The Roosevelts versus Ronald Reagan.

Back at the start of the Twentieth Century, Theodore Roosevelt had posited that big business and a foreseeably big labor would require a big government to balance their power and solve complex new problems. For a long time, it appeared that “the Republican Roosevelt”[1] had been prescient. The New Deal, launched by his cousin Democrat Franklin D. Roosevelt, greatly expanded the government’s role in the economy. That trajectory continued until the election of Ronald Reagan in 1980. Since then, Republicans have inveighed against the expansion of state power (unless national security can be invoked). What do Americans think about this issue in the early Twenty-First Century? A January 2014 opinion poll captured a fundamental division of opinion.[2] A majority (57 percent) agreed with the statement that “we need a strong government to handle today’s complex economic problems.” However, a very substantial minority (41 percent) rejected that idea in favor of letting a free market operate without “the government being involved.” To belabor the obvious, 57 + 41 = 98 percent of Americans. There is no uncertainty in the minds of Americans about this issue, no mushy middle ground on which compromise is possible. Two tribes confront each other. In Europe, on the other hand, there is a broad consensus on the role of government in the economy.

This has important implications for the economically-battered ordinary American. In 2010, the median wage was $26,364. After adjusting for inflation, this was the lowest real median wage since 1999.[3] In 2014, American median net worth per adult hit $44,900. Japan, Canada, Australia, and many Western European countries ranked ahead of the United States, which came in at 19th .[4] Apparently, if Americans are offered a choice between earning another $20,000 a year and getting another month of vacation, they would take the pay.[5] One could interpret this as Americans being workaholics. One could also interpret it as a sign of the economic stress under which many Americans are operating.

The question is what to do about this pathetic performance. The opposing positions generally pit redistribution through taxation policies (i.e. “strong government”) against pro-growth and social mobility policies (i.e. “let the market operate”).

If you combine federal, state, and local taxes, Americans are among the lowest taxed people in the developed world. Here the US ranks 31st, trailing most of the countries with higher median net worth.[6] Where does American federal spending go? Almost two thirds of it (65 percent) goes to three categories: Social Security (24 percent); Medicare/Medicaid/CHIP (22 percent); and defense (19 percent).[7]

None of this goes to the question of which group is correct. Perhaps neither one is entirely correct. Europeans are laboring under an “austerity” that would never be tolerated in the US. It does suggest that there is a core dispute that is more powerful—and important—than the “culture wars” that obsess the media and Democratic activists. Hence, Bernie Sanders.

[1] As Yale historian John Morton Blum called one of his books.

[2] “Poll Watch,” The Week, 17 January 2014, p. 17.

[3] “Noted,” The Week, 4 November 2011, p. 18.

[4] “The bottom line,” The Week, 20 June 2014, p. 34.

[5] “Poll Watch,” The Week, 24 July 2015, p. 15.

[6] “Noted,” The Week, 25 April 2014, p. 16.

[7] “Noted,” The Week, 25 April 2014, p. 16. It is worth pointing out that most countries don’t spend anything like the share of the budget on defense as does the US. Instead, they rely on the US in an emergency. That frees up a lot of resources for social programs. Then the federal nature of American government means that much spending is done by state and local authorities. Some European countries, in particular, have a more centralized system.


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