Who's Pump-Priming Now?
BACK in the 1970s, during the first Arab oil embargo, I happened upon an old book at a Salvation Army store in Washington, D.C.It was called the "War Time Guide Book for the Home." Written in 1942, it showed Americans how to cope with shortages on the home front. Fertilizer or laundry soap, cold cream or toothpaste - the guide told Americans how to make it themselves, out of materials available (back then at least) at hardware stores and pharmacies. I was struck by how dependent the United States had become since then. Born into the consumption boom that followed the war, I thought that things like laundry soap came from factories by some kind of law. Economists call this "division of labor" progress. But the gas lines stretching out for blocks showed a dark side of this progress. Build an economy on a sense of need - for oil, for example - and scarcity is the inevitable result. I thought of the "War Time Guide" again during the recent war against Iraq. The conflict showed how far America has drifted from the self-help ethos reflected in that book in the 1940s, when Americans were willing to cut consumption to fight a war. This time the nation fought a war because it wasn't willing to cut consumption, even a little bit. By one estimate, if the Reagan and Bush administrations had not weakened auto-fuel efficiency standards, the US wouldn't have needed the oil at stake in the Gulf War. Yet even as the saber-rattling resumes there, the administration continues to oppose measures to require cars that burn less gas. The truly strange part is that this national self-indulgence is carried out in the name of "conservative" government. Call it patriotism if you wish. But conservative? Not by my grandfather's standards. He was a businessman and a Republican, practical and thrifty to the core. He wore sensible wool suits, even to baseball games at Pittsburgh's old Forbes Field in the afternoon. He didn't believe in borrowing, paid cash for everything he bought, and thought the government should do likewise. Thirteen years of Roosevelt had helped set his face into a dolorous frown. Once, he pulled me aside at a family gathering. "Jonny, I just want you to remember one thing," he said, wi th urgency but apropos of nothing. "You can't prime the pump." I didn't know he was talking about the deficit-spending doctrines of John Maynard Keynes, the economist whose theories FDR had followed. Yet at some basic level I grasped the point: the government, like individuals, should live within its means. Work and saving were more important than spending and consumption. Today such thinking is considered antique, by those who call themselves "conservatives" as much as anyone. President Reagan talked about balanced budgets. But then he financed a big tax cut with borrowed money. The Democrats used to borrow to finance government spending; Reagan borrowed to finance personal spending. The federal government became a giant Visa card, through which the Japanese and others lent Americans money so they could buy Japanese VCRs and cars. It is no accident that a main legacy of the last 10 years, from the Savings and Loan debacle to junk bonds, is debt. The federal deficit grew by more than a trillion dollars. Individual bankruptcies doubled, and the savings rate fell to half that of the early '70s. The federal deficit grew by over a trillion dollars. The mounting environmental and resource debts are of a piece with this spendthrift view. The irony is that America's new debtor status prevents it from leading the post-cold war world econom ically, the way conservatives desire. Such borrow-and-spend thinking used to be called liberal. But the real conservatives today are environmentalists. They are the one group that embraces the old Republican virtues of practicality and thrift. Instead of borrowing billions to build nuclear power plants, they want more efficient light bulbs. They seek energy security abroad through frugality at home. The "War Time Guide" called for a "return to something like the self-reliant competence of our pioneer forefathers." That is a sentiment heard o ften from environmentalists, but not from those who call themselves conservatives today.