I am a baby boomer, a post WWII son of 2nd generation immigrant parents. I'm a bit older than Paul Krugman, but I grew up in exactly the same America he talks about in "Conscience of a Liberal".
Postwar America was, above all, a middle-class society. The great boom in wages that began with WWII had lifted tens of millions of Americans - my parents among them - from urban slums and rural poverty to a life of home ownership and unprecedented comfort. The rich, on the other hand, had lost ground. They were few in number and, relative to the prosperous middle, not all that rich. The poor were more numerous than the rich, but they were still a relatively small minority. As a result, there was a striking sense of commonality: Most people in America lived recognizably similar and remarkably decent material lives.
Krugman further noted that as WWII ended, 35% of American workers were unionized and as late as 1970 that figure still remained around 27%. Throughout this period, working class Americans were narrowing the wage gap not only with the professional class (lawyers, engineers, accountants, etc.) but also with skilled laborers such as machinists and tool/die makers.
It must be noted that during this period, the social programs initiated during the New Deal not only remained pretty much intact, but had more or less been accepted as a political status quo. Even President Dwight Eisenhower, in 1954, confided to his brother that efforts of some millionaire businessmen and a few politicians to abolish social security, and eliminate labor laws and farm programs were "stupid" and anyway, their numbers were negligible.
Oh my, how times have changed. I'm sure we can all agree that the political thinking of today is a full 180 degree turn from 1954. Moreover, the future of the American worker, no matter the skill level, is in serious jeopardy. Starting in the 1960s, the conservative movement began to push back against the social programs of the New Deal and finally in the 1980s, with the election of Ronald Reagan, it began to dismantle that social network. A new gilded age was born extolling the virtues of deregulation, free enterprise and individual responsibility.
Today, we live at the end of the third decade of "free market capitalism" in America. The corporate modus operandi today is, if there are "undue" restrictions, or inconveniences, on the operations of a business, then it is their job to get around them. We live in the age of the technocrat, the quantitative analyst. As William Blum puts it:
Corporations, whether financial or not, strive to maximize profit as inevitably as water seeks its own level. We've been trying to "regulate" them since the 19th century. Or is it the 18th? Nothing helps for long. You close one loophole and the slime oozes out of another hole. Wall Street has not only an army of lawyers and accountants, but a horde of mathematicians with advanced degrees searching for the perfect equations to separate people from their money. After all the stimulus money has come and gone, after all the speeches by our leaders condemning greed and swearing to reforms, after the last congressional hearing deploring the corporate executives to their faces, the boys of Wall Street, shrugging off a few bruises, will resume churning out their assortment of financial entities, documents, and packages that go by names like hedge funds, derivatives, collateralized debt obligations, index funds, credit default swaps, structured investment vehicles, subprime mortgages, and many other pieces of paper with exotic names, for which, it must be kept in mind, there had been no public need or strident demand. Speculation, bonuses, and scotch will flow again, and the boys will be all the wiser, perhaps shaken a bit that they're so reviled, but knowing better now what to flaunt and what to disguise.
This is another reminder that communism or socialism have almost always been given just one chance to work, if that much, while capitalism has been given numerous chances to do so following its perennial fiascos. Ralph Nader has observed: "Capitalism will never fail because socialism will always be there to bail it out".
Coincidentally, while Paul Krugman and I grew up in that middle class America of socialist ideals, there was also a Cold War emerging with the Soviet Union. One of the most unfortunate results of that Cold War was the decades of anti-communist propaganda stamped in people's minds as a lasting association between socialism and what the Soviet Union called communism. Socialism came to be understood as a dictatorship. It meant Stalinist repression, a suffocating planned economy, no freedom of enterprise, no freedom to change jobs, elimination of personal expression, and other similar vagaries. This is a set of beliefs that even Americans opposed to US foreign policy religiously cling to. It is the long held American version of the boogie man. No matter how bad our capitalist economy is, Americans think and have thought, that the only alternative available is something called "communism", and they know how "awful" that is.
To further the confusion, conservatives in England, for many years following the end of WWII (and culminating with Margaret Thatcher), filled the minds of the public with the idea that the British Labour Party was socialist. And when recession hit (as it has cyclically in capitalist countries) the public was reminded, and they believed, that "socialism had failed". And America picked up on this nuance.
Yet, ever since the dissolution of the Soviet Union in 1991, polls taken in Russia have shown a nostalgia for the old system. In the latest example, "Russia Now", a Moscow publication that appears as a supplement in the Washington Post, asked Russians: "What socio-economic system do you favor?" The results were: "State planning and distribution": 58% ... "Based on private property and market relations": 28% ... "Hard to say": 14%.
Many Americans cannot go along with the notion of a planned, centralized society. To some extent it's the terminology that bothers them because they were raised to equate a planned society with the worst excesses of Stalinism.
But looking back to the dawn of my world and Paul Krugman's too, recall that a major war, WWII, tested Americans and subjected us to our greatest collective stress. In WWII, the US government commandeered the auto manufacturers to make tanks and jeeps instead of private cars. When superior weapons were called for and the atomic bomb was foreseen, Washington did not ask for bids from the private sector; it created the Manhattan Project to do it itself, with no concern for balance sheets or profit and loss statements. Women and blacks were given skilled factory jobs they had been traditionally denied. Hollywood was enlisted to make propaganda films. Indeed, much of the nation's activities, including farming, manufacturing, mining, communications, labor, education, and cultural undertakings were in some fashion brought under new and significant government control, with the war effort coming before private profit. And in the wake of this directed capital allocation and unwitting move toward wartime socialism, America won the war and became a prosperous society.
So, likewise in peacetime, we can think of socialism as putting people before profit, with all the basics guaranteed - health care, education, decent housing, food, jobs. Those who swear by free enterprise argue that the "socialism" of World War Two was instituted only because of the exigencies of the war. That's true, but it doesn't alter the key point that it had been immediately recognized by the government that the wasteful and inefficient capitalist system, always in need of proper financial care and feeding, was no way to run a country trying to win a war.
Again, from William Blum:
It's also no way to run a society of human beings with human needs. Most Americans agree with this but are not consciously aware that they hold such a belief. In 1987, nearly half of 1,004 Americans surveyed by the Hearst press believed that Karl Marx's aphorism: "From each according to his ability, to each according to his need" was included in the US Constitution.
In 1994, Mark Brzezinski (son of Zbigniew) was a Fulbright Scholar teaching in Warsaw. He asked his students to define democracy, expecting a discussion on individual liberties and authentically elected institutions. Instead, he was surprised to hear his students respond that to them, democracy meant a government obligation to maintain a certain standard of living and to provide health care, education and housing for all; in other words, socialism.
It is not so easy for us in America 2009. The indoctrination has been long and thorough. The believers in free market capitalism have been discredited but the entrenched status quo is still powerful and very vocal. The media propaganda machine wants to protect and continue that status quo.
I do not pretend to have all the details for the new society that needs to evolve. It will take much trial and error to arrive at that place. Having said that, I believe we should give heavy emphasis to reducing the profit motivation in making decisions and, instead, seriously address our environmental degradation, promote universal health care, institute fairness in our labor and trade initiatives and generally put the common good and general welfare of the American public first. That's a rising tide that will lift the boats of all Americans, regardless of wealth status, ensuring a sustainable and reasonable quality of life for all of us.
Now if we can just find a political leader and the political will to make it happen. Paul and I weren't there for that part, so I have no insight how to make that happen.