Over the Edge: From 1989

In 1989, the United States of America was two hundred years old. The following words were themselves written two hundred years ago:

The average age of the world’s greatest civilizations has been 200 years. Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

The United States had experienced many of these stages by 1989, while retaining characteristics of each. Is a return to bondage happening now?

What triumphed in 1989, relatively speaking, was balance. The communist regimes of Eastern Europe were severely out of balance, with so much power concentrated in their public sectors. In contrast, the successful countries called Western exhibited a balance of power across the three main sectors of society—public, private, and plural—more or less.

More was the case in countries such as Germany and Canada, less in the United States. Yet compared with what came after 1989, the United States still mitigated the forces of markets and individualism with extensive public welfare services, substantial regulations of business, and significant taxation of wealthy individuals and corporations. In fact, “America emerged from World War II with government, market, and civil society [the plural sector] working together in a healthier, more dynamic, and more creative balance than at any time since pre–Civil War years” (Korten 1995: 88).

But a failure to understand this need for balance drove the country over the tipping point, to imbalance. For if capitalism had indeed triumphed, then the economists had it right and the corporations were the heroes. They had saved the world from the communist menace. But if it was balance that had triumphed, then private sector excesses needed to be stopped, right then and there. The opposite happened: these excesses accelerated.

It is not that businesses have been waging some kind of orchestrated conspiracy. True, they have sometimes acted in concert to enhance their influence, as when their associations have lobbied for lower taxes. But of far greater effect has been the steady pull of so many private forces, each pursuing its own interests—for the creation of tax loopholes, extension of government subsidies, loosened enforcement of regulations, and so on—pitted against public agencies that have become less and less able, and inclined, to resist them.

Add up the consequences of so many deliberate but disparate actions—all the lobbying and litigating, maneuvering and manipulating—and the country has ended up with the equivalent of a coup d’état. Adam Smith’s invisible hand in the American marketplace has become a visible claw in the American Congress. De Tocqueville identified the genius of American society as “self-interest rightly understood.” Now the country finds itself overwhelmed by self-interest fatefully misunderstood.

Consider the extent to which power has shifted in America since 1989—for example, the significant skewing of wealth to the richest 1 percent of the population and Supreme Court rulings that have opened the floodgates to political donations. “Only a generation ago, excluding corporations from the political arena was not only thinkable and debatable but was also the law in some [American] states” (Nace 2003: 233). Back in “the mid-1980s, President Ronald Reagan overhauled the tax system after learning that General Electric … was among dozens of corporations that had been using accounting gamesmanship to avoid paying taxes. ‘I didn’t realize that things had gotten that far out of line,’” he said (Kocieniewski 2011a). From 2008 to 2012, twenty-six major American corporations, including General Electric and Boeing, paid no federal income taxes at all (Drawbaugh and Temple-West 2014).

On the global front, with regard to the environment, the Montreal Protocol of 1987 dealt with the problem of the ozone layer, as a “result of unprecedented international cooperation” (Bruce 2012). Now we have been having conference after conference on global warming whose results would be laughable were the issue in question not so important. (The appendix describes various aspects of our current state of imbalance.)