Once upon a time, each individual person in the Americans society and the American economy bore all sorts of risk associated with their life.[1] Then came the Great Depression of the Thirties.[2] Under Democratic auspices in the New Deal and the Great Society, mass-unionized workers got defined-benefit pension systems, “Cadillac” health insurance plans, unemployment insurance, near-full employment, and ever-more generous Social Security. In essence, risk became shared as if in an insurance model.

Then, beginning in the Seventies, international competition eroded the complacency of the post-war decades. Coincidentally, at the same time, the mythic “American work ethic” eroded to the point where, for example, American-manufactured cars ceased to be stolen. OK, somebody might want to buy German cars or Japanese cars, but Americans cars? Who would steal a K-Car or a Gremlin? The car companies and the UAW pressured Washington into imposing quantitative limits on the number of Japanese cars imported into the United States. Again, the assumption of risk fell on the group or community rather than on the individual.

In the Eighties, risk began to be shifted back toward the individual. Both corporations and governments “de-leveraged” by cutting their formal obligations. Defined-benefit pension systems gave way to defined-contribution systems; health insurance slid toward high-deductible plans; a minimum of 5 percent unemployment became the definition of “full employment”[3] Rather than tolerate poor workmanship for high labor costs, companies began to shift their production overseas. American consumers got better products at a lower price.

All the same, those consumers were also producers. The new systems eroded both job-security and labor compensation. Several aspects of contemporary political radicalism (both Bernie Sanders and the Tea Party) may arise from this disorder.[4]

At the core of Hacker’s work is a life-cycle interpretation of political success and failure.[5] The 45 year-old Hacker believes that victory goes to the young, energetic, and imaginative. (People like him or Paul Ryan.) The Democrats were young and vigorous once. Then, over time, they turned into a party of old buffers. Meanwhile, licking their wounds in exile, the Republicans became a party with “that lean and hungry look.” They figured out how to market their ideas and developed an acute understanding of how the political system worked. Democrats fell in droves before the sword of Ronald Reagan. According to this narrative, old-guy Democrats thought that they could get by splitting the difference with fine young conservatives. Alligator Republicans just ate their lunch. Now what was needed, in the mind of Jacob Hacker is a younger, more dynamic Democratic Party.[6]

The possibility that labor costs (wages + benefits) relative to price and quality of the goods produced has gone beyond what is sustainable in a competitive global economy is not something that Democrats desire to discuss. Nor Republicans either.

[1] Jacob Hacker, The Great Risk Shift (New York: Oxford UP, 2006).

[2] The New Deal is what the Left has I n place of a revolution. Polemicists will debate whether it was a new American Revolution or a watered down Russian Revolution.

[3] Unemployment had sunk below 3 percent in the pre-management of the economy Twenties.

[4] Democrats are inclined to regard one—Sandism—as legitimate, if misguided, while they regard the other—what, evangelical Republicanism?—as illegitimate as well as unhinged. I’m not sure I see a real difference.

[5] It isn’t much different from Ibn Khaldun or Ma Joad.

[6] In the world of ideas, this meant people like Paul Krugman and Joseph Stiglitz; in the world of the communication of ideas—or at least of notions and punch lines—it meant people like Jon Stewart and Steven Colbert.