That is the question Jonah Goldberg asks after reading Jay Cost’s recent essay for National Affairs titled “The Politics of Loss.” It is an insightful essay; you should read it all because even this extended excerpt does not fully do it justice:

For generations after World War II, both parties agreed implicitly upon a great American share-out: The fantastic growth of the American economy gave politicians in both parties the enviable task of deciding how the annual surplus would be divided, meaning that everybody could be a winner. Republicans could cut taxes and dabble in generous social-welfare benefits; Democrats could distribute generous social-welfare benefits and dabble in tax cuts; both parties could push for an overpowering military; and all the while the annual budget deficit stayed more or less within a tolerable range. It was a true win-win, with political disagreements largely fought over which side would win more.


In our time, however, this balance has been upset not only by the severity of the most recent recession, but also by the weakness of the recoveries that have followed the downturns of the past decade. Evidence would suggest that the great American growth machine is sputtering, with forecasts auguring middling growth next year (around 2%), essentially continuing the unimpressive trend of the past decade. And this economic torpor strikes at the worst possible moment: The Baby Boomers — an outsized generation that came about because of the post-war era’s unparalleled prosperity — are now starting to collect on the generous promises that politicians made when they were just children.

The days when lawmakers could give to some Americans without shortchanging others are over; the politics of deciding who loses what, and when and how, is upon us. Neither party yet fully understands the implications of this shift, which means both parties risk being caught unprepared when the economic slowdown forces profound changes in American politics. The great American share-out is coming to an end — and, with it, the rules and norms of our politics that several generations have taken for granted.

Jonah sees the politics of loss as more of a threat to the Democrats:

[T]here’s a key difference between the parties. The Democrats tend to be more traditionally coalitional: If everyone sticks together, everyone gets paid. In the age of austerity, however, zero-sum politics become more of the norm. When one constituency’s victory is another’s loss, the payoff for solidarity diminishes.

However, Jay’s essay presents a more pessimistic outlook:

Popular support for a right-leaning economic agenda depends upon the belief that the free market generates broad prosperity in the long term. In other words, when the average person believes that he is better off in an unfettered market, he will support conservatives — even if a few of his fellow citizens are enjoying unequal shares of the national surplus.


When prosperity is lacking, however, liberal Democrats have the upper hand.

Thus, Jay urges “a relentless, unapologetic growth agenda, promoted on the campaign trail and adopted in Washington should Republicans win in 2012.”

Although I have previously addressed the politics of loss, I have yet to be persuaded of either perspective. Although I agree with Jonah that a true fiscal crisis will split the client groups of the Democratic party, the author of The Tyranny of Clichés certainly knows the direction of history is not inevitable. A fiscal crisis would also pose problems for the GOP. For example, Medicare is one of our largest unfunded liabilities and seniors are currently a GOP-leaning demographic. If the GOP cannot achieve entitlement reform before the moment of crisis, the party would be faced with the sort of hard choices that usually cause politicians of any party to make bad policy. Moreover, the current politics of the Eurozone suggest that if the left can fool people into believing the so-called “balanced approach” to debt is actually cutting spending, we could become trapped in the economic quicksand Jay fears.

What surprises me most about Jay’s essay is that in looking for solutions, he did not link the themes of his essay to those of his terrific new book, Spoiled Rotten. In his book, Jay details the history of the Democratic Party, concluding that it has become so captured by its client groups that it is no longer capable of governing in the general public interest. In 1992, Jonathan Rauch coined a term for this: “demosclerosis.” Riffing on Mancur Olson’s The Rise and Decline of Nations, Rauch argued:

Economically speaking, entrenched interest groups slow the adoption of new technology and ideas by clinging to the status quo. They distort the economy, and so reduce its efficiency, by locking out competition and locking in subsidies. As they grow, they suck more of society’s top talent into the redistribution industry. All in all, the economic costs can be very large. ***

The other kind of effect is on government. The accretion of interest groups, and the rise of bickering over scarce resources, Olson feared, can “make societies ungovernable.”

Now the theory’s darker implications come into view. “The logic of the argument implies that countries that have had democratic freedom of organization without upheaval or invasion the longest will suffer the most from growth-repressing organizations and combinations,” Olson wrote. If he is right, then the piling up of entrenched interest groups, each clinging to some favorable deal or subsidy, is an inevitable process as democracies age.

However, occasionally some cataclysmic event — war, perhaps, or revolution — may sweep away an existing government and, with it, the countless cozy arrangements that are protected by interest groups.

Is America headed toward a cataclysm? At the New Criterion, James Piereson considers the possibility:

What, then, is likely to happen? The United States will lurch forward for a few years yet, borrowing still more money to finance our public programs and putting off, for a time, any serious measures to address the problems of spending and debt until some event intervenes to force our hand. The United States has placed itself in a position in which it is vulnerable to any number of unforeseen and uncontrollable events. The bond markets could revolt against increasing levels of debt. Interest rates could rise to ruinous levels. A major bank or two might fail, precipitating a new financial crisis. A war or revolution in the Middle East could cause a spike in oil prices. Terrorists might strike again. We could face a new recession before we have fully recovered from the last one. Europe could go into recession as a result of its own debt crisis, thereby curbing the demand for American exports. Because the United States is already skating on thin ice with little room to maneuver, any or all of these events would bring the current system to a point of crisis where Congress would have to slash spending and renegotiate promises it has made. At this point the United States would enter uncharted political territory.

This would be the ultimate challenge for a political regime organized around public spending and debt. It would immediately lead to a highly charged political situation in which incumbents are voted out of office, interest groups battle to protect their pieces of the budget, and the political parties struggle to keep their electoral coalitions intact. As this process unfolds, Americans may then witness the kinds of events not seen in this country since the 1930s or, even, the 1850s and 1860s: protesters invading the U.S. Capitol, politicians refusing to leave office after they have lost elections, defiance of the Supreme Court, the emergence of new leaders, and, possibly, the formation of new political parties. All of this can be expected from a process in which an entrenched system of politics withers and dies and a new one is gradually organized to take its place.

This level of political turmoil ought to be avoidable. As Jay suggests, a relentless focus on economic growth is crucial. However, conservatives and libertarians need to be more creative in how they think and argue about promoting economic growth. It’s not all about tax cuts. Debt overhang can depress economic growth for decades. Fighting demosclerosis promotes economic growth. The reform and restriction of public-sector unionism (a key factor of demosclerosis) promotes economic growth. The exposure and elimination of crony capitalism promotes economic growth. The right needs to present a unified theory based on the link between economic growth and small-r republicanism.

Jay is also correct in insisting that the emphasis on growth be part of Republican campaigns, although I differ slightly with his reasoning. Jay argues it is important to make a growth agenda part of campaigns so that the GOP has a “mandate” to enact it once in government. In an era of increasing political polarization, it is less clear to me that any party or president will be able to claim a “mandate” to do particular things. Barack Obama campaigned on healthcare, but he ended up with a plan more like Hillary Clinton’s — and even then only because a financial crisis helped sweep sufficient numbers of Democrats into Congress, not because there was any public mandate to enact Obamacare. Nevertheless, campaigns tend to be the most teachable moments in politics, the moments when those who pay little attention to politics pay attention. Moreover, campaign coverage is ultimately driven mostly by the candidates; outside elections, the political environment rests more within the control of cultural, journalistic, and educational institutions controlled by the left. Campaigns at least present the opportunity for the right to make its case with less of a filter than usual.

Are the Dems doomed? To be sure, the politics of loss would present more immediate challenges to the client coalition driving the Democratic Party. Nevertheless, the left retains institutional advantages that would allow them to spin the failure of their “balanced approach” to the debt as a failure of basic principles of fiscal responsibility. The Dems will only lose if the right consistently makes the case that what Walter Russell Mead calls the Blue Social Model is failing not only because it is running out of money, but also because it is a major reason we are running out of money.

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