SNAP OUT OF IT:

Back to the Future (JAMES TRAUB, October 5, 2003, NY Times Magazine)

Nineteen seventy-seven. I remember it well. It was the year Son of Sam stalked the streets of New York before he was finally arrested. It was the year of the blackout, when looters rampaged in the face of an overwhelmed New York Police Department, its ranks depleted because of the city's budget cuts. And it was the year I moved to New York.

I had seen an apartment -- one bedroom, $250 a month -- on 91st Street between First and Second Avenues, and I visited the block at 11 one night to see if it felt safe. It was late summer, maybe a month after the blackout, and two girls were chatting on a stoop -- an encouraging sign, I thought. They agreed that it was a fine place to live, no fear, no hassles. Just then, a taxi pulled up, and another girl emerged. ''Did they get him?'' asked one of her friends on the stoop. ''Yes!'' This girl, it turned out, had been mugged on the street, and her attacker had just been convicted.

That was the 70's for me. New York's brush with bankruptcy had already passed, but the larger sense of an urban crisis was everywhere. At the tabloid where I worked (the one that famously announced ''SAM SLEEPS''), it was the Year of School Violence, with weekly articles about teachers assaulted in hallways. The force of chaos seemed to boil just an inch beneath the pavement. Think of ''Taxi Driver,'' released in 1976. Travis Bickle, his head throbbing, drives his cab through the nightmare world of New York City, where 14-year-old hookers cruise the streets and dealers fence everything from automatic weapons to stolen Cadillacs. ''This city here,'' he mutters furiously to himself, ''is like an open sewer.'' Or think of Saul Bellow's Artur Sammler, followed back to his Upper West Side lobby by a resplendent black pickpocket who pins the old man down against a wall and brandishes before him the unanswerable might of his immense penis. And it wasn't just New York. New York served, as it often does, as the incarnation of a larger urban mood. Chicago and St. Louis and Cleveland and Detroit seemed to be sliding into the same pit.

Yes, children, it was a low era and a very bad time to be around unless you happened to be rich. In recent months, we have had some nasty reminders of that time, including another blackout, another mayor announcing deep cuts in city services, growing unemployment and, of course, the deep background jitteriness that remains from 9/11. Significant numbers of both people and businesses are leaving the city, and a recent New York Times poll found that only 30 percent of city residents believed that New York would be a better place to live 10 or 15 years from now. Things fall apart; the center cannot hold. . . .

Well, wait a minute. The center is holding.

It was mentioned yesterday that this is the third time since Ronald Reagan was elected president that the Democrats have accused Republicans of creating "the worst economy since the Great Depression." But no one who lived through the '70s can take such an assertion at all seriously. After fifty years of New Deal/Great Society and continuous war (guns and butter), the chickens came home to roost in the late '70s/early '80s. Inflation averaged--averaged!, not briefly reached--11.5% from 1979 to 1981. Unemployment ran at over 9% annually in 1982 and 1983. And the Fed under Paul Volcker was forced to crank interest rates up into the high teens. This Triple Whammy together with high crime rates at home, a series of victories for the communists in the Cold War (Vietnam, Nicaragua, Afghanistan, etc.), oil embargoes, the Tehran hostage crisis, and the thoroughly ineffectual political "leadership" of our worst set of presidents (JFK, LBJ, Nixon, Ford, Carter), created a cultural climate in which it was seriously thought that not only was America in a perhaps irreversible state of decline, but that it might be time to face the reality that democracy, capitalism, and Western Civilization generally had seen their best days.

Even as late as everyone now knows we were in the process, the best and the brightest thought that the Soviet system was a permanent and viable, maybe even superior, rival to liberal democracy. Robert D. Kaplan has a few lines that neatly sum up the state of affairs, in what is a favorable profile of Henry Kissinger:

Kissinger regularly mixed violence and the threat of it with diplomacy, so that the diplomacy had credibility. He preserved what he saw as the legitimate order, in which the Soviet Union was both contained and accepted, so that revolutionary chaos was confined to the edges of the superpower battlefield, in the Third World. (In perceiving the Soviet Union as permanent, orderly, and legitimate, Kissinger shared a failure of analysis with the rest of the foreign-policy elite -- notably excepting the scholar and former head of the State Department's policy-planning staff George Kennan, the Harvard historian Richard Pipes, the British scholar and journalist Bernard Levin, and the Eureka College graduate Ronald Reagan.)

(That "Eureka College graduate" may be the most exquisite twist of the knife ever applied to the gizzard of the intellectual elites, eh?) The problem, of course, the reason that our memories of that time have dimmed so and that the elites have been let off the hook for their disastrously inaccurate assessment of the futures of liberal democracy and totalitarianism respectively, is that Ronald Reagan (and Fed Chairman Volcker) applied such drastic remedies to the sick society they inherited that the situation had completely reversed itself within just a few years. High interest rates, tax cuts, and the more confrontational stance in the Cold War triggered twenty uninterrupted years of economic growth and the implosion of the USSR. The old conventional wisdom of the Left was summed up in 1987, Paul Kennedy's The Rise and Fall of the Great Powers, but just two years later Francis Fukuyama's End of History virtually disposed of the century long argument between freedom and statism and settled it in freedom's favor.

So, for fifteen or twenty years now we've had a nation where economic growth, low inflation, lowish interest rates (though nowhere near low enough) and fairly high employment is the norm and where even Democrats and pundits of the Left at least pay obeisance to the notion of free markets, whether they believe in them personally or not. And for much of that time we were not only the world's only superpower (which we obviously remain) but perceived no threat of any kind to not just our domestic security but even our interests abroad. We became, predictably, quite spoiled. So spoiled, in fact, that the brief period during which we adjusted to post-Cold War demilitarization (as spending on national defense was cut in half as a percentage of GDP), under George H.W. Bush, was greeted with utter hysteria, even though it produced only a very mild slowdown and set the stage for an explosive period of growth while we enjoyed the peace dividend (the entire reduction in the federal budget deficit and eventual surplus in the 90s can be explained simply in terms of savings on projected defense spending--keep Defense at the average Cold War rates and there would have been no surplus even despite the boom). Now, we've been through another brief doldrums, this one brought on by the Fed mistakenly anticipating inflation during a deflationary period, the markets mistaken belief that Internet content offered economic opportunity, and the 9-11 attacks, which shocked us out of our national security complacency and scared the bejeebies out of us all.

It is unimaginable that such a combination of factors--bad Fed policy, an investment bubble, and a crisis of consumer confidence--would not slow the economy somewhat--what's remarkable is that it has had so little effect. Inflation is still non-existent and globalization of the economy suggests it won't return for decades. Accordingly, interest rates are back down close to where they should be. Unemployment, even though a notoriously lagging indicator, remains reasonably low. The Dow is back within striking distance of 10,000. GDP growth seems to be in the 3% range. Really, the biggest problem we have right now is that we're still scared.

Unfortunately, there will not be a victory in the War on Terror that is as uplifting as 9-11 was depressing--that's just the cold, hard reality. However, as the situation in Iraq settles down and we turn over control to the natives it should quiet concerns. And if we were to produce the bodies--living or dead--of Osama bin Laden and/or Saddam Hussein, it might well provide a significant emotional boost to our confidence. Shallow as it may seem, that would appear to be all that's needed right now, a little psychological uplift to get folks to stop complaining about how tough their rather easy lives are and get back their faith in themselves and the future. Of course, it would be helpful if this geopolitical dose of Prozac came sooner rather than later so that George W. Bush heads into the re-election with people recognizing times remain good, rather than staring at their navels and moaning in self-pity.

Posted by Orrin Judd at October 5, 2003 07:53 AM