The Daydream Economy

I was going to preface this Moneybox installment with some profound comment about historical change and the need to recognize the way in which our time both resembles and differs from other eras in American economic and political history, but I couldn’t come up with anything that didn’t sound preposterous. Instead, I’ll just get to the point, which is that I was reading a collection of Walter Lippmann’s essays this weekend and came across a piece he wrote in February 1927 called “Causes of Political Indifference To-Day.” Much of this piece feels eerily accurate about American politics and business today, though important parts of it do not, but in any case I wanted to excerpt a chunk of it. Here goes nothing:

“[O]nly a few years ago the country was still naive enough, was still sentimental enough, to have become violently indignant over a Cabinet officer accused of bribery. Indignation of this sort we have not known during these last few years … . The impression has gone out from the White House that there is no use caring too much whether public officials are honest or whether elections are bought.

“This persistent dampening down of popular interest in popular government has been the calculated policy of Mr. Coolidge ever since he became President. The reason given for it is that nothing must be done to distract business. The other reason for it, not given, but perfectly well understood, is that it is good politics when you are in power to discourage all manifestations of discontent … . Yet neither the personality of Mr. Coolidge nor the very special political strategy which he adopted will by itself account for the lethargy of spirit which has prevailed during his administration.

“The American people, since the industrial recovery of 1922, have enjoyed an amazing prosperity. Except here and there in a few spots there has been such a surplus of wealth that practically the whole people have raised their standard of living. It was obvious that the opportunities to make money were so ample that it was a waste of time to think about politics … . With the stupendous surplus available these last years, it has seemed to most men quicker and easier to go out and make money than to work through the cumbersome, indirect processes of political action. Thus there has been no political discontent, except in a few states where the new surplus of wealth was not available, and where in consequence the old progressive motives and traditions survived.

“I am not, of course, saying how real or how permanent is this [surplus]; the fact which counts is that from about 1922 on almost everybody has had the feeling that he had a lot of money in his pocket, and would soon have more … . Together with this diffused prosperity, I should set down as a fundamental cause of political indifference the rise of what may be called the New Capitalism. Whatever may be the intrinsic good and evil of such things as the wide distribution of securities, the net result of this new attitude on the part of capital has been to create a new attitude on the part of the public. The press agents of the corporations have been told to woo the public, and their wooing has been successful. Suspicion has died down. Yet here again we must recognize that it would not have died down if capitalism as we know it were not making most people feel quite comfortably well off.”

The growth of the U.S. economy in the Clinton years has not been as stupendous as it was during the Coolidge years, and the standard of living of the average worker in the 1920s rose much faster than it has in the past six years. But things are much better for most people than they were in 1991. And it’s striking that both eras featured daydream-like politics, and an overwhelming sense that Washington mattered little next to the serious business of business.

This is the point, of course, at which the announcer says: “Just two years after Lippmann’s essay appeared, the American economy entered the greatest crisis of its history.” Extending the analogy that far would be a mistake. But it’s worth asking ourselves: “What happens when our daydream ends?”