A Culture War of Economics

A review of The Battle by Arthur Brooks

By Bryant Jackson-Green

America is at a crossroads and faced with a choice—one that will determine whether or not we remain committed to the American ideal of economic freedom and liberty or embrace an ever-expanding government. This is the sum of the argument made by Arthur C. Brooks, President of the American Enterprise Institute and former professor of Business and Government Policy at Syracuse University, in The Battle, the most recent (and perhaps the most heavily promoted) book to come out of AEI. The book sets out for itself the formidable task of not only explaining the roots of the momentous debate between the proponents of free markets and statism, but offering "a plan of defense for free enterprise," with "nothing less than the soul of America" up for grabs. How successful it is in doing this, however, is a somewhat more complicated question.

Brooks' latest work certainly has had the advantage of a well-strategized format and release. At approximately one-hundred-thirty pages of content, it's a quick read. It can be run through in hours, making it uniquely accessible for those without the time, will, or patience to plod through more dense, academic tomes. In an age of 24-hour cable news, blogging, and twitter, some compromises may need to be made in order for the printed media to stand a chance in changing minds and influencing voter opinion, so with this goal in mind, its length might be seen as an advantage. A three-part series in the Washington Times in July on the "New Culture War over Free Enterprise," along with several other well-received op-eds in the Wall Street Journal, succinctly and forcefully laid out the primary thesis of his book, which, when coupled with an aggressive online presence and heavy media touring by Brooks, made The Battle one of the "must have" political books of the season. If nothing else, it is a victory for AEI's promotional team.

But there is, unsurprisingly, a tradeoff for the increased accessibility: the book is far too brief—and, perhaps primarily for this reason, lacks the detail and rigor one would expect from a highly-respected policy analyst and academic such as Brooks. It's as if most of the effort behind the book has gone into marketing the book and less into thoroughly developing its arguments. But keeping in mind that this book has come out in time for reading before the 2010 election season, and is almost assuredly intended to persuade middling and conservative-leaning lay voters, oversimplified lines of reasoning might be the most effective for the intended audience.

Regarding, first, its merits, one the more laudable accomplishments in this books is Brooks' ability to present a concise, cogent explanation of the financial crisis and how it has been exploited as a pretense to dilute the American capitalist system into something much closer to its social democratic counterpoints in Europe. According to Brooks, the narrative on the left has been to explain the crisis centers around five major points: that "government was not the primary cause of the economic crisis;" that only it is capable of understanding and fixing it; that regular home-owners on "Main Street" are all victims of corporate excesses; that only stimulus spending will fix the economy; and that the middle class will remain immune to costs of such spending, the burden of which will supposedly be carried by the wealthy. Point by point, Brooks refutes this picture, emphasizing the oft-overlooked influences of state-backed lenders Fannie Mae and Freddie Mac, policies encouraging lending to the severely under-qualified (see the Community Reinvestment Act of 1977 and its subsequent strengthening in the 90s) as leading causes of the crisis, countering the grossly oversimplified, misleading narrative of Wall Street "greed" as the root cause of the crisis. To the extent that Wall Street was culpable, the moral hazard leading up to the crisis, to say nothing of the impact further moral hazard created by a taxpayer-backed bailout will have in the future, implicated government policy as being first and foremost to blame.

The role of government in precipitating the events of the crisis and in increasing the expanse of the state is, of course, a bipartisan project, another key point that Brooks does not neglect to expound upon. While the Democratic Party has been the driving force behind most of the more recent expanses in the size of government, the fiscal misconduct of the most recent Republican administration and Congress gives conservatives hardly any high ground to stand on now. The justly maligned Troubled Assets Relief Program (TARP) was a Republican initiative in 2008, costing $700 billion. A few months later, it was the auto industry's turn for a Republican handout: $17.4 billion went to General Motors and Chrystler. Conspicuously missing, however, is an account of what the nation has spent on the wars in Afghanistan and Iraq since the beginning of the former in 2001. Recent estimates cite the cumulative cost of the two wars as surpassing $1 trillion, when related foreign aid and veteran costs are considered as well. Regardless of one's views on the merits of either war, an assessment of their cost would have shown a surprising degree of frankness from Brooks, so it is a little disappointing that it was not mentioned, even by way of a defense or justification. One can, it seems, expect only so much criticism of the right from the President of AEI.

One can take issue, however, with the superficially appealing central narrative of a "new culture war," with the fate of American "free enterprise" hanging in the balance. It's not that the American capitalist system isn't threatened,—anyone following the major legislative disgraces of the past two years, from TARP to the more recent Healthcare and Education Reconciliation Act, should at least be able to identify these programs as a step in the direction of a social democratic welfare state—but some of the key assumptions underlying this vision are thwarted by a closer examination of some major issues.

The most glaring instance of this is the 70% - 30% divide Brooks cites as making the partition between supporters of the American free enterprise system and European style socialism. According to Brooks, when we examine public feeling on capitalism, taxes, business, and government, a "clear and consistent pattern" demonstrates that "70 percent of Americans support the free enterprise system and…[are] unsupportive of big government." On the other hand, between 20 and 30 percent opposes markets in favor of "government solutions." It very well may be that, when posing the general question, "is capitalism a better system than socialism," most Americans will chose the former. Socialism is, of course, rather un-American: unlike most European nations, we simply do not have a tradition of a politically viable socialism.

But upon closer examination, it becomes increasingly obvious that this majority has a very poor understanding of what free enterprise entails, or for that matter, of basic economics. Regarding the government practice of stimulus as a means to pick up the economy, for example, 60% of Americans favor "additional government spending to create jobs," according to a June Gallup Poll on 2010 Congressional Legislative Priorities. When questioned on how they want to solve the crisis in the major entitlement programs, Social Security and Medicare, a greater number of Americans support raising taxes to address the issue, while only 31% favored raising the retirement age. Granted, the latter option could only postpone the inevitable, and a greater percentage of those who supported raising taxes came from the 18 to 29-year-old demographic. But unless state-sponsored safety nets and stimulus smack of laissez-faire, these views seem to undermine, or at the very least complicate Brooks' thesis, which was intended to have been a clean and simple account of the state of American political divisions.

Ultimately, one must judge the book for what it is, in light of what it was intended to accomplish. As a brief overview of what the conservative economic policy stance could and should be (I'm not naive enough to hold my breath), The Battle is a decent book, ironically thwarted by the simplicity that was one of its greatest advantages. For those who would like a considerably more thorough, intellectual and stronger work, I highly recommend looking into Arthur Brooks' other major books: Gifts of Time and Money: The Role of Charity in America's Communities (Rowman & Littlefield), Who Really Cares: The Surprising Truth about Compassionate Conservatism (Basic Books, 2006) and Gross National Happiness: Why Happiness Matters for America—and How We Can Get More of It (Basic Books, 2008).