‘Big’ Government Protects American Values in a Big Economy

This post was originally published as part of a series on The Regulatory Review. Reprinted with permission.

We thank Shelley Welton for her generous comments about our book and for the two issues she raises about our argument that American history is a story of how the mix of government and markets has been based on respect for equality, liberty, fairness, and the common good. We appreciate the opportunity to engage in a dialogue on those issues.

Welton points out that the “tradeoff” of our “capacious coverage” is a limited exploration of the nuances behind the development of the mix in each history period we discuss. There is indeed a deep literature about change in the government–market mix that offers a thicker and more nuanced account of that history. Much of that literature is cited in our footnotes. And in our previous book, we offered our own theoretical account of government and markets.

This book acknowledges some of those twists, turns, and complications, but not all of them by any means. But at this calamitous time in our history, as the Trump Administration lays siege to government, to say nothing of the values it incorporates and implements, it is important to consider the big picture for three reasons.

First, as the deconstruction of government proceeds apace, it is important to understand that the United States has never had “small government.”

Second, by looking at the larger picture, we attempted to demystify “big” government by explaining dual insights revealed by the history we recount: Government has been involved in the same three functions of investing in market infrastructure, policing market behavior, and maintaining an economic safety net, in at least an elementary form, dating back to the beginning of the country’s history. And we have a “big” government because we have a “big” economy. The nature of the government’s three functions has evolved and grown to preserve a mix of government and markets that serves American values.

Finally, although it appears Pollyannish to celebrate the democratic conversation that has produced changes in the mix of government at a time of extreme polarization, name-calling, and a move to authoritarianism, it is good to remember that over our history, it is precisely that conversation that has blunted similar challenges in the country. Not easily, as the book acknowledges. As Jill Lepore sums up American experience, “The nation, as ever, is the fight.”

The linchpin for fighting back has been to call on America’s values. Moira Donegan recently observed, “the American spirit is indefatigable: it loves freedom and equality, abhors tyranny, values minding your own business and hates, above all, to be told what to do. When Trump was last in office, Americans found, at the end, that they did not like it. They will not like it now, either, and that dislike, however tardy, will have political consequences.”

Welton also asks whether “it might be equally productive to see our history as a long and ongoing contest over both what core American values are as well as the best means to achieve them.” We agree that which values Americans consider significant has shifted over history and that our definition or understanding of those values has evolved.

But the country has adhered to its values of equality, liberty, fairness, and the common good in one form or another, because the country’s commitment to each single value has been consistently tempered by an ongoing commitment to the other values. At times the country has emphasized liberty and at other times it has emphasized equality, for example, but the emphasis on one or the other has been impacted by a commitment to the other values. Even at the height of the Great Depression when the market system had lost all credibility with most of the public, for example, the New Deal sought to save capitalism, as our book chronicles, not abandon it.

Moreover, today’s applications of the values of liberty, equality, fairness and the common good are not the same as they were previously because the applications of those values have been intertwined with the country’s political economy, which itself has evolved and changed as the country moved from an agrarian society to the industrial age, and eventually through globalization and much more.

Consider how those values were realized from the mid-1930s through the 1960s. President Franklin D. Roosevelt’s New Deal was continued by President Dwight D. Eisenhower. President Eisenhower’s investments in nuclear power, the U.S. highway system, and the space race extended government’s participation in the economy. As a result, economic inequalities were reduced and the liberties attached to social mobility were increased post-World War II, a period known by economists as the Great Compression. That program was not a complete success because of its failure to address racial discrimination—which had to await the 1960s for the beginning of a more adequate response. We can, though, say that a healthy mix of government and markets existed during that time even as the values that we identified were achieved imperfectly.

Again, we thank Welton for joining us in the symposium. And we look forward to a continuing conversation with her and other scholars, both detailed and nuanced, and general and thematic, about what we can and should learn from American history about the mix of government and markets.