain type of capitalism." That type of capitalism, which Leonhardt calls "democratic capitalism," is the political economy of the New Deal: careful regulation, a distaste for wealth acquisition, and close cooperation between business, government, and labor. That form has been replaced, in Leonhardt’s telling, by "rough-and-tumble capitalism." Deregulation and the aggressive prioritization of growth have, in Leonhardt’s view, driven widening inequality and the decline in American life expectancy.
How did this replacement happen? Leonhardt’s story goes something like this: In the postwar era, a coalition of moderate business and labor leaders, corralled by government, kept the economic peace, and produced broad-based economic prosperity. But this coalition proved fragile. The New Left of the 1960s and ’70s prioritized social over economic issues, while labor unions failed to redirect the conversation. The right, instead, took advantage, banking on its own culture war issues to push through a radical reform agenda. Certain social pressures—rising immigration and educational polarization—exacerbated these basic trends, contributing to the declining status of the working class.
This story is told primarily through a series of biographical portraits of Americans involved, in one way or another, with economic policy. There are presidents and professors, activists and lawyers. Reference to academic research is sprinkled throughout, but most of the focus is on the people. If you have a more-than-passing familiarity with the history of latter-20th century social policy, none of the names will be new. But if you don’t, it’s a serviceable review.
But that review is in service of a larger project, the restoration of what Leonhardt calls "democratic capitalism," but which one could just as easily think of by the more popular term: Bidenomics. After all, isn’t the president’s vision precisely a return to the kind of corporatism that defined post-WWII America? Isn’t his thesis that capitalism is good, but needs to be managed? Even Biden’s positioning on social issues, and his attempts (however ineffective) to distinguish himself from his party’s left, is a repudiation of the very politics Leonhardt blames for the fall of "democratic capitalism."
So on the level of political essay, does Ours Was the Shining Future persuade that the Rooseveltian past is the Bidenomic future? Not so much. The fall of democratic capitalism wasn’t an accident—it was baked in.
The New Deal gave way to the Great Society, and the vast, sclerotic social services bureaucracy that trapped its clients in cycles of poverty. The labor unions became entrenched interest groups, whose demands grew to retard growth. (In one of the book’s less self-aware sections, Leonhardt bemoans the power of special interest groups, conveniently missing public sector unions in his enumeration thereof.)
Most importantly, massive government spending proved unsustainable. Leonhardt acknowledges the inflation of the 1970s, but prefers to attribute it to the OPEC oil shocks, avoiding discussion of Milton Friedman’s insight that the ever-expanding money supply was the real problem. A similar burst of inflation following Biden’s first wave of mass spending programs has continued to dog the president politically, for similar reasons. The problem with democratic capitalism, to paraphrase Thatcher, is that you eventually run out of other people’s money.
All of this is not so much a criticism of Ours Was the Shining Future, which is valuable as a statement of the Bidenomics theory of the case. Rather, it is a criticism of that vision as such. It didn’t work last time, and it won’t work now.
Ours Was the Shining Future: The Story of the American Dream
by David Leonhardt
Random House, 528 pp., $32
Charles Fain Lehman is a fellow at the Manhattan Institute and a contributing editor to City Journal.