If Only We Had Listened Then

On July 15, 1979 President Carter returned from nearly two weeks at Camp David to give a speech that would be remembered as a highlight — and some might say a lowlight — of his Presidency.   The speech is often the subject of such caricature that it gets remembered as far different than it was.   Called the “crisis of confidence” speech, it got morphed into the “malaise” speech (though Carter never used the term) and was trashed by his opponents, both Ted Kennedy and Ronald Reagan.

At the time of the speech it was well received.   His approval ratings jumped from 25% to 35% in the week afterwards.   In that speech he said America was at a cross roads.   He painted two visions of the path forward:

We are at a turning point in our history. There are two paths to choose. One is a path I’ve warned about tonight, the path that leads to fragmentation and self-interest. Down that road lies a mistaken idea of freedom, the right to grasp for ourselves some advantage over others. That path would be one of constant conflict between narrow interests ending in chaos and immobility. It is a certain route to failure.

All the traditions of our past, all the lessons of our heritage, all the promises of our future point to another path, the path of common purpose and the restoration of American values. That path leads to true freedom for our Nation and ourselves. We can take the first steps down that path as we begin to solve our energy problem.

The first path was one with a mistaken notion of freedom as being all about self-interest and distrust of community.   That path would lead, he warned, to crass materialism, narrow self-interest, and an unsustainable economy.   It would be a rejection of the values that made America great in favor of individual pursuit of people trying to get whatever they could, looking out only for their own bottom line, and justifying any injustices with a claim that if the market provided that result, it must be OK.   As Carter warned:

“In a nation that was proud of hard work, strong families, close-knit communities and our faith in God, too many of us now tend to worship self-indulgence and consumption.  Human identity is no longer defined by what one does but by what one owns.  But we’ve discovered that owning things and consuming things does not satisfy our longing for meaning.”

The second path was one leading to energy independence, a focus on alternative energies, and a renewal of the American community.   For Carter this was a moral issue.   America’s future depends on the American people putting values ahead of greed, and coming together to face a world where we had become susceptible to oil shocks, facing economic uncertainty and realizing that the government couldn’t solve America’s problems.   He called the country to come together and take a long range vision of what is needed, avoiding the temptation to turn to cheap and illusory solutions.

If you don’t want to watch the speech, you can read it here.

Instead the US choose to follow another path, put forward by Ronald Reagan who defeated Carter in 1980 and promised Americans they could, as the beer commercial said “have it all.”

Reagan’s vision was seductive.   First of all, Reagan was a good man and people trusted him.   He clearly believed what he said.   He also was telling Americans what they wanted to hear.   The problems we face aren’t ones of values and the need for difficult choices.   All we need to do is cut taxes and let the American people shine and we’ll be that “shining city on the hill” once again.

When Reagan came into office he removed the solar panels Carter had installed on the White House.    He cut taxes.   The economy grew.   But yet, it was indeed an illusion.    The economy would have grown no matter who had been elected, deep oil price cuts injected massive amounts of money into the economy.   The recession that was so bad in 1980 had been induced by Paul Volcker’s monetary policies; once inflation was tamed, that and lower oil prices were a certain path to ending the recession.

But Reagan and the Democrats — this was a bi-partisan illusion — then engaged in a massive build up of debt.   US government debt to GDP ratio went from 30% to 60% in the 1980s.   That hyperstimulated the economy and started us down the road of having an unsustainable debt-based consumer economy.   Consumer debt started to rise too.    Total debt (private and public) had tended to hover around 150%.   In the 80s that debt zoomed up to over 250%.   The economic boom associated to Reagan was simply a country charging on its credit card, going into debt, and thinking things must be good because they could buy so much stuff.

Of course this continued.   Government debt growth slowed in the 90s, but private and consumer debt kept soaring.   Debt and low taxes on the wealthy produced not jobs via trickle down economics, but bubbles as investors chased the dream of “something for nothing.”   Americans both left and right thought that the good times would last forever, even as debt mounted to nearly 400% of GDP overall (public and private).

Now we’re in a crisis of massive debt, fears of long term energy crises, and no clear way to get back on the path of sustainability.    It’s led to wars and our political system, once the envy of the world, seems defined by partisan pundits who too often see compromise as something for only the weak.   Given that the US system can only run via compromise, it’s a path towards political stagnation and fragmentation at a time when we need to come together.

If we had listened to Carter in 1979 and saw the country’s problems as rooted in a weakening of the core values of community and sacrifice in favor of consumption and greed, we might now be in a much better place with a far better future.    Yet we didn’t.   But we can still learn from Carter’s words.   Our problems are primarily about values and ethics, not about economics and policy.   Focus there first and come together as a country true to our core principles — values shared by the left and the right — and we can start to rebuild the American dream.