Five and a half years ago, when I first moved to Washington, D.C., for a magazine job, I rented a basement apartment in a neighborhood called Bloomingdale. The area was full of Victorian-era homes that had once been occupied by mostly middle-class black families, right on the border where the Northwest quadrant of the city becomes the Northeast. But throughout the 2000s, affordable D.C. neighborhoods with trendy-sounding names like Bloomingdale drew gentrifiers who needed low rents—journalists, creative types, entry-level do-gooders, and shift-working bartenders and baristas who occasionally had Mom and Dad’s help—and so the neighborhoods changed.

Some days, I worked from home instead of going into the office, and I’d head down the block to the Big Bear Café, a hipster outpost where you could find everyone from the neighborhood, the old and the new, together in one place. There, we’d all spend more than $2 on a cup of over-roasted French press coffee or $5 on a breakfast bagel with ham, egg, and cheese sourced straight from farms within a 500-mile radius of the city. I was as likely to see a Generation X professional working on his or her new laptop as I was to overhear lithe young men and women in a conversation about reinventing yoga. Sitting among this particular slice of the tattooed elite—the people who are outside the center of power but at a good distance for judging it—typing away on my own computer, I could feel like I’d made it. Somewhere, anyway.

Last summer, I was laid off when my magazine dramatically and suddenly shrank to half its size. It was the first time I’d been unemployed in my adult life, though I’d watched waves of layoffs hit coworkers in nearly every job I’d had. I had an army of friends, many slightly younger Millennials who’d graduated in the height of the Great Recession, who showed me the unemployment ropes. Deciding to save money on rent, which had grown in five years from $995 a month to $1,275, I sublet my apartment. I stayed for a few weeks off U Street at a friend’s group house. There was an unoccupied spare bedroom that had been used as a crash pad for unemployed friends many times before, and they hosted a huge dinner party nearly every Sunday at which I had already been a regular, so it felt like home.

Through the summer, my friends and I, all in our late twenties to mid-thirties, would go out at night for $10 Negronis or bourbons, or went to places where we had cultivated friendships with bartenders so we got some drinks for free. We’d have $8 drip coffee in the mornings with a rosemary or lavender scone, or something else ridiculously fancy, rubbing shoulders with the people our age and older who actually made money. Some of us would go off to work while the rest of us navigated our new self-employment, since the freelance life was the only one available.

I saved up enough money over the summer to afford my rent again, for awhile, and I moved back into my apartment and continued piecing together work as a freelancer. I felt like I hadn’t missed a beat. Most important, I was doing the work I wanted to do, as were my friends—we were doing good work, in the fields we’d intended to enter. We were making a difference, not just clocking in somewhere during the day and having extended-adolescence fun at night. We felt we were building toward something, an actual career and a life.

Millennials are loosely defined as the generation that came of age in the decades around the turn of the century. Demographers put the earliest birth years at either 1980 or 1982, with an end point of 2000 or 2002, which means that Millennials’ working lives will always be shaped by the Great Recession and its aftermath. Even for the oldest among us, the time before video games and computers is lost in the hazy memories of early childhood. We’re a generation in which children were empowered by promises that they could grow up to be anything they wanted to be. Born in October 1979, I’m technically part of Generation X, but socially I fit best with the Millennials. I graduated from high school with 1980s babies, and the phone number on my first resume in college was a cell phone rather than a landline. My friends, classmates, colleagues, and I are all used to mobility, Google searches, and texting. The cynicism and slactivism that characterized, or stereotyped, Gen X is something we’ve observed only when we watch clips of Jon Stewart’s Daily Show on YouTube or Hulu, or shared on Facebook.

The oldest of us are now reaching our mid-thirties. A couple of years ago, it seemed as if I woke up one day and suddenly felt like an adult. Nothing had changed materially about my life, but my experiences and responsibilities totaled up in a way that equaled grownup. And yet, I still lived in a tiny apartment with an Ikea dining table, a bookshelf I scored from my curb, and a couch I carted home when it was discarded from my office. I never expected to be rich, but I did expect to someday have real furniture and maybe even a house. Achieving those things was always in the future, at some relatively well-moneyed point that I was expecting would roll around— until I realized the future had dawned and the financial stability hadn’t appeared.

My friends and I are a recognizable class in D.C. and other cities like it (New York, Los Angeles, Boston), the creatives, the professors, the people who work in nonprofits or think tanks because they want to use their talents to make the world a better place. In decades past, people like us never made much money, and money is not the main way our tribe keeps score. But I see lots of people in the same fields who are twenty-five, thirty, or forty years older than I am who have solid, comfortable lives that have added up materially. They’re editors of magazines, tenured professors, and people who are stably employed at nonprofits with actual salaries, health care benefits, and, if not traditional pensions, then at least matching employer contributions to their 401(k)s. They’re not living in mansions, or even McMansions, but they have tasteful homes they bought on Capitol Hill or in close-in suburbs like Silver Spring or Takoma Park decades ago that now give them an easy half a million in net worth. Along the way they’ve managed to afford having one or two kids, and have sent those kids to college, even if they had to take on debt to pull it off. Many seem satisfied and fulfilled as they approach a modest but comfortable retirement.

I’m happy for them. But their lives seem incredibly distant to me, as if their histories belong in a textbook of some past America. I don’t see the path that would get me from where I am to where they are. And I’m sure many of my friends, though we might be counted among the more privileged members of our generation, feel the same.

Maybe the twenty- and thirtysomethings of previous generations also felt this way when they looked up the age ladder. And Millennials do have some real potential advantages over previous generations, from our higher levels of education to all the possible benefits of digital technologies. But before we get too excited about all the low-cost goods and services our generation can summon with an app, we need to understand that even these features of the “sharing economy” are making some people above us very rich while we become a generation that owns virtually nothing.

A few months after my move to D.C., I got rid of my aging car. I had been waiting for the day it would fail inspection, and it sat mostly unused in a $100-a-month lot. I signed up for Zipcar instead. I got a bargain on my start-up fee through the online coupon service Groupon, and soon Zipcar had a new VW Golf parked less than three blocks from my basement apartment.

Access to a car was useful, because when I first moved to my neighborhood, it was a food desert. I’d occasionally rent a car for a big grocery trip or a trip to Target for household goods—otherwise I’d have to scrounge for food at the price-gouging corner store up the street or lug groceries for a mile. Zipcar was the best option, because for many years it was difficult to get a taxi service to come to my house, even when I called the dispatcher a day in advance to schedule it, and it was impossible to hail a cab on North Capitol and Florida, the biggest intersection near where I lived.

Over the years, getting around has become even easier. The car service smartphone apps Uber and Lyft have finally allowed me to get a ride from my house and friends’ houses in neighborhoods like Columbia Heights or Petworth—they’re sometimes cheaper than traditional cabs, and they’re always more reliable. Using Capital Bikeshare means we didn’t even have to own our own bikes.

Other products and services have made my life easier still. At a slight premium, I can have food delivered straight to my door rather than worrying about cab trips back and forth from the supermarket. Amazon Prime’s free two-day delivery obviates long trips to Target or spending a fortune at a hardware store for household goods. If we have to pick up extra hours of work to cover the cost of rent or lattes and drinks, we can have our washing done by the online service Washio, or send someone else to the grocery store for us with Instacart. These companies mostly make money by charging fees per transaction or fixed membership fees. Saving time is important, too—there is always more work to do.

These are the benefits of the sharing economy. They help us manage, and sometimes afford, our lives. We can live in relatively cheaper neighborhoods, far from the city center and reliable public transportation, because we can always pull up an app. Everyone uses Uber and Lyft and Zipcar: the waitress at the brick-oven pizza place that opened in Bloomingdale four years ago, especially when she needs to get home after a late shift; the kid who quit his job at the coffee shop to be a theater set designer; the vintage-clothing store owner who also makes money as a freelance journalist. Facets of the sharing economy provide opportunities for coping with downward mobility, even if some older folks may not understand how using a $600 smartphone to summon a college-educated Uber chauffeur amounts to thrift.

For one friend of a friend of mine, Nathalie Maréchal, the sharing economy makes graduate school possible. Nathalie, who is now twenty-nine, got her bachelor’s and master’s degrees in D.C. before moving to Los Angeles for a PhD program in communications at the University of Southern California. Her stipend is $30,000 a year, which she has to stretch to cover her car—an unavoidable purchase in L.A.—and her $1,400 one-bedroom apartment. To make it work, during breaks she rents the apartment on Airbnb, the online service meant to provide an alternative to traditional hotels. Regular people can rent out their rooms for extra money, and any damages are covered by the insurance Airbnb provides. In the meantime, Nathalie flies back to D.C. to stay with her partner. It helps that he is stably employed here in broadcasting, and her parents can give her money every now and then. Getting regular financial help from parents is something about 35 percent of Millennials say they are doing.

Nathalie is worried, because Los Angeles is one of the many cities cracking down on Airbnb and demanding that its users pay a hotel tax. While Airbnb markets itself as an online service that helps people like Nathalie, and the brand requires people to believe that users are just exchanging money for services with their “peers,” a 2014 study showed that roughly three-quarters of Airbnb hosts in New York City owned multiple properties—that is, they are basically acting as hoteliers without taking on the responsibilities that owning and running a hotel requires. “That’s very different from someone like me who’s just trying to sublet her apartment over the summer in a safe way that has insurance,” Nathalie says. For her, Airbnb isn’t just extra income—“it’s a necessity.” (For those who are trying to cobble together a living by renting out multiple Airbnbs, it may be an economic necessity as well, but it’s one that undermines hotel safety standards and threatens the livelihood of hotel service workers.)

The loss of Airbnb income could disrupt the delicately balanced graduate school life Nathalie has built for herself. In fact, it could disrupt her whole life going forward. She’s preparing for a career as a likely underpaid academic. “The only way I’ll own a house is if my partner buys one,” she told me.

Another woman, a thirty-two-year-old named Melissa Esposito, found a second career through the online sharing economy. Esposito majored in English at Salem College in North Carolina and had come to D.C. to work for a campaign with Emily’s List during the 2004 elections. Afterward, she’d stayed in the city to work for Flex-
car, an early competitor to Zipcar. “They were environmentally conscious, and I liked that idea,” she says. “I got rid of my car.” Then, Zipcar bought Flexcar in 2007 and consolidated operations. Within two years, Melissa was out of work.

She looked for other jobs, but 2009 was a bleak employment year. (According to the Bureau of Labor Statistics, 2.1 million workers lost their jobs in 2009, primarily in mass layoff events.) Since high school, Melissa had been making her own stationery and giving it away to friends as gifts. At first she designed it by hand, and later moved to making stationery digitally and printing it on eco-friendly paper. Before she lost her job, she was already selling stationery on Etsy, a website on which users can sell handmade goods. (Etsy charges fees—20 cents per item listed for four months, then 3.5 percent of the item price once sold—in exchange for letting users sell on the platform.)

Now, with more time on her hands and few job prospects, Melissa decided to concentrate on growing her handicraft hobby into a career. Making stationery for a living was something her mother viewed with skepticism, but Esposito saw a potential business in artisan notecards, stationery, and other gifts. After all, even with the ubiquity of electronic communication, stationery stores can still be found in malls. Why not build a store online? The start-up costs were much lower than opening a bricks-and-mortar store, and Etsy took care of all the billing and made the technical aspects of operating a virtual store easy. She also liked the idea of a flexible career, especially as she looked forward to one day having children.

But, as with most people selling on Etsy, Melissa’s virtual store does not add up to a living. Rather, it is a way to mitigate the lack of a more secure career path.

Samantha Close, another doctoral student at the University of Southern California, made a documentary about Etsy sellers. Most of the people she spoke with had bachelor’s degrees but were struggling to find a career with a path for advancement. She mentioned one woman who’d worked as a receptionist: “She said she had to ask permission to go to the restroom. ‘I’m an adult woman, I’m thirty years old, I don’t want to ask permission to go to the bathroom.’ ” For others, especially ethnic minorities, even well-educated ones, employment options outside Etsy were often limited to low-wage jobs in retail or fast food. “It doesn’t make any sense to put health, to put effort, to put time into a minimum-wage job where your hours can be cut at any point and there’s no benefit for you,” Close said.

According to a report released by Etsy, only 18 percent of sellers use their Etsy store as their primary source of income; the rest simply need or want the extra money. More telling, Etsy described its sellers as emblematic of what it euphemistically called a shift toward “flexible work”—that is, its sellers don’t have stable jobs. “[Forty-eight] percent are independent, part time, or temporary workers with a median household income of $44,900, 10.2 percent lower than the national average. Etsy sellers are combining income from both salaried jobs and entrepreneurial efforts to make a living,” the report read. But the company’s owners just had a big payday. Etsy started selling stock to the public in April, raising $1.8 billion in its initial public offering. Word on Wall Street is that it may soon be gobbled up by an even larger corporation, such as eBay.

This spring, less than a year into my life as a freelance writer, I realized I couldn’t live in my apartment anymore. My rent had been increasing faster than my income, and even if I didn’t mind that the cost was eating into a growing share of my take-home budget, I decided it wasn’t worth it. Other costs were growing, too, especially the student loans from my undergraduate years and an ill-advised master’s degree. I had deferred my student loans as long as possible and couldn’t put off payments any longer. My student debt totals more than $100,000, which is way more than I make in a year, and on an income-based repayment plan, my monthly bill is more than $500, or about half my rent. If I didn’t have an income-based plan, I’d be paying over $1,000 a month.

Most of my friends have student loans, and of the dozen or so Millennials I spoke to for this article, only two didn’t have student loans. Because we have degrees, we are better off than those who have student loans but did not graduate. Over time, we are told, those of us who graduated will see increased earnings that will outweigh the costs of our education. (And it’s the best-educated generation in American history, with a third of twenty-six- to thirty-three-year-olds possessing a col-
lege degree.)

That all seems so abstract to me, though. There has never been a generation with this much student debt. Two-thirds of us who graduate do so with loans, and the average amount is $28,000. The growth is partly because the cost of college increased more than 500 percent in one generation. The student loan problem gets worse for those who go on to graduate school, which many people did during the downturn. The unemployment rate for Millennials with at least a college degree is 3.8 percent—better than the 12.2 percent for those without, but still double the rate for older college graduates, and higher than the unemployment rates for college graduates of the same age after the 1982 and 1992 recessions.

In all, young people bore the brunt of the economic downturn—as young workers often do—but Millennials are taking a longer time to recover than previous generations did after similar events. More people are retiring later than expected, staying in the workforce longer because of the recession, and employers are more reluctant to hire workers with a shorter employment history and fewer skills. When they do hire them, it’s at a lower starting salary than those paid in previous generations. Some people—young people without families to pay for—have part-time second jobs just to supplement their flagging salaries. A friend of mine who works in the nonprofit sector, and my boyfriend, who is a social worker, both work two jobs to cover bills and have a little money beyond the base level they need.

Many Millennials—including me—are no longer working full-time jobs but are instead making do with the gig economy, part of the contingent job market that is comprising a bigger and bigger share of the labor force. By some estimates, contract employment made up fully half of the jobs added after the recession, and contract workers are currently 40 percent of the labor force.

In truth, being a freelance writer suits my lifestyle and career goals, and I might have chosen it for myself whatever the job market looked like. Writing has also never been the world’s quickest path to getting rich, and I wouldn’t be doing it if money were my goal. Some of my friends in other industries, from the law to many types of nonprofit work, feel the same way.

But the downside is that we don’t have benefits, like health insurance or employer matches for 401(k)s, and our jobs are unstable. Employers can end relationships with us at any time, and much of the work is project based. Contacts and clients can dry up, and it’s harder to forge new ones without an office to go to. Skills can atrophy. These workplace setbacks can impact the rest of our lives.

Even people with apparently stable jobs find themselves needing to moonlight in the gig economy. Rebecca Delaney, a twenty-seven-year-old who once interned for my old magazine, is now a “full-time” federal employee. But after she was furloughed in 2013 during one of the government shutdowns, she started an Etsy store selling clothes and jewelry. “Courtesy of Ted Cruz, I got a new hobby that pays money,” she says. Many people turn their hobbies into moneymaking ventures not just for fun, but as a hedge against losing their day job.

Uber drivers, too, are part of the same gig economy. Uber recently released a survey finding that their drivers make an average of $19 an hour—but, crucially, the company did not take into account the costs that Uber drivers face, such as the cost of owning and maintaining a late-model car, as well as paying for gas, insurance, fees, and depreciation. And because Uber insists that they are not employees but, rather, independent contractors, Uber drivers are also responsible for the cost of buying their own health insurance. While the company’s survey found that more than three-quarters of the drivers were satisfied working with Uber, almost a third said they were looking for a better, full-time job. Forty percent said driving for Uber did not make up a significant portion of their wages.

Marriage—and the two incomes it provides—could stabilize life for many Millennials, but the irony is that most young people say they want to wait to get their finances in order before they get married. The average age of marriage has been inching up, and is now twenty-seven for women and twenty-nine for men. A relatively new phenomenon is that a young woman and her potential partner are likely to be very focused on how well she is doing financially before committing to marriage. “I think lots of people want to be established and know who they are before they get married and share finances,” says thirty-four-year-old Kate Amarelo, who works for the federal government and also sells jewelry on Etsy. “At least for women, they want to be more self-sufficient and self-reliant.…The crowd I hang with is more the ones who want to be independent and do their own thing before latching onto the whole getting married, have a kid, buy a house thing.”

Many women I know agree with her: we fear being overly dependent on a husband’s money. We learned, perhaps too well, the lessons of previous generations of women, some of whom, struggling to balance home and work, scaled back jobs and relied on their husband’s earnings only to be left financially devastated by divorce. In addition, many of the young men in this generation barely earn enough to support themselves, let alone a wife and children. The most educated Millennials are most likely to be married. But while marriage may often in effect be a reward for having “made it” financially, having a financial partner can also bring financial stability. Melissa Esposito, who is among the 26 percent of Millennials who are married, wouldn’t have been able to become a shop owner had she not had a stably employed husband.

Without a marriage and children, there’s less pressure to settle down and buy a home, and Millennials are delaying that, too. Even the oldest Millennials aren’t buying homes at the ages previous generations did. They’re the biggest driver of the decline in homeownership, and the wealth of households headed by someone under the age of thirty-five is down 41 percent from where it was for the same type of households in 1995.

“Most of us came of age when all we were hearing about was that the economy sucked because people bought houses,” Rebecca Delaney says. “The message people my age took away was ‘Homeownership is frightening and the economy’s going to eat you.’ ” There are also those who just enjoy renting. “I don’t want to buy a house at all, particularly,” says Kate Amarelo. “If I had to deal with all the things that go on in a house, oh no, uh-uh.… The whole financial thing is terrifying.” But homes have been the biggest source of wealth for middle-class families, and if Millennials don’t become homeowners, they are going to need some other way of building assets for the future.

I watched my parents struggle with a home they could barely afford, and I came away with the message that they were worse off for having become homeowners, not better. But as we get older, we realize that adult life is slipping out of reach, whether we want that kind of life or not. (I felt that way especially as, at thirty-five, I confronted the rental market for what felt like the millionth time in my life.) We know we’re relatively well off, but we’re still worse off than the college-educated people who came before us. We’re in the careers we always knew wouldn’t make us rich, but we thought we could at least achieve solvency. After years of trying to live a bohemian life, I’ve found that even that seems harder now—especially in the cities that have always drawn those of us with modestly paying careers. While the sharing economy made it seem like I was being thrifty and saving money, the reality was that I spent almost all of my monthly income on rent, student loans, and health insurance. The people who are doing all right, or better than all right, are fewer and fewer, and the rest of us are falling farther behind.

The way in which we live our lives, in which we spend our money, may be masking this. It may be why Millennials tend to have such a sunny outlook—polls show that 49 percent think the country’s best years are ahead. As consumers and producers, we’ve been using the sharing economy instead of buying our own homes and building our net wealth. Some of us run Etsy shops, and a lot of us are “entrepreneurial” as we swing from one grapevine to the next as freelancers, but very few of us are building equity in a real business. And we’ve been deluding ourselves about who really benefits from the system.

When we rent a Zipcar for a few hours, Zipcar asks us to clean up after ourselves and fill the gas tank out of a sense of obligation to our Zipcar community. When we hire an Uber or a Lyft or rent a room on Airbnb, the person on the other end has a Facebook-style profile picture, and we chat like old friends on a big social network that purports to have taken the place of an economy. In reality, though, these are the same types of services that have always been around—private drivers and taxis, hotels, rental car companies—but their services are sliced up into tiny bits and provided by underpaid contingent workers, which is what we are ourselves. No one notices the money changing hands, and it may seem like we’re just sharing a service with friends. But in fact we’re enriching the owners of whatever app or platform we’re using, becoming just a data point on the path to their payday while we age without assets. It’s their world, and we’re just renting it.

The post The Post-Ownership Society appeared first on Washington Monthly.

This past February, at the Conservative Political Action Conference (CPAC) outside Washington, D.C., Wisconsin Governor Scott Walker rolled up his sleeves, clipped on a lavalier microphone, and without the aid of a teleprompter gave the speech of his life. He emerged from that early GOP cattle call as a front-runner for his party’s nomination for president. Numerous polls this spring placed him several points ahead of former Florida Governor Jeb Bush, the preferred candidate of the Republican establishment, in Iowa and New Hampshire. Those same polls showed him with an even more substantial lead over movement conservative favorites such as Ted Cruz, Rand Paul, and Mike Huckabee. In late April, the Koch brothers hinted that Walker would be the likely recipient of the nearly $900 million they plan to spend on the 2016 election cycle.

The source of Walker’s appeal—his singular calling card, in fact—is not hard to identify. In 2011, the governor signed legislation stripping most of Wisconsin’s public-sector unions of their rights to collective bargaining and to require dues from members, essentially busting those unions. He went on to survive a bitter 2012 recall effort backed by national unions and to win reelection in 2014 in a state Barack Obama won in 2012. He then signed “right to work” legislation that massively undercut the state’s dwindling private-sector unions, too. In his twenty-minute CPAC speech, Walker referred to his battles with labor six times directly and as many times indirectly. It is the core of his message.

It is hard to exaggerate the attractiveness of that message to Republican voters. Back in the day, progressive Republicans like Wisconsin’s own Senator and Governor Robert La Follette championed the labor movement, but today’s GOP is overwhelmingly hostile to unions. Only 44 percent of moderate-to-liberal Republicans, and 23 percent of conservative Republicans, have a favorable view of labor unions, according to the Pew Research Center. By contrast, 70 percent of moderate-to-conservative Democrats and 80 percent of liberal Democrats rate unions favorably. Union support is one of the biggest wedge issues.

In his CPAC speech and subsequent ones, Walker likened his clash with Wisconsin’s public-sector unions to Ronald Reagan’s 1981 firing of 11,000 striking air traffic controllers, thus presenting himself as a rightful heir of the party’s patron saint. He extended that connection to foreign policy. A few days after his CPAC speech, Walker told a Palm Beach Club for Growth audience that Reagan’s firing of the controllers was “the most significant foreign policy decision of my lifetime” because “it sent a message around the world [that] we weren’t to be messed with.” Walker’s similar toughness under fire with the unions, in other words, makes him ready to be commander in chief. “If I can take on 100,000 protesters,” he told the crowd at CPAC, “I can do the same across the world.” The mainstream press treated such comparisons as bumbling efforts to cover the fact that, as a governor and former county executive, he has scant foreign policy experience. But conservative audiences loved the show of resolution. Walker wants tough strength to be his calling card; his campaign book is called, not coincidentally, Unintimidated.

What GOP primary voters most want is a candidate who will not compromise on conservative principles but can still win a general election. That’s where Walker’s triumph over public-sector unions really helps him. He not only stood up to big labor, he points out, but politically lived to tell the tale, winning a recall election in 2012 and reelection to a second term in 2014. “We did it without compromising,” he told CPAC:

We took on the powerful special interests in Washington and we returned the power back to the hand of the hardworking taxpayers. They didn’t like that. They tried to recall me. They made me their number one target. But in the end we showed them we can fight and win for the hardworking taxpayer.

It’s obviously too early to know who will ultimately become the GOP nominee. The field of candidates is crowded. The debates are months away, and Walker has real vulnerabilities. His flip-flops on key issues like immigration have already hurt him among some conservatives. His poll ratings in his home state have fallen and his national poll numbers weakened in the late spring. His claim to special status as a conservative who can win in a blue state is also questionable. Two of his three statewide electoral victories occurred during off-year elections (2010 and 2014), when GOP voters typically predominate, and his 2012 recall victory was colored by the fact that voters were being asked to overturn the previous year’s election results over a policy dispute, which, according to exit polls, many of them thought was inherently unjust.

But let’s presume he does become the nominee. Walker’s triumph over the unions could continue to be a useful tool for him, not only in firing up the GOP base but also in reaching out to independents, 47 percent of whom take a dim view of unions, according to the same Pew poll, and even to persuadable Democrats. The 2016 elections will be a battle over the role of government in failing to spur a too-weak economy and boost stagnant incomes. The Democratic nominee will likely present herself (or, less likely, himself) as a champion of the middle class who will wrest control of government away from the big banks and other powerful corporate interests and use it to benefit average Americans. Walker will be armed with an equivalent reform narrative. The problem with government, he can say, is not just that it is too big, holds back private-sector growth, and robs us of our freedoms—the standard Republican view, which he tirelessly proclaims—but that it has been captured by its own employees, who run it for their own benefit, not the public’s. Just as he took on the unions in Wisconsin, he can say, so will he take on the bureaucrats in Washington, returning power back to “the hardworking taxpayers.”

So it’s worth looking carefully at Walker’s arguments for why he busted the state’s public employee unions. To what extent were those unions the obstacle to getting the state’s fiscal house in order—a key argument Walker made during the 2011 standoff? To what degree do state and local government employee unions drive government’s costs up and push its performance down?

Even more important is the question of how Walker’s experiences and management choices at the state level might translate at the federal level. Is a governor whose greatest accomplishment is the crushing of state and local government unions the right person to lead the government in Washington?

The marble rotunda of the Wisconsin state capitol building is a cacophonous place if there’s any kind of noise inside. School tours, for instance, make it impossible to carry on a conversation. And in February 2011, when Scott Walker announced in the first weeks of his term that he would push through a budget-repair bill that would deal with short-term budget issues—and take long-term aim at Wisconsin’s public employee unions—the din was unimaginable. Tens of thousands of employees, mostly teachers, police officers, and firefighters, descended on the capitol in a series of demonstrations that went on for weeks. Those who could get inside beat drums and sounded air horns. Those who couldn’t get in marched outside, even on frosty Madison winter weekends.

Republicans held the governorship, assembly, and state senate, but passage of the budget bill needed enough Democrats present to make a quorum. Fourteen senate Democrats fled the state to prevent action. State police were sent to their homes to find them, especially after reports surfaced that some Democrats were sneaking back late at night and on weekends, but the senators eluded both the police and the Republicans. They holed up at a hotel just south of the Illinois border and strategized over how to stop Walker’s union-busting plan.

The most important part of Walker’s proposal radically changed the rights of the state’s public employee unions. The proposed law would limit collective bargaining to wages, and increases could not exceed the rate of inflation. Contracts would be for just a year, and unions needed to win an annual vote to stay certified. Most important, employers—that is, state and local governments—could not collect union dues and workers would not be required to pay them. Law officers and firefighters would be exempt. The proposal especially targeted local education unions, which had been a nagging thorn in the Republicans’ sides for decades.

Walker pushed his plan, he told David Gregory on Meet the Press, because “collective bargaining does have a cost.” He pointed to the time when, as Milwaukee’s elected county executive, he asked the local public employee union to accept a reduced thirty-five-hour workweek to avoid layoffs and furloughs for everyone. The union’s reply, he said, was “Forget it.” Now the state was facing a tough budget, and he told Gregory that layoffs would be necessary if he couldn’t get his plan through the legislature. It was, he said, “our moment in Wisconsin’s history.”

The Democrats refused to budge from their Illinois hideout, so Republican legislators decided to outflank them. They stripped the budget pieces away from the bill, which left only the union-busting bits and removed the quorum requirement, allowing the Republicans to pass the bill without getting the Democrats back to Madison. As he signed it, Walker said he was proud to “lead the way … to get Wisconsin working again.” But he wasn’t shy about claiming a broader victory to “ultimately inspire others across this country state by state and in our federal government,” he told reporters. In just his first three months in office, he had come to see this “as part of our legacy.”

Almost no one saw this anti-union attack coming. Walker’s 2010 gubernatorial campaign focused on a pledge to create 250,000 new jobs in his first term (job growth fell far short, at 145,000 new jobs). There were hints that he planned to free local governments from being “strangled” by mediation with public employee unions and that he wanted to increase local governments’ flexibility in negotiating health plans. But it wasn’t until a press luncheon a month after his election that the full union strategy began to come into focus. He told reporters that “we are going to look at every legal means we have to try to put that balance more on the side of taxpayers and the people who care about services.” The union leader Bryan Kennedy worried that Walker planned “to make state employees the political whipping boy for the state of Wisconsin’s economy”—and he was right.

Walker wasn’t done. In early 2015, he championed a right-to-work bill to end the requirement that employees join unions or contribute union dues as a condition of employment. Just as in 2010, he hadn’t campaigned on the proposal in the election months before. In fact, even after the election, he said about the bill, “I think it’s a distraction.” This time around, the right-to-work bill was a favorite of Republican legislator leaders, but, as the train charged out of the station, Walker happily climbed aboard the engine. He was happy to claim victory, but he got lots of help from conservatives in the capitol. In Slate, Betsy Woodruff wrote, “Without the Wisconsin state Legislature, Walker would just be a skinny Chris Christie.”

For decades, Wisconsin had been one of the national leaders in union organizing of the government workforce. AFSCME, the largest government employee union, began in Madison in 1932.

But by the time Scott Walker was elected, their ranks had long stopped growing. Public employee union membership in Wisconsin hit a high point in 1999, with almost 58 percent of the state and local government workforce belonging to unions. Membership bounced up and down with the election cycle for the next twenty years— until Walker’s effective assault in 2011. As Figure 1 shows, union membership dropped from 50 percent of all state and local employees to 31 percent in just four years.

As the same chart shows, state and local government union membership nationally has been flat for four decades. If union power is a problem for government, it’s one that hasn’t, by that measure, been growing. Indeed, as a share of overall state government spending, wages and benefits for public employees have been dec
lining.

When he came to office in early
2011, amid a national recession and the end of the federal stimulus, Walker faced large budget deficits. He targeted union power as the core of the problem. “For us, this is about balancing the budget,” Walker told Fox News Sunday’s Chris Wallace at the time. “We’ve got a $3.6 billion budget deficit. We are broke.” Closing that deficit can’t be done, he insisted, “with the current collective bargaining laws in the state.”

But was collective bargaining really the problem? That year, the George Washington University political scientist John Sides released a study comparing the fiscal conditions of states with high and low percentages of union households and found no correlation. “[S]tates with larger unionized workforces do not have larger budget deficits,” he wrote. A follow-up study by the Institute for Research on Labor and Employment at the University of California, Berkeley, added collective bargaining to Sides’s calculations and got the same result: states where unions had strong collective bargaining rights did not have bigger deficits than states without such protections.

The new labor law Walker ultimately signed did help the state and local governments extract approximately $3 billion in labor givebacks, largely through high employee contributions to their pensions and heath benefits. But other states also closed large budget deficits that year. Some, like Connecticut and Rhode Island, did so by winning large labor concessions, but through old-fashioned hard bargaining and political compromise. The unions in those states retained their collective bargaining rights. Indeed, early in the negotiating process with Walker, union leaders said they would concede to his demands for higher employee contributions to pensions and health care if he would drop his insistence on gutting collective bargaining. The governor said no.

Walker’s argument for why unions should lose power wasn’t solely premised on the need to close budget deficits. He also appealed to basic fairness. “We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” he proclaimed. The implication was that government workers, through their unions, were extracting pay and benefits that average taxpayers, living in the “normal” market economy, could never expect and shouldn’t be forced to pay for.

Are unionized government workers overpaid relative to what they could expect to earn in the private sector? As it happens, there is a substantial literature on that subject.

In a fascinating 2012 paper in ILR Review, three professors of business, David Lewin of UCLA, Jeffrey Keefe of Rutgers, and Thomas A. Kochan of MIT, reviewed that literature and conducted their own analysis of data sets on wages and benefits. On average, counting wages as well as retirement and other benefits, they found that, compared to private-sector employees, state and local government employees are undercompensated by 5.6 percent, with the gap smaller for local government employees (4.1 percent) than for state employees (8.3 percent).

The authors also confirmed a connection, observed in many other studies, between education and pay. Put simply, the higher the education levels of public servants, the less they are paid relative to what people with the same levels of education earn in the private sector. On the other hand, those government workers with lower levels of education tend to be paid the same or more than they would make in the private sector.

That’s not to say that unions don’t boost the pay of government workers. They do, though not as much as you might imagine. According to the authors, government unions on average provide their members with 3.7 percent higher pay—significant, but a fraction of the 14.1 percent wage bump private-sector unions win for their members.

Walker aimed his attack at public employee unions—but especially at the state’s teachers’ union, which had long been the most powerful union in the state, had long supported Democrats, and had represented some of the local governments’ most-educated public employees. Their pay was lower than the national average, according to the annual report by the National Education Association, at $54,535 in 2014-15, compared with the average national salary of $57,379. At the time of the 2011 battle with Walker, teachers’ salaries had risen faster than the national average over the previous decade, with a 29 percent increase compared with a 23 percent increase nationwide, but the average salary ($53,792) was still less than the national average ($55,418).

Do strong teachers’ unions drive up salaries? The Thomas Fordham Institute, a conservative Washington-based think tank, produced a 2012 study assessing the strength of teachers’ unions. Comparing the ranking of states by union strength with the salary increases for teachers in the last decade (from 2004 to 2014), it’s hard to make the case that the unions are a powerful engine driving up salaries (see Figure 2). In fact, the state with the smallest increase (Illinois) has some of the strongest unions, and the state with the biggest increase (Wyoming) has only modestly strong unions.

Unions do matter, of course. Teachers wouldn’t invest so much energy in them if they didn’t believe they did. In Wisconsin, the teachers’ union was especially successful in getting many districts to pay the teachers’ share of contributions to the state pension system, to the tune of more than 6 percent of their salaries. For most teachers, that ended after the passage of Walker’s bill. But many other factors besides union bargaining determine teachers’ salaries, and they often count much more. Teachers in Pittsburgh make more than twice as much as teachers in Newark after accounting for differences in the cost in living, according to a 2014 study by the National Council on Teacher Quality (NCTQ). In Boston, it takes teachers seven years on average to reach a salary of $75,000. In Wichita, it takes more than thirty years. Figure 2 captures the role that unions pay in shaping teachers’ salaries—but it shows that other forces matter much more. The NCTQ study found that teachers in Milwaukee and Gwinnett County, Georgia, have about the same lifetime earnings. Milwaukee’s teachers’ union has long had a strong voice. Collective bargaining in Gwinnett County is explicitly illegal.

Walker would argue that limiting pay increases isn’t the only reason the teachers’ unions needed to be cut down to size. As he explained in his CPAC speech, the real goal was getting better-performing teachers for the benefit of students: “[I]n our state, we don’t have seniority and tenure anymore. We can hire and fire based on merit. We can pay based on performance. We can put the best and the brightest in our classrooms and we can keep them there.”

Here, Walker was speaking the language not just of conservative Republicans but of many reform-minded Democrats who have long complained of teachers’ union resistance to charter schools and other innovations that threaten union power but have been shown, in some places at least, to boost student outcomes (see David Osborne, “How New Orleans Made Charter Schools Work,”).

Walker, however, hasn’t done much as governor to advance such reforms (his focus has been on increasing funding for vouchers and opposing Common Core standards). Moreover, in comparing the strength of teachers’ unions with overall K-12 achievement (as ranked by Education Week in its annual survey), it’s hard to make the case that states with stronger unions have lower achievement (see Figure 3).

But Walker didn’t target all public employee unions. His plan allowed police and fire unions to continue to bargain over wages and benefits—and they were exempt from the cuts in government-funded benefits that reduced the take-home pay of teachers and many other public employees. If the goal was to help taxpayers and to get out of the way of market forces on wages, then the first step would have been to remove union protection from groups that are farthest out of sync with the private sector. As Lewin, Keefe, and Kochan show, the pay gap between the private and public sectors tends to be greatest for those with the highest levels of education and lowest for those with the lowest levels of education. According to the U.S. Bureau of Labor Statistics, the jobs of police officers and firefighters have entry requirements of a high school education, compared with at least a bachelor’s degree for teachers. But the firefighters and police officers were exempt, while teachers took the brunt.

In the end, gutting union power allowed Walker to save the state about $3 billion over his first term. Most of the savings came from passing more of the cost of fringe benefits from taxpayers to employees, and two-thirds of that came from higher employee contributions to pensions. In the first two years after the law passed, the tax-watchdog group Wisconsin Taxpayers Alliance found, average teacher salaries were flat but take-home pay dropped by 16 percent, as a result of the shift in the cost of fringe benefits.

Not a nickel of that money, however, went to shoring up the state’s long-term pension obligations. Anyone who studies state and local government finance knows that the next big crisis is the sorry state of most state pension systems. Walker, however, didn’t have to worry about that, because he inherited the nation’s strongest state pension system, with 99.8 percent of its obligations funded.

This may strike many readers as odd, since conventional wisdom holds that pressure from public-sector unions is behind the vast unfunded deficits in state pension systems, with Illinois’s nearly insolvent system being the prime example. But as Figure 4 shows, there is no connection between the strength of unions and the fiscal health of state pension systems. Some states, like Wisconsin, whose unions were ranked as the eighteenth most powerful in the country before Walker arrived in the governor’s mansion, are in fine shape. Other states with weak government unions are in terrible shape. South Carolina, for instance, has the second-least-powerful public-sector unions in the country and only 66 percent of its pension obligations are funded. It turns out that elected leaders, regardless of their state or party, are good at finding ways to underfund their pension systems, since doing so takes pressure off today’s budget while pushing the pain off into the future.

To what extent, then, did Walker’s crushing of the unions help Wisconsin’s “hardworking taxpayers”? The $3 billion he saved in his first term was certainly something. But that amounted to less than 1 percent of overall state and local government spending over that time period. Those savings came from the pockets of teachers and other public servants who are also taxpayers and whose compensation, by most measures, was not out of line. The law Walker signed didn’t contribute to the fiscal health of the state’s public pension fund. It provided management flexibilities that could ease school reforms down the road but that the governor himself hasn’t taken much advantage of. And, as we’ve seen, Walker could have won most or all of that $3 billion through tough negotiating without going for the jugular and virtually eliminating collective bargaining. Why, then, did he do it?

It’s tempting to portray the struggle over Wisconsin’s unions as a matter of high policy. In reality, however, it was the culmination of decades of increasingly fierce partisan wrangling that pitched the state’s Democrats, along with their union supporters, against resurgent Republicans and their allies in the business community.

In the previous twenty years, there had been other epic battles, but none was bigger than the 1998 campaign for State Senate District 27, located in a Madison suburb. The race pitched Democrat Jon Erpenbach, a former legislative aide, local radio personality, short-order cook, and truck driver, against Republican Nancy Mistele, a local business operator and prominent conservative activist. Both sides expected that the race would decide control of the Wisconsin state senate, which had been tilting back and forth and was then in Republican hands. With Republican Tommy Thompson in the middle of his fourteen years as governor, the Democrats saw control of the senate as critical in regaining their power in the state—and Erpenbach’s race as critical to senate control. For the Republicans, it was their golden opportunity.

It was a big-money campaign, at least for those times and for a state legislative race. Erpenbach raised $188,000, but Mistele vastly outspent him with the $307,000 she collected. She also had big help from Wisconsin Manufacturers and Commerce (WMC), the state’s chamber of commerce, which spent an estimated $200,000 in issue ads. But the state’s major public employee union, the Wisconsin Education Association Council (WEAC), jumped on Erpenbach’s side with an estimated $362,000 of its own issue ads. Issue-ad spending swamped the candidates’ own campaigns, and, as Erpenbach later told a reporter, “The campaign was totally out of my control.” In fact, he said, he felt like a “bit player” in his own campaign.

Erpenbach may have lost control of his campaign, but with WEAC’s money he won the race. The Democrats controlled the state senate, the seeds were planted to make issue ads an unstoppable national force, and the fight between WEAC and the WMC became a blood feud.

In the following years, WEAC and the WMC became stalking horses for the Democratic and Republican establishments, and the groups fought proxy battles for the parties on the state’s biggest issues. WEAC was the most powerful voice of public employee unions in one of the most important swing states in the country. The WMC was determined not to let them set the state’s agenda. The two groups may not have invented issue ads, but their rivalry brought them to a fierce level not previously seen in the country.

So when Walker won the governorship in 2010, as well as control of both houses of the state legislature, the ring was set for the Republicans to attempt a knockout blow to WEAC.

But not all unions suffered the same fate. The Wisconsin Troopers Association, for example, escaped most of the changes in bargaining power imposed on the teachers and won a 17 percent increase for its members in its bargaining with the Walker administration. The state troopers guarded the capitol during the 2011 fracas—and supported the governor in his 2010 campaign, the 2012 recall election, and his 2014 reelection battle. The governor’s spokeswoman, Laurel Patrick, denied that there was a connection. “This is ridiculous. To say there is a pattern of favoritism is inaccurate.” Some local police and fire unions also backed Walker—and they also found themselves far better off than the teachers’ union.

Sharp-elbowed politics is part of the American tradition. James Madison warned about the “mischiefs of faction,” and what has happened in the Wisconsin city that bears his name surely ranks among the most mischievous. But it’s awfully hard to argue that it represents a pathology of union power or that the unions had a privileged place at the table. They found themselves in a nasty blood feud and lost.

What do Scott Walker’s actions as governor say about how he might act as president if he were elected? Do his experiences busting the state’s government unions, and the instincts that led him to do so, make him the right person to take on the management challenges of the federal government? He argues that the union battles show he’s tough enough to lead, but there are much deeper issues at play here.

To begin with, whatever problems Washington has, they don’t have much to do with union power, for the simple reason that unions at the federal level don’t have much clout. They represent only 19 percent of all federal employees (compared with 42 percent of local government employees and 30 percent of state government employees across the nation, and 31 percent of state and local employees in Wisconsin). Federal unions have no right to bargain over wages; Congress sets federal pay through appropriations. Federal employees don’t have the right to strike, and never have. (The 1981 air traffic controllers’ strike was illegal under federal law, and Reagan actually provided a grace period to give them a chance to think twice before being dismissed.)

Today, the biggest problem with federal employees is that there’s not nearly enough of them. As the University of Pennsylvania political scientist and former George W. Bush White House aide John DiIulio has noted in these pages (see “The Rise and Fall of the U.S. Government,” January/February 2015), the size of the federal workforce today remains about what it was in 1960. Meanwhile, the U.S. population has more than doubled, the federal budget has quadrupled in real terms, and the number of pages in the Federal Register has grown fivefold (see Figure 5).

Washington has accommodated this growth largely by handing the job of managing federal programs to outside contractors. But with the same number of federal workers having to oversee ever more money and contractors, cost and quality have suffered. Year after year the GAO and other watchdogs document countless programmatic breakdowns and billions of dollars in cost overruns as a result of what I’ve dubbed “government by proxy.” The disastrous launch of the Obamacare website was a classic example. The Center for Medicare and Medicaid Services had too few employees with the right skills to manage the contractors who built the system. It’s also a good example of what can turn government programs around: the Obama administration parachuted in a couple dozen of the right people, and in a few months the website was up and running well.

If Scott Walker became president, what would his policies be toward the federal government and the people who work for it? As far as I can tell, no reporter has ever asked him. Not that he’d necessarily be very forthcoming. During his race for governor Walker gave virtually no hint that he would push to strip government unions of collective bargaining rights. As governor, he foreswore any interest in right-to-work legislation until he signed such a bill handed to him by his GOP-controlled legislature.

In all likelihood, then, a President Walker would adopt the views of his fellow Republicans in Washington toward federal workers, which these days can be characterized as “Off with their heads.” In the wake of revelations about egregious backlogs for appointments at some Veterans Affairs hospitals—backlogs caused, again, by too few federal employees, in this case primary care doctors—Senator John McCain led a campaign to make it easier to fire poorly performing federal managers, and then pressed to fire them faster. Other Republicans are campaigning to transform the Senior Executive Service into at-will employment, which would allow political officials to fire the most senior careerists without cause. Meanwhile, House Republicans are pushing to substantially downsize the federal workforce, including a plan to allow federal agencies to hire just one new worker for every three who leave. It’s easy to see a President Walker aggressively championing this agenda.

In a different era, one could imagine a kind of grand bargain emerging from such a push. Federal civil service rules do need reforming, after all. At least some Democrats would probably agree to, say, replacing lifetime employment for senior civil servants with five-year renewable contracts and much greater flexibility in transferring senior executives, in return for increases in both the ranks and pay of bureaucrats. And as John DiIulio has argued, an increase in the size and capacity of the civil service would mean fewer contractors and less wasteful spending, and hence would amount to a substantial decrease in the actual size of government.

Convincing most Republicans to see things that way, however, won’t be easy. At a minimum it would require a national GOP leader who can see past conventional ideological categories, understand the advantage of compromising with Democrats when it comes to policy on government employees, and guide his party in that direction. If Scott Walker manages to win the Republican nomination, it will be because he did precisely the opposite.

The post Scott Walker’s Real Legacy appeared first on Washington Monthly.

If the dictionary had an entry for “classic tech start-up,” the company Airware could be the featured illustration. It certainly has all the requisite qualities. Founded by MIT graduates? Check. Given early-stage funding by prominent venture capital firms? Check. Operates out of an airy loft in San Francisco’s SoMa neighborhood? Check. Makes hard-to-describe products for a nascent, potentially huge industry most people are only vaguely aware of? Check.

Airware is in the commercial drone business—remotely piloted aircraft, typically equipped with cameras, that can potentially be used for everything from inspecting bridges to delivering packages. The company’s eighty employees don’t make the drones themselves, but develop the hardware and software used in them—“GPS, actuator interfaces, payload interfaces, onboard computing, datelines, ground control system software, configuration tools,” explains (sort of) Jesse Kallman, Airware’s head of business development.

Airware is one of hundreds of companies, large and small, that comprise a commercial drone industry that racked up $609 million in sales last year. That market could approach $5 billion by 2021, according to WinterGreen, a research firm.

That’s just the drone industry itself. The technology’s greater potential impact is on businesses doing the buying. Oil and gas companies are eyeing drones as a way to economically inspect thousands of miles of pipelines. Electric utilities see similar uses for the nation’s complex (and aging) grid of high-tension lines and towers. Filmmakers love the idea of replacing camera-equipped helicopters with cheaper, more flexible drones.

But perhaps the most important immediate application is agriculture. Drones could “provide detailed scouting information on weed emergence, insect infestations, and potential nutrient shortages,” Jeff Vanderwerff of the American Farm Bureau Federation told the U.S. Senate this spring. This valuable information allows the farmer to catch these threats “before they develop into significant and catastrophic problems.” Down the road, drones could also enable so-called field-based phenotyping. This involves flying drones over test fields and taking images of experimental varieties of crops designed to, say, build more biomass or thrive in the heavy-rains-followed-by-drought conditions that climate change is causing. Plant geneticists would then analyze the data from the drones to see which tweaks they’ve made to the plants’ DNA actually work best under real-life conditions. This, in theory, could dramatically speed up the process and lower the cost of developing new and better crop strains. “Maybe ‘Holy Grail’ is overstating it,” says Sam Fiorello, CEO of the Donald Danforth Plant Science Center in St. Louis, which provides cutting-edge research for AgTech startups, “but it’s a huge advance in plant research.”

Commercial drones, then, could be a fundamental technology driving innovation and growth in coming years. As the world’s traditional leader in aviation technology (and, for better or worse, the world’s foremost military drone pioneer), the U.S. ought to command this industry.

There’s only one hitch: companies like Airware can’t sell many of their products in the U.S. That’s because the Federal Aviation Administration (FAA) has been slow to write the regulations drone makers need to test and operate in U.S. airspace. This past February, after years of missed deadlines, the FAA finally published a draft version of regulations for small drones—a notice of proposed rulemaking (NPRM), in Washington argot. The finished version of the rule probably won’t be ready until late 2016 or early 2017, according to the Government Accountability Office. Meanwhile, countries such as the UK, France, Switzerland, Australia, New Zealand, and Japan have had rules for testing and using drones on the books for several years—rules significantly less restrictive than those in the FAA’s recent NPRM.

As a result, American firms are being lured abroad by the more flexible regulatory frameworks of foreign governments. Google is testing package delivery drone technology in Australia. Amazon is doing the same in Canada. Airware is busy selling its products to drone companies in Australia and Europe. Meanwhile, a company called DJI, based in Shenzhen, China, now dominates the world market for smaller, lower-cost commercial drones.

The business press and tech websites are filled with stories slamming the FAA’s tardy and constricted regulations. It seems like a classic example of incompetent federal bureaucracy getting in the way of economic progress. Conservatives certainly see it that way. “The FAA is failing big time,” writes Marc Scribner, a fellow with the Competitive Enterprise Institute, because the agency is “mired in its own bureaucracy.” “The FAA is adopting a hyper-precautionary principle position that is holding back innovation,” Adam Thierer, a fellow at the libertarian Mercatus Center at George Mason University, has written.

Of course, there’s good reason to be careful and deliberate when it comes to easing restrictions on commercial drones. Nobody wants unmanned aircraft snooping through bedroom windows or getting sucked into jet engines. Still, conservative critics have a point. Other advanced countries have already found ways to allow this industry to grow, with no notable safety problems so far. Why is the FAA lagging?

A big part of the answer has to do with changes in the rulemaking process that conservatives themselves have helped bring about. Since at least the 1970s, right-leaning think tanks and the corporate lobbying community have been relentlessly propounding the message that regulation is suffocating the U.S. economy. Many on the left, worried about corporate influence on regulators, have also demanded more transparency. Prodded by these concerns, lawmakers and administrations in both parties have spent the last three-plus decades wrapping the FAA and other regulatory agencies in ever more procedural red tape. Congress has compounded the problem by starving agencies for funds and whipsawing them with conflicting mandates. The result is a slower, more cumbersome regulatory process with countless veto points opponents can use to alter or kill regulations they don’t like. Which, for critics of regulation, was the whole point. Except now the process is hamstringing what ought to be a sprinting American industry.

Before coming to Airware, Jesse Kallman spent five years as an FAA contractor working on integrating unmanned drones into the existing airspace system. He was there in 2012, when Congress passed the FAA Modernization and Reform Act (FMRA) directing the agency to expedite commercial drone regulation. He was also there a year later when Congress sequestered a chunk of the FAA’s budget, crippling its ability to meet mandated deadlines. “These are the kinds of things going on that make it really challenging to hire people, to plan more than two months out,” says Kallman. “No one understands what their budget is. Everyone is getting furloughed. Will we have funding next week? That was a big problem.” Michael Huerta, the FAA’s chief, told Congress in April 2015, “In recent years, funding uncertainties resulting from sequestration, government shutdowns, and short-term reauthorization extensions have hurt the FAA’s ability to efficiently perform our mission, and have impeded our ability to commit to long-term investments.”

A lack of funding remains a problem at the FAA. For instance, companies that want to experiment with commercial drones before the new regulations are finalized can apply to the FAA’s Unmanned Aircraft Systems (UAS) office for what’s known as a “Section 333 Exemption.” The agency has already given out more than 250 such permission slips (and, in April, picked up its pace), but a backlog remains. “The UAS integration office is getting slammed with demand,” explains Kallman. “They need more people to process 333 applications.” Companies can also apply for an older type of exemption called an “experimental airworthiness certificate,” but these can take even longer to come through. Amazon waited more than half a year for an experimental certificate to test a drone delivery system, by which time, a company vice president, Paul Misener, told Congress this spring, that particular technology had become obsolete—delays that prompted Amazon to move its testing efforts to Canada.

Budget constraints are only part of the problem. Even more important are changes to the regulatory environment in recent decades that have slowed the process down. For instance, since the 1940s, regulators have been required by statute to allow members of the public to comment on drafts of rules as they go through the process. In more recent years, however, lobbyists for industries and interest groups have learned to game the system by flooding agencies with comments, many of them cut-and-pasted repetitions of one another. The Academy of Model Aeronautics (AMA), the principal model airplane hobbyist group, did exactly that, getting thousands of its members to submit personalized variations of the same argument that noncommercial drone enthusiasts should remain lightly regulated. Each comment must, by statute, be reviewed by agency personnel.

Agencies have also been given an ever-growing series of complex procedures they must follow before issuing final regulations. As the FAA’s February proposed rule states:

Changes to Federal regulations must undergo several economic analyses:
First, Executive Order 12866 and Executive Order 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Public Law 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act of 1979 (Public Law 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Public Law 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995).

This isn’t even a complete list, and researchers have barely begun to assess the effects of all the efforts to regulate the regulators. But last year, the Harvard political scientists Daniel Carpenter and Jesse Gubb released a study of a key part of the process: rule review times at the White House’s Office of Information and Regulatory Affairs (OIRA). By statute and executive order, OIRA is required to review and sign off on all regulations issued by thirteen cabinet-level departments as well as many independent agencies based on cost-benefit analysis. Carpenter and Gubb analyzed data from all 42,014 OIRA regulatory reviews completed from 1981 to 2012. They found that average review times soared eightfold during that period, from less than ten days to nearly three months, with some rule reviews taking years to complete. It took OIRA four months to give the FAA’s drone NPRM a green light. (This measure, by the way, understates the delays OIRA imposes. It doesn’t take into account the extra time regulatory agencies put into preparing paperwork to bulletproof their rules against expected OIRA critiques.)

Another source of the problem businesses have with the FAA are the conflicting mandates that the agency is operating under. For years, the main task Congress and successive administrations have given the FAA has been to ensure the safety of air travel, a mission the agency has been astonishingly successful at (airline travel has been getting safer globally for decades, and there have been no major commercial airline crashes in the United States since 2009). The 2012 FMRA legislation demanded something very different from the agency: that it accept some risk to the airspace in order to accelerate the growth of the nascent commercial drone industry.

That’s a reasonable request, and in theory, the FAA ought to be able to find a way to do both. In practice, the agency’s traditional safety consciousness has overwhelmed its attempted accommodations to the drone industry. Companies are desperate, for instance, to fly drones “beyond visual line of sight” (BVLOS)—that is, miles beyond where the operator can visually see the aircraft—using cameras, GPS, and other guidance mechanisms. BVLOS flight is vital for many of the most promising commercial application of drones, such as inspecting electrical lines and delivering packages. But to get permission even to experiment with BVLOS systems in the United States (outside the Arctic, where Congress has created an exemption, and with the exception of a small pilot program the FAA announced in May), commercial drone manufacturers must apply for experimental airworthiness certificates and suffer delays. Or they can utilize one of a handful of FAA-approved test ranges, which are located in remote areas in states like North Dakota and Kansas—far from the industry’s center in California—and entail paperwork and restrictions that start-up firms find maddening as well as expensive. Other countries, including Canada, allow firms much easier permitting to experiment with BVLOS flying. In France, the practice has been allowed for lightweight commercial drones in rural areas without a government permit for several years.

Other countries, however, operate in parliamentary systems that don’t necessarily subject their regulatory agencies to the heads-I-win-tails-you-lose oversight that Congress routinely imposes. Joe Kennedy, a senior fellow at the Information Technology Innovation Foundation, recently authored a report calling for smarter regulations to encourage cutting-edge technologies like commercial drones, which was critical of the FAA’s efforts. But as a veteran former congressional staffer, he also understands the pickle the agency would be in if a commercial drone were, say, to crash into a bus. “A congressman or senator’s going to haul FAA leaders to the Hill and say in front of the cameras, ‘You’re responsible for ten deaths! How did you let that happen!’ ”

Congress has also complicated the FAA’s job by giving special treatment to a powerful class of drone users: hobbyists. For many years, model airplane buffs have been allowed to pursue their interest with little interference from the FAA. And for years, that largely unregulated system worked. There weren’t that many such hobbyists, and over several decades only about half a dozen deaths involving model airplanes were ever recorded, only one a bystander. Today, however, more sophisticated flight controls mean that no expertise is required to fly (though it is, perhaps, required to fly safely) and cameras with real-time video relays encourage some users to flout older norms. In January, for instance, a hobbyist crash-landed a drone on the White House lawn. A lot more people are flying drones, and the new technologies blur the lines between recreational and non-recreational use. If you are flying for fun and take a picture, and then later decide to sell it, were you a “hobbyist” or not?

But the AMA—the hobbyist group—convinced Congress to write into its 2012 law that the FAA “may not promulgate any rule or regulation regarding a model aircraft … flown strictly for hobby or recreational use,” so long as it was under fifty-five pounds, flown far from airports, and in accordance with “the programming of a nationwide community-based organization.” (The law doesn’t specify the name of such an organization, but the AMA is the only one that fits that description.) By granting the exemption, Congress put the FAA in the unenviable position of having to investigate individual instances of drone flying, make rabbinical judgments about whether the operator is or is not a hobbyist, and, if not, issue cease-and-desist orders to the non-recreational operator for activities that would otherwise be perfectly legal. As you can imagine, this has not sat well with commercial drone operators.

A more sensible system, which many European countries seem to be moving toward, would regulate based on the risk of the drone or practice, with the least risky—lightweight drones flown in rural areas at low altitudes—receiving little regulation, regardless of whether the operator is a hobbyist or a company. But that’s unlikely to happen in the U.S. given the parameters Congress has forced on the FAA.

This year’s proposed rule was in many ways better than drone advocates had feared. It basically codifies that by around 2017 the United States will have drone regulations almost as industry friendly as a number of other countries have today (and a few have had for years). That’s a step forward, and the FAA is continuing to try to work with industry on tricky areas like line-of-sight restrictions. Still, for the next two years, the complex systems companies need to devise—for instance, “sense and avoid” technologies for drones to replace human eyes and ears as the last resort in preventing crashes—will be easier, from a regulatory perspective, to research in, say, Canada, France, or Australia. And those other countries aren’t standing still. By 2017, their regulations are likely to be even more accommodating to changing technological realities.

“If you look to France,” says Kallman of Airware, “French regulation has been some of the most innovative in the world. They don’t have to go through the same procedures.” French regulators, he notes, have more discretion, which allows them to “iterate out initial steps quickly, and slowly expand.” The FAA, on the other hand, is “stuck with the process they’ve got.”

Indeed, that process is the consequence of years of effort in Washington to take discretion away from regulators. Several bills now before Congress (mostly sponsored by Republicans) would regulate regulators even further. You can argue that such efforts make the regulatory process more democratic. You can also argue that they make it more susceptible to the influence of lobbyists and to the deadening hand of bureaucratic complexity. What’s hard to argue, at least in the case of cutting-edge industries like drones, is that it’s good for business.

The post Why Is America Losing the Commercial Drone Wars? appeared first on Washington Monthly.

“Today, the top 1 percent earn a higher share of our national income than any year since 1928.” That’s Tea Party champion Senator Ted Cruz talking. Other GOP presidential contenders, from Jeb Bush to Rand Paul, now trot out similar formulations. Yet even as Americans across the political spectrum find themselves agreeing that growing “inequality” is a big problem, most politicians, as well as most political journalists and the experts they quote, are not talking about the kind of inequality that most matters to most people.

That’s because today’s talk about inequality generally isn’t about actual people. It’s about disparities between different, abstractly drawn, arithmetically defined, statistical categories. And so we hear about how, say, the “top 1 percent” compares in income to the “bottom decile.”

Of course, important truths are revealed by such comparisons. Mostly these have to do with the strong trend of super-rich people getting even richer—a trend that leads many people to worry, with reason, about rule by plutocrats and the coming of a new Gilded Age.

But, frankly, that kind of inequality is not the half of it. For one, most of us are much more concerned with how well we are doing compared to five or ten years ago, or compared to the life we remember our parents having at our age, or about whether our children will ever do as well. Those kinds of questions have a lot more emotional and practical personal import than whether the “1 percent” gobbled up another percentage point of the nation’s income.

Nor, at least arguably, is the kind of inequality measured by such statistics the kind that has been growing the most over the last several decades. Worse, because of the habits of thought that build up from constant use of such statistical artifices in political discourse, our political conversations tend to minimize the full extent of inequality as it’s experienced by most Americans.

Here’s an example. How often have you heard it said that the average middle-class family is suffering from “stagnant” income? That’s the kind of formulation that emerges if you look at, say, the middle three-fifths of the income distribution today and compare it to the middle three-fifths of the income distribution in, say, 1979. After adjusting for inflation, the picture shows middle-class households having basically the same income as they had thirty-six years ago.

Yet there is a big problem with that conclusion: these are not the same people! The heads of today’s young households weren’t even born in 1979. And those who were middle-aged in 1979 are now deep into their retirement years.

What happens when we use statistics that treat these very different people as if they were the same people? We come up with averages or medians that smooth over and obscure the vast differences in the economic trajectories that Americans of different generations have been on during the last several decades.

Specifically, we miss two huge trends. The first is positive.

We miss that those Americans who were middle-aged in 1979 have, as a whole, seen their standard of living rise sharply compared both to their own previous experience and to that of their counterparts in the previous generation. So, for example, when people who were forty something in the late 1970s became fiftysomething in the late 1980s, their income and net wealth were not only higher than they had been ten years before, they were also far better off than fiftysomethings had been in the 1970s. And as retired seventysomethings today, not only have most seen their personal income net worth hold even or even continue to rise, they are also way better off financially than were seventysomethings in the 1990s. For this birth cohort of Americans, dramatic upward mobility, not stagnation, has been the norm.

The other big trend is what has been happening to each subsequent younger cohort of Americans, which is basically the opposite. Start, for example, with the twentysomethings of 1979. They had a lower real income in 1979 than twentysomethings did in 1969. And as fiftysomethings now, they not only make less money than they did when they were fortysomething, they are also far worse off as a whole than were the fiftysomethings of 2005. This generalization applies to white members of this cohort and even more so to those who are African American or Hispanic.

Today’s fiftysomethings may be part of the first generation in American history to experience this kind of lifetime downward mobility, in which at every stage of adult life, they have had less income and less net wealth than did people who were their age ten years before. Yet these mid-wave Baby Boomers shouldn’t feel too sorry for themselves. That’s because, as we shall see, they were far better off as twentysomethings than were subsequent cohorts of Generation X twentysomethings, and especially better off than today’s Millennials.

These vastly different economic trajectories experienced by today’s living generations are basically unprecedented. Throughout most of our history, inequality between generations was large and usually increasing, to be sure, but for the happy reason that most members of each new generation far surpassed their parents’ material standard of living. Today, inequality between generations is increasing for the opposite reason. Though much more productive and generally better educated, most of today’s workers are falling farther and farther behind their parents’ generation in most measures of economic well-being.

If it were just a matter of the old getting richer while the young get poorer, it would not necessarily be so bad. Under that scenario, most of us might struggle financially until we grew old, but we could at least look forward to realizing a variant of the American Dream in retirement. But that’s not how these trends are playing out. The downward mobility of today’s younger Americans leads to the downward mobility of tomorrow’s older Americans, making the problem of growing generational inequality truly dire. It’s time to get clear about just what’s been going on and what we can do about it.

Let’s first get some predictable objections out of the way, starting with the problem of defining and measuring what we mean by a standard of living. Leave aside those philosophical questions we could all debate endlessly about whether and how, say, smartphones, gay marriage, and climate change make younger generations better or worse off. Other more straightforward challenges apply even when comparing the strictly material standard of living of different birth cohorts at different times in their lives.

Among the complicating factors are changes in family structure and size (more single-parent homes, fewer children overall), the rise in the number of working women, and the increasing proportion of the population drawn from historically disadvantaged groups. Other considerations include the true measure of inflation, the amount of financial and unemployment risk borne by individuals in different eras, and changes in educational attainment. Yet while no single metric is perfect, in combination they tell a dramatic and, by and large, depressing story.

The most straightforward apples-to-apples comparison is between the amount of income working-age men with a specific level of education make today compared to what their counterparts in the previous generation made. According to work done by the economists Michael Greenstone of the Massachusetts Institute of Technology and Adam Looney of the Brookings Institution, the steepest downward mobility has been among male high school dropouts, who in 2009 earned 66 percent less (adjusted for inflation) than their counterparts did in 1969, due to a combination of falling real wages and declining labor force participation rates.

The slide for men with only a high school degree, who constitute the majority of men in the United States, was almost as bad: a staggering 47 percent. College-educated men did better, of course, but only by falling not as far. For prime-age male college graduates, real earnings in 2009 were 12 percent below that enjoyed by their counterparts forty years before. Even among those who worked full-time, real earnings were 2 percent below that of their counterparts in 1969.

These trends were well in place before the coming of the Great Recession from 2007 to 2010. According to work by Jeff Madrick and Nikolaos Papanikolaou, between 1969 and 2005 real earnings for full-time male workers, ages twenty-five to thirty-four with only a high school degree, declined from $34,681 to $30,000 (in 2005 dollars). Meanwhile, full-time college-educated male workers of the same age eked out hardly any gains compared to their counterparts in the previous generation, as real wage and salary income for this group increased at an annual growth rate of just 0.1 percent between 1969 and 2005.

Making a similar comparison between today’s working women and their counterparts a generation ago reveals an only slightly less dramatic story. For example, according to a recent Brookings study, among full-time working women, ages thirty to forty-five, who lack a high school degree, real wages were 12 percent lower in 2013 than they were for their counterparts in 1990. For the typical working woman in this age group who has a high school degree but never graduated from college, wage and salary increases have been hardly measurable from one generation to the next, rising by just 3 percent between 1990 and 2013.

Only college-educated women in this age cohort who worked full-time saw any substantial gains over their counterparts of 1990. Primarily this was a compositional effect, mostly due to modest increases in the numbers of women in managerial jobs rather than to any general increase in wages for women doing the same jobs.

These trends for men and women converge in the statistics on family income, which, especially for the young, show dramatic downward mobility. The median income among families headed by someone under thirty-five was just $35,500 in 2013. Adjusted for changes in the consumer price index, this was down nearly 20 percent from what young families earned in 2001.

But this hardly tells the whole story. Another measure of generational downward mobility is the ever-earlier age at which workers in successive cohorts have typically seen their earning top out and then fall into permanent decline. In nearly all previous eras, workers normally saw their income rise in their twenties, thirties, forties, and fifties as they gained education and experience and as wage rates in general grew. A worker’s earnings (as well as savings) would then typically peak and level off in late middle age before declining around age sixty-five. Though their earnings might have been interrupted by illness or temporary unemployment, most workers generally earned more than they had in the past until they retired. This historical pattern still held strongly through about 2000, after which successive birth cohorts of Americans started seeing their earnings peak and then decline at younger and younger ages.

The tipping point came with the cohort born between 1946 and 1950. The median household income of these early-wave Baby Boomers rose steadily during their early working-age years, in accord with the historical pattern. Adding to these gains in household income was a sharp increase in the number of working women, as the two-paycheck family gradually became the middle-class norm. Yet despite this increase in female paid labor, median income for these households started declining while their prime wage earners were still in their early fifties—a time of life when members of previous generations were typically gaining in real income from year to year. According to census data compiled by Robert J. Shapiro of Brookings, for members of this cohort median household income peaked in 2000 at $78,458 and fell each year thereafter, winding up at an inflation-adjusted $50,834 in 2013.

This pattern has grown progressively worse among Americans born in subsequent years. For example, mid-wave Boomers born between 1953 and 1957 saw their median household income peak at $77,543 in 2002, when they were between forty-five and forty-nine. For this cohort, household income subsequently fell by half a percent annually during the so-called economic recovery years of 2002 to 2007 and then fell much more during and after the Great Recession, to $60,100 by 2013. Financially speaking, fifty turned out to be the new sixty-five for these cohorts, even as they were expected to live longer.

For late-wave Boomers and early-wave Gen Xers, the story has been worse. For example, among persons born between 1962 and 1966, median household income peaked in 2007, when they were still between the ages of forty-one and forty-five, and has not yet recovered.

Late-wave Gen Xers and all Millennials are still young enough that most have probably not yet reached (let’s hope!) their personal lifetime peak of annual earnings. Yet the trend in median household income among these younger birth cohorts shows that most members have already missed out on the rapid increase in earnings that members of previous generations typically experienced in their twenties and thirties. This early-career earnings deficit has left them with fewer dollars to save while young, putting them even further behind older cohorts in their ability to build long-term assets, such as adequate saving for retirement.

Contributing to this trend are large numbers of Americans who were raised in middle-class homes but who have fallen down the economic ladder as adults. According to a study by the Pew Charitable Trusts of children born in the late 1970s, a third of those raised in middle-class families—defined as families between the 30th and 70th percentiles of the income distribution—have fallen out of the middle class in adulthood. This phenomenon is particularly pronounced among members of minority groups. Among African Americans who were raised in middle-class families, for example, 37 percent fell out of the middle class by the time they reached middle age. The corresponding number for their white counterparts was 25 percent.

How do these rates compare with the numbers of Americans who move up from poverty? Recent research by Raj Chetty and others shows that over the last two generations, fewer than one out of ten children born to parents in the bottom fifth of the income distribution managed to rise to the top fifth as adults. This ratio has apparently not changed since the 1970s. Yet because overall income inequality has increased substantially since then, the consequences of failing to rise up from the bottom of the income ladder have become more extreme, as have the consequences of falling down the ladder.

Income alone does not define a standard of living, of course. Getting ahead in life also requires accumulating assets, such as home equity and financial savings, that exceed one’s debts and other liabilities. Without at least some net wealth, it is impossible to finance a first home, pay for a child’s college education, enjoy financial security in old age, or leave behind an inheritance. The opposite of net wealth is insolvency.

Until the present era, despite vast disparities and inequalities across different racial, ethnic, and other demographic groups, most American families realized a rising net worth, not just within the life course of each generation but from one generation to the next. Today’s older Americans still exemplify this historical pattern. For example, according to work done by the Urban Institute, Americans who were seventy-four or older in 2010 had an average net worth that was 149 percent higher than that enjoyed by Americans who were the same age in 1983 (after adjusting for inflation).

This pattern has disappeared, however, among all subsequent birth cohorts. The tipping point came among people born in precisely 1952, who, by 2010, became perhaps the first birth cohort in American history to have less real net worth on the threshold of retirement than people born ten years earlier had at the same age. From there, the real net worth of subsequent birth cohorts has generally remained stagnant or has declined compared to the life-cycle experience of birth cohorts ten to twenty years older. For example, after adjusting for inflation, the median net worth of families headed by a person thirty-five to forty years old was 30 percent less in 2010 than it was for their counterparts in 1983.

Because of the vast upward mobility of the cohorts born before the 1950s, and the general downward mobility of Americans born during and after that decade, the economic status of the next generation of elders will, on current course, be lower than that of today’s retirees—and their children are even less likely to be able to make up any shortfall. One study by the Pew Charitable Trusts has found that the typical retiree couple born between 1936 and 1945 had enough net wealth to replace 100 percent of their pre-retirement income when combined with annuitized assets, such as private pensions and Social Security. For younger Americans, however, that replacement ratio drops steadily. Because of the comparatively meager net wealth of most Gen Xers, for example, the typical Gen X couple is on course to see their income drop in half in retirement.

This is assuming that both members of such a couple are able to continue working until the previously normal retirement age, which may well not happen. Labor force participation rates for men now sixty-five and older have increased compared to those of their counterparts in the early 1990s. But for today’s prime-age men, corporate downsizing, low wages, obsolete job skills, rising rates of chronic illness such as diabetes, long-term unemployment, and other factors have been driving down labor force participation rates sharply. The share of prime-age men—those twenty-five to fifty-four years old—who are in the workforce declined by 5 percent between 1992 and 2012. Since the 1960s, the share of prime-age men no longer in the workforce has roughly tripled. Taken together, these trends paint a picture of a new America in which most members of each successive generation typically have lower real household income and net wealth than did their counterparts in the previous generation, while men, at least, also have a shorter and less secure attachment to the workforce.

Adding to the difficulties facing future elderly Americans is the disappearance of windfall Social Security benefits. In the late 1970s, Social Security paid out benefits to retirees that exceeded the value of their contributions by between $250,000 and $300,000 in today’s money. Subsequent birth cohorts have paid a far higher share of their income into the system, but under current law, most members are promised little more in benefits than they paid in taxes. Social Security payroll taxes remained below 2.5 percent through the 1950s and below 4 percent until the end of the 1960s. But workers born in the 1960s have paid 6.2 percent of their income into the system throughout most of their working lives—and, in truth, it’s double that, since most economists agree that the employer contribution in payroll taxes is ultimately borne by employees.

Having effectively paid about one out of every eight dollars they earned into Social Security, the ability of Americans born during and since the 1960s to save for their own retirement has been correspondingly reduced, even as the system’s rate of return has become progressively less for each new generation. The same diminishing rate of return is found in many private pension plans as well, even as pension coverage itself has also fallen precipitously among today’s young and middle-aged workers.

The declining cost and increasing quality of digital technologies, as manifested by smartphones and their apps, give many of today’s Americans access to goods and services that were beyond the reach of even the richest people on the planet a generation ago. The price of food, cars, and many other consumer items is also lower, relative to wages, than was the case thirty or forty years ago. Yet the cost of the particular goods and services Americans most need to help themselves and their children rise up the economic ladder have at the same time grown much faster than family income or general inflation. This is another large factor behind the stark increase in wealth inequality among the generations.

One major example is the inflation in higher education costs. Over the last generation, graduating from college has become a near prerequisite to obtaining middle-class status, or avoiding losing it. Yet even as the cost of paying for higher education became, for that reason, harder for families and individuals to avoid, the cost of attending a public or private college escalated 40 percentage points more than the consumer price index between 2005 and 2015.

Compounding the burden, the share of the higher education sector’s revenue paid by families and students rose from one-third in 1980 to one-half in 2012, reflecting not just rising tuition but also a sharp decline in need-based financial aid over the last generation. Closing the gap has been a mountain of debt on household balance sheets. The share of young adults with student loans rose from 26 percent in 2001 to 40 percent in 2010. Sadly, much of this debt is held by people who never finished college, and who have often been victimized by predatory lending practices.

Meanwhile, the dramatic rise of health care costs relative to family incomes has been, and will continue to be, particularly burdensome on younger generations. As recently as the 1960s, health care costs were an incidental expense for most young American families. In 1964, health care spending was just $197 per person per year. This low cost meant that with a mere seventy-eight hours of labor (or by the end of the second workweek in January, for those working full-time), the average nonsupervisory worker earned enough to cover the per capita cost of health care, including that of all children and retirees.

By contrast, such a worker had to put in 452 hours in 2012 before earning enough to cover the average per capita burden of medical expenses, which by then had risen to over $8,915. Put another way, in that year it was nearly March before the typical American working a forty-hour week earned enough to pay the health care sector’s growing claim on his or her personal output.

The total annual cost of health care for a typical family of four covered by a typical employer-sponsored plan reached $23,215 in 2014, or roughly the equivalent cost of buying a brand-new Honda Accord LX every year. The continually growing burden of health care costs is a major reason why employers are so reluctant to hire and wages remain stagnant.

While some of the increase in health care costs reflects genuine advances in the practice of medicine, most simply reflects rising prices for existing medical services combined with an increasing volume of redundant tests, unnecessary surgeries, and other forms of overtreatment that don’t improve health. Peer countries achieve better population health and life expectancy while expending as little as half as much per person in health care services. As such, most of the increasing cost of health care is pure inflation and does not reflect improvement to the average American’s standard of living.

Another factor behind the aggregate downward mobility of Americans born since roughly 1950 has been their exposure to the massive growth of payday loans, subprime mortgage lending, and other wealth-destroying consumer finance products. Americans who came of age before the 1970s were largely protected from predatory lending by usury laws, for example, which capped fees and interest costs on loans. But starting in the 1980s, these consumer finance protections largely disappeared. At the same time, financial engineering, including securitization, led to the growth of financial institutions with business models that allowed them to prosper—at least in the short term—by lending money to people who could not afford to repay.

These trends, combined with generally lagging or falling individual and household incomes and rapidly expanding access to credit, often on predatory terms, lead to an explosion of borrowing. When this was followed, in turn, by a collapse in home prices, the result was devastation to the balance sheets of most Americans under fifty. By 2010, the average family headed by a person twenty-five to forty-nine had a net worth that was 32 percent below that of their counterparts in 1989.

This sequence of events particularly damaged members of Generation X, many of whom took out mortgages on predatory terms at, or near, the top of the housing bubble. Largely as a result, from 2007 to 2010, Gen Xers as a whole lost nearly half (45 percent) of their wealth, or an average of about $33,000 subtracted from already low levels. Many were pushed into negative net worth, as their houses became worth less than their debts.

By contrast, those born during the Great Depression era (between 1926 and 1935) experienced zero loss of net wealth as a group during the Great Recession. Indeed, in 2010, those ages sixty-five to seventy-four had a net worth 53 percent higher than that of their same-age counterparts in 1989.

Most Millennials were too young to be in the market for real estate during the housing bubble in the mid-2000s and therefore did not directly experience the evaporation of real estate wealth caused by the Great Recession. But while this might be counted as a blessing, the longer-term trend of declining asset ownership among today’s younger Americans has potentially very negative implications for their future net wealth.

For example, rates of homeownership among households headed by a person under thirty-five have fallen from 43 percent in 2005 to 35 percent in 2014. To be sure, not every Millennial wants or needs to own a house. But homeownership has been the major means by which most ordinary Americans in previous generations built their net wealth and financed their retirements. Moreover, home prices have been recovering since the bottom of the Great Recession, and in many places have been escalating sharply. Thus, the continuing decline of homeownership rates among young households has probably subtracted from what the Millennials’ aggregate net wealth would have otherwise been. And if the typical Millennial winds up a renter for much, if not all, of his or her life, this will certainly require that the generation acquire some other major means for building assets over the life course.

A sharper decline in stock ownership among young adults does not bode well for that possibility. In 2001, 48 percent of persons eighteen to thirty-one years of age owned stock; by 2013, this share had dropped to 37 percent. This long-term decline in stock ownership among the young occurred in a period in which stocks, despite volatility, appreciated in value by severalfold. It also occurred at a time when traditional, defined-benefit, employer-provided pensions were becoming vanishingly rare among younger workers.

Younger cohorts of Americans are also increasingly less likely to own their businesses, as this magazine was among the first to point out. (See “The Slow-Motion Collapse of American Entrepreneurship,” Washington Monthly, July/August 2012.) On a per capita basis, the rate of new business formation declined by 50 percent between 1977 and 2009, a trend that leaves more businesses failing each year than are started. As Federal Reserve Chair Janet Yellen recently observed, the declining share of Americans who are business owners diminishes what historically has been “a vital source of opportunity for many households to improve their economic circumstances and position in the wealth distribution.”

The trend now seems to be compounding among Millennials, who, despite high aspirations to entrepreneurship, are having a difficult time starting new successful businesses. As a recent report by the Kauffman Foundation concludes, even though Millennials have higher levels of education than previous cohorts and lifelong exposure to information technology, their shaky finances mean that most “can’t afford to become entrepreneurs.” (See also Matt Connolly, “The Lost Entrepreneurial Generation?”)

Millennials are also less likely than young adults in the past to own other forms of assets, including cars and many durable consumer items. In some instances, this can be positive. If, for example, the growth of services like Zipcar makes owning a rapidly depreciating asset like an automobile unnecessary, this is at least potentially a gain to one’s net worth. Being able to “monetize” previously underused assets, such as by renting a spare bedroom through Airbnb, can also have the same positive effects on personal balance sheets.

Yet the flip side of the “sharing” economy is the “gig” economy, in which more and more of us, and particularly the young, are no longer employees but, rather, contingent workers who become responsible for buying and maintaining tools, equipment, and places of business, as well as securing health and retirement benefits, that, in previous eras, were furnished by employers. The Uber driver, for example, has responsibility for purchasing and maintaining the car he uses to work for the “ride-sharing” company, just as the contract white-collar worker must often finance and maintain her own office space, IT systems, career training, and other hard and soft assets necessary for her work. Both are also on their own when it comes to traditional employee benefits, and because they cannot count on a regular paycheck, they have an extra need for building savings to cover the increased volatility in their earnings. Though difficult to measure, the increasing uncertainty and contingency that surrounds today’s employment has to be counted as a net negative for most workers’ standard of living.

To be sure, some of the factors behind generational downward mobility are difficult to address through public policy. For example, over the last several generations there has been a huge increase within each successive birth cohort of Americans in the share of children being raised by single parents. As recently as the 1980s, among children born to mothers with only a high school degree, only 13 percent were born outside of marriage. By the late 2000s, that figure had risen to 44 percent. Abundant social science research documents that this is both a cause and a consequence of diminishing economic opportunity, yet there is no single policy lever that will reverse the trend.

But many of the major causes of downward mobility do rest squarely within the realm of political economy and public control. One example is the woeful inefficiency of the U.S. health care system, which costs far more and produces the same, or worse, outcomes relative to other industrialized nations. A large body of research now pegs the amount of waste in this burgeoning sector at between 30 and 50 percent of all health care spending. According to the National Institute of Medicine, eliminating this waste would be enough to provide every young person in America (ages eighteen to twenty-four) with the average annual tuition and fees of a four-year institution of higher learning for two years—to take but one example of its tremendous opportunity cost.

The higher education sector is also badly in need of systematic rethinking and overhaul. Individuals need to be cognizant of both the mounting cost of not acquiring an education and the lifelong damage that can result from excessive student debt. At the same time, government and society at large need to attack inflating college costs, which seem to result primarily from growth in administrative spending and a lack of transparency about educational outcomes.

Another priority should be redirecting the vast subsidies the federal government has long expended to help households accumulate financial and tangible assets. These subsidies currently total over $350 billion a year, with the lion’s share going to already wealthy households and individuals. For example, American taxpayers annually spend roughly $70 billion to cover the cost of the home mortgage deduction. Yet 70 percent of this money goes to households in the top 20 percent of the income distribution, while just 8 percent goes to middle-income households, and almost nothing to the bottom 40 percent. Similar tax breaks nominally meant to encourage saving for college and retirement have similar “Robin Hood in reverse” qualities. Much more can and should be done to target resources for asset building for those in, or struggling to reach, the middle class.

Let’s not forget another possible policy lever: the money supply. Moderate levels of price and wage inflation have always tended to benefit younger adults disproportionately, because younger households tend to have more debts and fewer assets than older households. Conversely, hard money tends to help older generations, who have fewer debts, less need to worry about unemployment, and more assets to protect from inflation. A big part of the reason that today’s seventysomethings did so comparatively well financially over their life course was that while they were young, the general wage and price inflation of the 1960s and ’70s eroded the value of their mortgages even as it inflated the value of their homes. Today’s young people, being particularly encumbered by debt, would particularly benefit from modest levels of general inflation so long as wages kept pace.

More generally, we need policies that will allow today’s workers to retain more of the value of their increased productivity. In many sectors of the economy, workers produce as much in one day as their counterparts in the 1960s did in a forty-hour workweek. Yet the benefits of this increased efficiency have gone overwhelmingly to already-established owners of assets rather than to each rising new generation of workers.

The reasons behind this shift are varied, but hardly inevitable or unalterable. Since the 1980s, for example, the U.S. has radically reduced enforcement of antitrust and fair trade policies. The resulting trend toward concentration in many industries largely explains the diminishing opportunities for upward mobility available through entrepreneurship. Consolidation also reduces the number of employers competing for wage employees, thereby tending to reduce wages and upward mobility for that reason as well. (See, for example, “Who Broke America’s Jobs Machine?,” Washington Monthly, March/April 2010.) Meanwhile, thanks largely to changes made in tax law and enforcement policy since the early 1980s, major U.S. corporations have used almost all their profits in recent decades to reward their shareholders with dividends and stock-buyback schemes, leaving little for investment in productive enterprise or for raising the wages of rank-and-file workers.

Certainly the potential exists for our children to inherit a far more productive and broadly prosperous society than exists today. Yet for this to occur, it is not enough to dwell solely on the phenomenon of the “1 percent” growing richer. The bigger problem is how plutocrats and their political and intellectual enablers (including many who have had no idea of what they are doing) continue to use their increasing power and influence over our political economy to cause mass inequality and downward mobility across generations.

The post Wealth and Generations appeared first on Washington Monthly.

On a cool, early-summer day in 2010, just four months after I had arrived in Budapest as Barack Obama’s ambassador to Hungary, I sat in the diplomats’ gallery in the stunning Gothic Revival Parliament building and watched Viktor Orbán being sworn in as prime minister of Hungary.

A month earlier, Orbán’s center-right political party, Fidesz, and its coalition partner, the Christian Democratic People’s Party (KDNP), scored a huge victory, winning a total of 263 out of 386 seats in Parliament. The ruling Socialists had all but collapsed, coming in second but with a meager fifty-nine seats. Now, from my perch overlooking the horseshoe-shaped arrangement of seats in the well of the chamber, I could see, on the left, the remnants of the Socialist Party; next to them sat the proud but few members of the green party, Lehet Más a Politika (LMP). To the right sat the radical nationalist, anti-Roma, anti-Semitic Jobbik party. In the middle of the horseshoe, spanning more than two-thirds of the seats, was a sea of Fidesz/KDNP members. Looking at them, I realized that none of us at the embassy or back in Washington had fully comprehended the extent of the party’s massive victory.

Nor, at that moment, could we have fully predicted what was to come. It seemed unthinkable that Orbán, a former prime minister and anticommunist dissident, would, over the next four years, crack down on the media, cozy up to Vladimir
Putin, and rewrite his nation’s constitution in an attempt to make Hungary—a NATO ally and member of the European Union—into what he called, approvingly, an “illiberal state.”

When I arrived in Hungary I figured my biggest challenge would be orchestrating a complex land swap with the Hungarian government that would move the barracks for the embassy’s Marines closer to the chancery building—a fitting assignment for someone like me, who had spent the previous two decades working as a real estate developer and Democratic fund-raiser. Little did I know we would be dealing with a budding strongman.

I first met with Viktor Orbán and his advisers in late January, as I was making my courtesy calls to government officials and he was running for office. Orbán seemed tired and tense, and his greeting was not warm, but we sat down to talk. “Mr. Orbán,” I said, “I am very happy to be here in Hungary representing my country. Hungary is an important and reliable friend and ally of the United States. My husband lived in Prague in 1989 and covered the collapse of the Soviet Union for Newsweek. He told me how passionately Hungarians embraced their liberation. He was deeply moved to experience it.”

“This is one thing that we can say about ourselves: we are freedom fighters,” Orbán said, laughing loudly and looking at his colleagues for reassurance.

Figuring that I had broken the ice, I launched into the substance of my talking points. “Over the last few months,” I said, “Hungary has handled a dramatic economic crisis with great skill. Hungary took quick action, stabilized the situation, and prevented it from becoming worse.” Rather than taking my point as a compliment to the people of Hungary for their resilience during their economic crisis, Orbán responded by tearing into the ruling Socialists while hammering home the need to rebuild an economy in which young Hungarians would have a chance at social and economic mobility. I listened carefully, but wanted to steer the conversation away from domestic politics and back to the elements of our bilateral cooperation. “Still,” I offered, “Hungary has come a long way from 1989.”

Practically jumping out of his seat, the former prime minister snapped, “But this is the problem! Your country thinks that everything has gone very well since the changes.” (Hungarians commonly refer to the collapse of the Soviet bloc as “the changes.”) “But it has not gone well,” he continued. “It has been a disaster!”

Instead of a polite courtesy call, our meeting had devolved into a full-blown podium speech, with Orbán animated and gesticulating as if he were whipping up a crowd at a campaign rally. “They stole everything! They are all communist millionaires! No, they are Bolshevik billionaires!”

For a split second, we all just looked at one another. Even Orbán seemed to suddenly realize that this was not the way to greet the new American ambassador. I was stunned. I still had several items left on my list of talking points, but how could I go on after that? His outburst had been so inappropriate, so unexpected, that I really didn’t know what to say in return. So I did the only thing I could: I stood up. Everyone nearly jumped up out of their seats in response. I could see Orbán’s advisers looking at one another with concern.

I extended my hand to Orbán and said, “I want to thank you for your party’s votes in Parliament supporting Hungary’s contributions to the Afghanistan coalition. It is my president’s number one foreign policy priority, and Hungary’s contributions are important and appreciated.”

Orbán smiled tentatively at this and, awkwardly shaking my hand, said, “You see, maybe we can agree on something.”

As I watched Fidesz take their oaths that day in the Parliament, seeing their confidence and unity, one implication of the supermajority came into focus for me. This, I thought, was why Orbán had been so nervous and excitable when I had met him back in January. He knew then that his party would win and that he would be prime minister again, but he had been anxious about whether the Hungarian people would hand him this kind of power.

Fidesz would be able to change laws that currently required a two-thirds vote of legislators to modify. Orbán had been campaigning on this, blaming problems with Hungarian governance on the inability to change these laws. He insisted that if he won a supermajority, he would be able to fix all that ailed his country, in the wake of the global economic crisis—much of which he blamed on not just the Socialists but also foreigners.

To properly understand Orbán’s sense of nationalistic aggrievement, one must understand the outlines of Hungarian history. Since the founding of their country in 1000 A.D., many invaders have swept over Hungarian soil. The Mongols were the first, in the thirteenth century, followed by the Ottomans in the sixteenth century and the Hapsburgs in the eighteenth. During World War I, World War II, and the Cold War, Hungary was ground zero and on the losing side each time.

The consequences of losing World War I had been enormous. When the Treaty of Versailles was signed, formalizing peace between the Great Powers and Germany, a separate agreement, the Treaty of Trianon, was imposed on Hungary by the Great Powers. The treaty redrew Hungary’s boundaries so that it lost more than two-thirds of its prewar territory and more than half of its prewar population.

For many Hungarians, particularly on the right, the Treaty of Trianon was a defining moment, setting as it did a national narrative that is an amalgam of victimhood, bravado, and an unshakeable belief in Hungarian greatness. Orbán became the tribune of this narrative.

Fidesz’s sweeping victory was viewed in Washington and Embassy Budapest with caution. But by the summer of 2010, it became clear that the new government intended to move forward not only with the adoption of new laws, but also with the passage of an entirely new constitution.

It was important for us to remember that this was an internal political issue for Hungary. Domestic politics in countries that are democratic friends and allies are generally left outside of the purview of bilateral engagements. We generally don’t tell our NATO allies how to run their countries.

But sometimes it’s hard to keep quiet.

On January 2, 2011, a day after Hungary took over the presidency of the European Union, the Hungarian Parliament enacted a law that radically transformed the operation and regulation of the country’s media. The law created a new, very powerful body called the Media Council, whose job it would be to regulate the content of newspapers, television, and radio. All five members of the council would be appointed by the Fidesz-controlled Parliament. Coverage of national and European affairs was required to be “balanced” and would be monitored and judged by the council. News of the law exploded onto front pages of newspapers across Europe, and the reaction was fierce. According to many political scientists, pundits, and journalists in Hungary and abroad, the new law seemed to prove what they had been saying since election day: that Hungarian democracy was dead, after barely twenty years.

Back at the embassy, my staff and I shared our concerns over the new media law with officials in Washington. Foggy Bottom did not disagree, but the U.S. policy of not engaging in Hungary’s domestic affairs superseded our concerns at this point. In light of the way the media law had come down, however, we felt it appropriate to ask top Hungarian officials about the upcoming rewrite of the constitution and encourage an inclusive process. As a strong ally of Hungary, we believed the United States could best do this not in an adversarial way, but in the spirit of a friend expressing concern.

One vehicle for conveying our unease was through visits by high-ranking American dignitaries. In April, Attorney General Eric Holder came to Budapest for an European Union conference, along with Secretary of Homeland Security Janet Napolitano. We asked Holder, America’s top lawyer and the man responsible for managing our judicial system, if we could enlist his help in talking to the Hungarians about our concerns over the new constitution. Holder agreed. In meetings with Hungary’s minister of justice, Tibor Navracsics, who also served as a deputy prime minister, Holder raised issue after issue about Hungary’s constitutional reform process, specifically questioning the media law and recent moves that appeared to restrict the independence of the country’s judiciary. Carefully, he expressed our concerns about what those laws would mean for Hungarian democracy.

Navracsics skillfully deflected Holder’s questions and eloquently explained the government’s position. Although his English was impeccable, he spoke in Hungarian with Holder and relied on an interpreter, periodically offering corrections to ensure that his explanations were crystal clear. He persuasively argued that the Orbán government was engaged in a voter-mandated overhaul of the system that would fix the corrosive and corrupt policies of the past. As Holder listened and nodded at the minister’s explanations, I could see the respect of one talented constitutional expert for another. In our subsequent meeting with Orbán, Holder chose not to repeat our government’s concerns, much to my disappointment. “The minister of justice really answered all of our questions,” the attorney general told me by way of explanation after the meeting. “I didn’t think we needed to raise them at a higher level.”

On April 18, 2011, a mere ten days after Holder and Napolitano left Budapest, the Hungarian Parliament passed the country’s new constitution, now known officially as “the fundamental law” but more commonly as the Easter Constitution. Despite repeated assurances from Orbán that the drafting process would be inclusive and that the Hungarian people would have a chance to comment and contribute, Parliament adopted it quickly, with virtually no input from the opposition parties, civil society groups, or the public at large. Even contributions by experts specifically tapped by the prime minister at the start of the process weren’t visible to the public, and it wasn’t clear they’d had much input at all.

Equally concerning was the content of the Easter Constitution, which was riddled with “placeholders” where major laws would later be inserted. The new constitution was essentially designed as a vessel to contain major laws that would have to be written and adopted by January 1, 2012, the day the constitution would go into effect. The question was, what would those laws look like, and what would the process be for adopting them?

Another opportunity to enlist prominent Americans in putting subtle pressure on the Orbán government presented itself in the last week of June, which we dubbed “Golden Week.” The Hungarian government had commissioned a statue of Ronald Reagan—who is much loved in Hungary—in honor of his hundredth birthday, and they planned to install it in the square in front of the embassy before the end of summer. In addition, Budapest would soon inaugurate the Tom Lantos Institute, a human rights organization established to commemorate the late Hungarian-born U.S. congressman. Lantos was the only Holocaust survivor to serve in the U.S. Congress. During his nearly three decades in the House, he was a vocal and effective advocate for human rights. The Hungarian government was funding the institute and had specifically requested that Secretary of State Hillary Clinton speak at the opening. Hillary and Tom Lantos had been close, and I knew his legacy was important to her.

Two congressional delegations, known as CODELs, were already planning visits. There was a third delegation, which was coming for the Reagan centennial celebration and would be comprised of dozens of dignitaries, including the former president’s attorney general, Edwin Meese, and former California Governor Pete Wilson, and would be led by Condoleezza Rice. They wanted to be present for the statue unveiling in Budapest. Finally, the entire Lantos family would come for the opening of the Lantos Institute. Just three weeks before Golden Week began, we received confirmation that Secretary Clinton would attend the Lantos Institute opening as well—a visit my embassy colleagues and I had worked hard to make happen.

For me, Hillary’s visit posed a very big question: Would the U.S. secretary of state comment on Hungary’s controversial reform process? If so, what would she say?

I got a call from Tomicah Tillemann, Tom Lantos’s grandson and a senior adviser to Hillary at the State Department. He had been instrumental in securing Hillary’s visit and was tasked with helping to write her speech for the opening of the Lantos Institute. Tomicah called to ask my thoughts about how Hillary should address the issue of Hungary’s constitutional reform process.

“There is no way that Hillary Clinton, being who she is, could possibly come here and not say something,” I told him. “It’s been discussed and debated in every major newspaper in Europe and beyond. The question is, what does she say, and when does she say it?”

Meanwhile, the Reagan delegation was touring Budapest and sitting down with members of the government. This group represented what remained of Ronald Reagan’s inner circle, and you couldn’t be more loved in Budapest than they were. During the Cold War, Hungarians had slightly more access to information than others on the dark side of the Iron Curtain, and they had seen that many western European nations were reluctant to poke Moscow in the eye. Reagan, however, had stood up and defied the Soviets. He launched a massive arms race, helping to push their economy into collapse. Hungary drew hope from the historic moment in 1987 when Reagan stood before Berlin’s Brandenburg Gate and shouted, “Mr. Gorbachev, tear down this wall!” The Hungarians knew they were not alone, that Reagan had remembered them, and they adored him for it.

Viktor Orbán idolized Reagan, and he spoke eloquently about his hero both during the unveiling and afterward, in his office, where he had invited Condoleezza Rice and the rest of the Reagan delegation. Before the meeting, I had briefed the group about some of our ongoing concerns over the constitutional reform process, and they were very interested. These people were the ultimate Cold Warriors. They knew Hungary’s culture and history, and they knew that in even the best-case scenario, democracy could not be deeply rooted after barely twenty years. Seated in Orbán’s office, they listened carefully as the prime minister laid out his vision to them, describing how the Socialists had destroyed the economy and how he would put Hungary back on track.

Toward the end of the meeting, Ed Meese spoke up. “You know, Mr. Prime Minister, Ronald Reagan always left something on the table for his political opposition, just so they would feel they had won something too and be willing to work together for the country.” Orbán’s eyes narrowed, and his face took on the stubborn cast I knew all too well. “I couldn’t possibly do that,” he retorted, lifting his hands off the table.

What had started out as a warm and friendly meeting suddenly went cold. “If I make concessions to the Socialists, I have to make concessions to Jobbik too,” Orbán asserted, raising the disturbing specter of Hungary’s extremist right-wing party. This wasn’t an argument that we ever gave much credence to, but it was one the prime minister and his team regularly used to try to get U.S. officials to back down from demands for reform.

That night, I headed to the airport with Tomicah to welcome Hillary Clinton to Hungary. As we made our way out of the city, we discussed the final version of the speech Hillary would deliver the next morning.

For months, our embassy team had communicated our concerns about Hungary’s political reforms to D.C., and these were well represented in her speech. But now that the moment was upon us, I was uneasy as I imagined the upcoming scene: Hillary would arrive early at the Hungarian Parliament; shake hands with the prime minister, whom she had never met before; step up to the podium; and, looking down from the grand platform, give him a lecture on the Hungarian political reform process. And she would do all this before she met with him privately. That seemed wrong to me.

I shared my misgivings with Tomicah. “We keep saying that we are raising our concerns as a friend, but what kind of friend blasts you publicly for the first time from your own podium, without even the courtesy of a private discussion first? The secretary has never even met Viktor Orbán.” Why, I asked, couldn’t her speech stay focused on Tom Lantos and his commitment to democracy and human rights? That alone was a strong statement that would certainly be heard as a message to the Hungarian lawmakers. After the ceremony, Hillary would have a private meeting with Orbán, and he would have a chance to give her his point of view. “Then they’ll do a joint press conference. Tomicah, that’s when she should publicly talk about our concerns.”

Tomicah didn’t disagree, but the die was cast. The speech had already been approved up and down the chain of command at the State Department.

“Then I may have to resign,” I said. The words popped out of my mouth so quickly that they startled even me.

Tomicah gasped. “What? You can’t do that.”

“It’s not the right way to do this,” I explained. “She should give Orbán the courtesy of meeting him before she relays concerns publicly. The Hungarians are waiting for her with open arms—they don’t expect to be slapped in the face.”

I watched my longtime hero Hillary Clinton emerge from her gleaming U.S. Air Force jet, wrapped in a sweater against the cool Budapest evening. When she saw me standing at the foot of the stairs, her face lit up in a bright smile and she opened her arms to hug me. “Hello, Eleni! Hello, Madam Ambassador!” I too smiled and gave her a big hug. But I knew that I had to say something and that this was the moment to say it.

“Hillary, I’m so happy you are here, but I’m worried about what you are about to do.”

She took in a breath, and it felt like I’d just thrown a bucket of cold water on our happy reunion. “Eleni, we have very experienced people who work on these issues all the time.” She called over Elizabeth Sherwood-Randall, then director of European affairs for the U.S. National Security Council. “Liz, Eleni has some concerns about tomorrow. Can you talk to her and see if we can address them?”

As the secretary’s motorcade pulled away, Liz and I hopped into my car, and I laid out my case to Liz. “The Hungarians aren’t prepared for this speech,” I said. “They think Hillary Clinton is coming to Budapest because she loves them—because America loves them. They think it’s going to be a celebration of Tom Lantos.”

“How can you say that they don’t know this is coming?” Liz asked. “What about Eric Holder?” she asked, referring to the attorney general’s visit earlier that year. “Didn’t he raise concerns when he met with Orbán?”

“He decided not to do it,” I replied. “He had a good meeting with the deputy prime minister and felt the issues had been addressed there. Look, the Hungarians know that we are concerned. I have told them that we think they are going about their reform process in a way that could damage their system of checks and balances and their democratic institutions. But they don’t know they are about to get a public blasting from the U.S. secretary of state from the podium inside their own Parliament. I firmly believe that she should say something about what’s been going on here. But first she gives Orbán a chance to explain. If he can’t satisfy her concerns, and I doubt he can, she speaks out. The same message gets delivered, but we’ve been fair.”

By the time I got home, it was nearly one in the morning. Just as I walked into the house, Liz called me. “We’re changing the speech, Eleni. Secretary Clinton will address any issues concerning Hungary’s reform process—any concerns that she still has once she’s met with the prime minister—during the press conference after the meeting, just as you recommended. I wanted to let you know tonight, so you can try to get some sleep. You’ve got a big day tomorrow.”

The tributes to Tom Lantos, delivered amid the imperial splendor of Parliament’s upper house, were worthy of the great man. A Budapest native and a Jew, Lantos was twice sent to labor camps during the Nazi era and twice escaped. He survived the Holocaust thanks to the efforts of the diplomat and humanitarian Raoul Wallenberg. After the war, Lantos emigrated to the United States and married Annette Tillemann, another Hungarian Holocaust survivor. Lantos’s status as the only Holocaust survivor ever elected to Congress made him one of the world’s most important voices speaking on behalf of human rights. He represented the San Francisco Bay Area until his death in 2008 at the age of eighty. His tombstone is inscribed with his most famous quote, the mantra of his life: “The veneer of civilization is paper thin. We are its guardians, and we can never rest.”

The Hungarian government had agreed to fund the Lantos Institute, even though it was well known that Orbán and the late congressman had not gotten along particularly well. “We agreed on almost nothing when it came to the political future of Hungary,” Orbán noted in his remarks that morning for the institute’s inauguration. But within Hungary, there was a great deal of respect for Tom Lantos’s contributions to Hungarian independence, and Orbán had supported the founding of the institute. Also, Orbán really loved Annette Lantos, the congressman’s widow. As the presentations unfolded, he cuddled Annette with one arm as they swayed back and forth singing a traditional Hungarian tune together.

Hillary spoke beautifully about Tom Lantos and his unrelenting commitment to the principles of democracy. Her words, echoing through the old chamber, were very pointed and, to my mind, appropriate. Her staff must have been up all night making revisions. After the ceremony, she and I headed to the prime minister’s office.

As always, our respective staffs flanked both sides of the long table. Viktor Orbán looked tense. He knew the United States was raising concerns about his constitutional reform process with escalating intensity, so he must have braced himself to hear about it that morning. But Hillary immediately put him at ease with comments about our cooperation and questions about some of the challenges our countries faced as NATO allies. When she asked about the constitution, the two of them engaged in a long discussion about what was happening in Hungary. I could see that the secretary was making up her mind, and that the prime minister knew that to Hillary Clinton, his arguments for the closed process sounded very, very thin.

As we walked from the prime minister’s office to the room where reporters and photographers were waiting for the press conference to begin, Orbán looked worried. Hillary and Orbán made some general opening comments, but one of the first questions went right to the thorny issue of Hungary’s reform process: Had the prime minister and the secretary of state discussed this?

“We talked very openly about the preservation of the democratic institutions of Hungary,” Hillary began, “and making sure that they continue to grow and strengthen, including providing essential checks and balances. As friends of Hungary, we expressed our concerns and particularly call for a real commitment to the independence of the judiciary, a free press, and governmental transparency.” Orbán’s face tightened into a frown, but inwardly I sighed in relief. Hillary’s response was just right. It was fair, reinforcing what we’d been saying privately for months: that our concerns about the reforms were real and that they were the concerns of a friend.

As we drove away from the Parliament building together, I turned to her. “Hillary, I am so sorry that you had to have drama in Budapest. You have so many other places in the world to worry about, it should have been easy here.” She smiled. “I’m very glad you spoke up last night, Eleni. You were absolutely right about how to handle this.” I exhaled, and suddenly realized how nervous I’d been.

Soon after, the secretary’s plane took off. Within the hour, the international news outlets were buzzing with the headline “Hillary Clinton Expresses Concerns over Hungarian Democracy.” I knew I had done my job.

Once Hillary departed Budapest, the spotlight largely left with her, but still the next six months would be by far the most dramatic of Viktor Orbán’s two-thirds revolution. And our engagement would make headlines again.

In September 2011, the Hungarian Parliament came back into session determined to rush through new versions of nearly every law of importance governing the country, since the new constitution would take effect in January of 2012. Along with the new constitution, more than 700 new laws would be written, amended, and adopted before I concluded my tour of duty. The most important of them, the cardinal laws, would need a two-thirds vote of Parliament to ever be changed again.

Because my staff and I had earned the professional trust of many in the Fidesz leadership, we were among the few—maybe even the only—outsiders allowed behind the closed doors of the rapid-fire lawmaking process. And just as we kept the lines of communication open with Hungarian lawmakers and government officials, it was our job to stay in touch with the civil society organizations (NGOs, nonprofit organizations, trade groups, and the like) whose members would be seriously affected by the new laws, but who were operating on scraps of information about what was coming down. The embassy was fast developing a broad and deep understanding of the big picture of the overall legislative changes unfolding in the country.

To keep track of the cascade of new legislation, I asked my staff to create a matrix of the most significant of the hundreds of laws under consideration, and the proposed changes. For our part, we proposed to be solely focused on the proposed laws that we believed could undermine Hungary’s system of checks and balances or weaken the independence of its democratic institutions. It was a mammoth task, but we were able to keep track of the reforms and their most troubling elements.

In the end, we identified the much-ballyhooed media law and the proposed laws governing elections and the judiciary as the most troubling. We also had serious misgivings about the new law governing religious groups.

We already knew that the proposed judiciary reforms would make sweeping changes. Most significantly, they would create a new administrative body, with management power over the courts, called the National Office for the Judiciary. Its president would have authority over budgetary and financial management of the courts, staffing, appointments, and distribution of caseloads, as well as the ability to unilaterally decide to transfer cases to courts outside where the alleged crimes had occurred. This last one was a real no-no in most judicial systems and something that gave me great concern.

A second body, the National Judicial Council, would be made up of judges elected by their peers and would serve as a consultative body to the Judiciary Office, but with no real power to affect decisions. Not only would the Judiciary Office have an unprecedented amount of clout, it would also be led by a single individual, appointed by Parliament for up to two consecutive nine-year terms.

In early December 2011, I was called back to Washington and found that officers at the State Department and the White House, as well as members of Congress, were outraged over the situation in Hungary. But as I was making the rounds at the State Department, news came from the embassy that the two-thirds majority had passed the cardinal laws related to the judiciary without addressing a single one of the concerns we brought to them.

It’s over, I thought, shoulders slumping. My efforts to help the Hungarian government prove its commitment to democratic principles, to encourage lawmakers to listen to all their constituents, had failed. I was disappointed and angry that I’d been misled. I was even more worried about what would happen next and how much stress it would place on other important elements of our bilateral relationship. In fact, just as all of this was happening, the Hungarians were helping to rescue American citizens who had been trapped in Libya as Muammar Gaddafi’s regime crumbled.

To round out a final diplomatic push, Secretary Clinton sent a letter to Prime Minister Orbán asking that he reevaluate some of the troubling laws before the constitution took effect. But January 1, 2012, was just a few weeks away, and I had little hope that the secretary’s letter would spur any last-minute changes.

I underestimated, however, what might happen if the secretary’s letter became public. Many people had been given copies—the Hungarian ambassador in Washington and the foreign minister in Budapest, among others. Somewhere along the line it was leaked to the press.

It caused a sensation. Headlines roared about the specific concerns that Hillary Clinton and the United States were expressing over Hungarian democracy. What’s more, it spurred European officials to take notice, at last, of what was happening in Hungary. One by one, European and EU leaders began to engage.

On January 3, two days after the new constitution became law, the Hungarian government held a massive celebration at the opera house. I was invited to attend, along with other members of the diplomatic corps. I wasn’t going to go to the celebration, but I wasn’t going to be coy about it. So I stayed home in my slippers and watched the coverage on television.

This was without a doubt the lowest point of my ambassadorship. Reports that the American ambassador was snubbing the celebration of Hungary’s new constitution circulated in the press. What should have been a great day for Hungary had degenerated into a partisan battle. Thousands of protesters gathered outside the opera house demanding to be heard. The state-owned television stations covered the protests, but their reporters stood alongside the crowds so that the cameras picked up the empty streets behind them instead of the mobbed ones in front.

The controversy over the new laws exploded into a full-blown crisis. Hungary’s currency, the forint, took a nosedive. In a series of interviews with the Hungarian media, I explained that the United States had engaged actively with Hungarian officials regarding their reform process, sharing our expertise on how the new laws would affect their democracy. We had been assured that our concerns would be considered, but none of them had been. “U.S. Ambassador Disappointed,” shouted the headlines.

Orbán’s government had no choice but to respond. In the early winter of 2012, Foreign Minister János Martonyi declared to a group of ambassadors that “the two-thirds revolution—though I have never favored that expression—is over, and now it is time for consolidation to begin.” He went on to say that Hungary’s leaders recognized that they had moved very quickly. Now that everything was done, they would go back and “make corrections.”

Officials agreed to begin a process to work with the European Union to ensure that the corrections did not violate EU law. The Hungarian government agreed to consult with the Venice Commission, the Council of Europe, and the European Commission, volunteering to hand over English translations of the constitution and several of the most controversial of the cardinal laws. If elements of the law were found to be inconsistent with EU standards, Hungarian government officials agreed to work with Parliament to modify them.

This was a significant turning point. We at Embassy Budapest knew that our role, unconventional and nuanced as it was, had been instrumental in getting the Hungarians to this point. For many months, we had been nearly alone in pushing for Hungary to address these concerns. The European Union had remained almost completely silent, even though it was far more appropriate for Hungary to work with EU and European institutions, given its membership in the group. As one European journalist tartly noted, “It takes Hillary Clinton writing a letter before we are willing to take notice of a problem within our own Union.”

Through the spring of 2012, negotiations seesawed between the EU and the Hungarians. We followed what was happening, but now it was from the backseat. That summer, the Hungarians adopted a major amendment to the constitution addressing many of the concerns that we had raised along with our European friends. More amendments would follow. But in spite of the modifications, Viktor Orbán was growing more and more powerful.

My staff insisted that I should feel proud of what we had accomplished. “They’re making changes and working with the European organizations that are designed exactly for this purpose,” they told me. “You should declare victory, ma’am.”

And there were victories. In September of 2013, under intense pressure from the EU and other organizations, Hungary passed a fifth amendment to the constitution addressing the key weaknesses that my staff and I had identified in 2011 and Hillary had subsequently pressed with Orbán. The amendment strengthened the powers of the National Judicial Council, the one comprised of judges, and took away the ability of the president of the National Judicial Office—a Fidesz appointee—to transfer cases between courts. It also removed restrictions on political candidates running campaign ads on privately owned media and allowed any religious group to identify itself as a “church” and enjoy judicial protections. Still, the amendment contained a number of dubious loopholes—for instance, only religions “recognized” by Parliament can garner tax exemptions and other privileges.

The victories, then, were only partial. The hope is that they will help enable the people of Hungary retain enough of their freedom to keep their country from slipping into full-scale authoritarianism.

I remembered that when Hillary was in town, we arranged for her to meet with leaders of the largest and most active civil society organizations, such as Transparency International Hungary, and representatives of the enfeebled opposition parties. After the initial buzz of excitement subsided, the group began taking turns explaining how they were shut out of the decision-making process in their country. Most of the people in the room had seen drafts of the new constitution only days before it was voted into law. They had no opportunity to comment on it or contribute to it. Secretary Clinton listened intently. Then she asked the group what they were going to do about it. The question surprised them. The unspoken response seemed to be “That’s why we’re talking to you.”

“Look,” Hillary said, “I’m not the one you need to convince that there is a problem here. You need to talk to the people of your country and try to convince them that there is a problem. If the media law has made it harder to get your message out, you’ll have to work harder. You have the Internet. You have tools. It’s not just about finding people who agree with you, it’s about convincing those who don’t agree with you that you are right. That’s where change comes from. As leaders of civil society, this is your job.”

Of course, Hillary was right. The job of securing a country’s democracy falls ultimately to its citizens, not to outside powers. But other nations also have the responsibility to use their diplomatic power to increase democracy’s odds. The situation in Hungary is still fluid, and progress is uneven at best. (Orbán supported sanctions against Russia over Ukraine, but this February he also cut a deal with Putin for cut-rate Russian natural gas and support of Hungary’s nuclear power industry, infuriating Western allies.) We do not yet know how the story will end. But this much is clear: Vigorous multinational action is making a difference in Hungary. And that action would not have happened without America taking the lead.

The post The Hungary Games appeared first on Washington Monthly.

There may not be a generation in American history with worse entrepreneurial prospects than Millennials. They entered the workforce amid a recession that left many without the resources necessary to start their own business. They hold a record amount of debt paired with next to no savings. A market dominated by big businesses has less room for small ones owned by young people. As far as entrepreneurship goes, the situation is a disaster.

Of these two interpretations, it’s the latter that’s been borne out by statistics. Millennials “have created fewer and fewer businesses since they entered the workforce in the early 2000s,” says a report from the Kauffman Foundation. Americans ages twenty to thirty-four are starting businesses at a slower rate than previous generations were when they were in the same age group. Business creation by Americans of all ages peaked at more than 550,000 startups in 2006, according to Kauffman, before dropping 31 percent to a low in 2010. That number only crept back up past 400,000 in 2012.

Before delving into potential underlying reasons behind the gap between Millennial interest in start-ups and their actual entrepreneurship rates, it’s important to understand why new businesses matter so much to the economy. While established companies tend to add jobs overseas, American start-ups are much more likely to create domestic jobs. The most efficient path to job creation is a start-up that hits it big—which is also the path to major technological innovation, according to Robert Litan, nonresident senior fellow in the Economic Studies Program at the Brookings Institution. “Cars, airplanes, computers, air conditioning,” Litan says. “All were commercialized by entrepreneurs, not established companies.” Very few start-ups will grow big enough to hire lots of people (and even fewer will produce products with the technological impact of the car or computer), but more new businesses means a higher chance that some strike gold.

The most obvious obstacle for Millennials who want to be entrepreneurs is their bank accounts. There’s a lot of overhead cost involved in starting a business—a Gallup poll last year found that 79 percent of people starting firms with fewer than five employees had to dip into their savings to do so. Given how many Americans in their twenties and thirties have had trouble finding steady work to pay the bills, it’s no surprise that they lack the savings necessary to get their entrepreneurial dreams off the ground. Combine that with massive amounts of student debt, and the drop in new businesses makes sense. While many members of previous generations could take out second mortgages or max out credit cards for funding, those options aren’t as open for debt-averse Millennials, who are more likely to be renters. What’s frightening is the long-term effect that entering the workforce during a recession can have on a generation, both in terms of future economic opportunities and psychology. Starting a business means taking a risk, and young people living paycheck to paycheck or going to grad school to avoid having to find a job in a weak economy are often unwilling to take that risk. “So many recent college grads live at home, and their parents are telling them to get a job,” Litan says. “The last thing that parents want to hear is, ‘I think I’m going to start a company.’”

Even those with the savings or the parental support to draw on are having trouble finding space in the market for their ideas. Entrepreneurship requires a niche, whether large (this app could change the way millions of people do an everyday task!) or small (there isn’t a good bakery within twenty miles of here!). As large companies consolidate and expand, though, those niches grow fewer and farther between. It’s especially visible in retail and food service—chains like Walmart and Target dominate, and jokes about how many Starbucks locations there are grew stale years ago—but, as Derek Thompson explained in the Atlantic last year, plenty of other industries are seeing long-term declines in new businesses. Construction start-ups (think home building, plumbing, and civil engineering) dropped by nearly 80 percent between 1978 and 2011, while manufacturing start-ups decreased by nearly 60 percent. How can a twentysomething wannabe entrepreneur compete with a company like Amazon, or Koch Industries? Consolidation can even eat away at the economic benefits wrought from the few who do go up against the big fish in the pond—many successful start-ups end up being purchased before they get big enough to hire a major number of people.

Another potential explanation, a favorite among conservatives, is that government regulation has stifled entrepreneurship. This can take the form of fees and requirements at the onset of a start-up. A Heritage Foundation report last year found that the cost of meeting regulatory requirements has gone up by more than $70 billion over the past five years. That can then dovetail with consolidation; while a company like Google can hire the lawyers and compliance officers necessary to understand complicated taxes and regulations, a new business with a young founder is going to have a much harder time.

There are reasons to doubt such negative effects, though. A study from Nathan Goldschlag and Alexander Tabarrok at George Mason University found that more heavily regulated industries actually have slightly higher rates of entrepreneurship. The study concluded that federal regulation “had little to no effect” on the overall decline of new business formation. In fact, there’s a segment of the entrepreneurial economy where experts are eagerly awaiting regulation: crowdfunding. It’s a way for large groups of people to send relatively small sums of money to businesses and projects they like, popularized by sites like Kickstarter (which saw people pledge $529 million to individual projects last year). While Kickstarter operates on what Kauffman calls “reward crowdfunding”—donors receive different gifts based on the size of their donations—there could be even more potential in “equity crowdfunding,” in which people who give money actually receive an ownership stake. The U.S. Securities and Exchange Commission is still writing the rules for equity crowdfunding, leaving a patchwork of regulation across the fourteen states that have legalized it in advance of the SEC rules. With full federal regulation, entrepreneurs (especially young ones with the savvy to promote their firms and projects online) could start taking investments from anywhere in the country.

At this point, researchers can only theorize about which explanation is to blame for the decline. Peak age for entrepreneurship, according to the Kauffman report, is around forty—people often need years of experience in a particular industry to identify a niche, gain skills, make contacts, and build up enough savings to take the plunge. Until Millennials hit that point, all we can do is compare them to previous generations before their own peaks. There are indicators that could signal an entrepreneurship resurgence among young Americans if the economy continues to improve. “We don’t know what’s going to come of the Millennials,” says E. J. Reedy, Kauffman’s director in research and policy. “The Millennials still have the potential to be the greatest entrepreneurial generation or America’s lost entrepreneurial generation.” Among the positive indicators is their high educational attainment, including access to specific training in starting businesses. There were more than 5,000 entrepreneurship courses reaching more than 400,000 students in 2008, compared to about 250 similar courses in 1985, according to the Kauffman report. Millennials tend to have a positive view of entrepreneurship, and they entered adulthood at a time when business founders like Steve Jobs and Mark Zuckerberg were already household names. Silicon Valley and the young people making millions there are constantly in the news—when they’re not being dramatized in movies like The Social Network or lampooned on HBO’s Silicon Valley. There’s a good chance that the average Millennial uses multiple apps that were developed by people around his or her own age.

But that’s just the problem: we’re in a time of what Reedy calls “hyper-extreme” young entrepreneurship. There are more incubators and accelerators than ever, only helping a tiny number of Millennials start companies. That doesn’t mean that the rest are outright ignoring entrepreneurship, though. Those skills and interests may actually be manifesting themselves in young people trying to make their way in the sharing economy. That means finding freelance or contract work, working on projects on their own time, and potentially leveraging assets like a car or an apartment to make money on the side. “They’re having to piece together their own jobs and careers,” Reedy says. “Somebody could be driving an Uber car, then doing ten hours of work as a barista.” Driving an Uber, opening an Etsy shop, selling freelance work—all could be seen as micro forms of entrepreneurship, kinds that won’t show up in studies of business creation. But unlike traditional entrepreneurship, they are only likely to create a single job, the one each individual is using to eke out a living.

Doing this kind of self-driven temporary work could be helping Millennials prepare for real business creation as the economy improves and they start to hit their forties. Or it could be keeping them from more standard work environments, robbing them of the experience necessary to identify niches and build contacts. Only time will tell whether Millennials are poised to break or doomed to perpetuate the country’s downward entrepreneurship trajectory.

The post The Lost Entrepreneurial Generation? appeared first on Washington Monthly.

Reagan: The Life
by H.W. Brands
Doubleday, 816 pp.

I came to realize that Mo was not in fact a king among dealmakers. He simply would not lower his price. Mo confounded me by having a simple goal and holding to it, in the process forcing me to negotiate against myself. I can imagine how Mikhail Gorbachev must have felt when he faced Reagan at Reykjavik in 1986. The president was determined to preserve his Strategic Defense Initiative, the planned antimissile shield that could theoretically stop an incoming Soviet weapon. No matter how many times Gorbachev pressed, Reagan would not relent. It did not matter that granting Gorbachev’s request—limiting SDI to the laboratory setting for ten years—meant conceding nothing; in no conceivable universe would SDI be ready for active testing within that time frame. Reagan’s firmness prevented a deal at Reykjavik, and the parties walked away embittered. But sure enough, they held another summit the following year. And Reagan eventually got his way.

Reagan’s goals as president were as simple as Mo’s, and like Mo he stuck to them relentlessly. According to H. W. Brands, the author of Reagan: The Life, Reagan’s goals were “to shrink government at home and defeat communism abroad.” He left more detailed matters—that is to say, all detailed matters—to subordinates, to the point where he himself could seem a little simple. (Reagan shocked Paul Volcker at their initial meeting by asking the chairman to explain the purpose of the Federal Reserve.) And yet simplicity can be a form of genius. Reagan viewed public affairs through a lens of right and wrong and refused to let details obstruct his clear-eyed view. In Brands’s words, “Communists and their sympathizers were bad, anti-communists and their supporters were good.” In this way the United States found itself in bed with Ferdinand Marcos, Augusto Pinochet, and apartheid South Africa. Who would imagine that such a basic, unimaginative thinker could win the Cold War?

American presidents are remembered for two, or at most three, big things. While historians traffic in nuance, the public does not, constructing instead a narrative around a president’s most significant acts, accomplishments, failures, and omissions. Lincoln freed the slaves and saved the union. Grant’s administration oozed corruption. Hoover coddled the rich and ran the country into depression. Johnson passed the Great Society and lost Vietnam. Barack Obama—I predict history will say—enacted universal health insurance and ended the Iraq War. This is not to imply that the day-to-day activities of a president do not matter; obviously they shape national and often international events. But if Reagan boiled things down to their simplest terms, so do we.

Ronald Reagan stands to benefit more than most presidents from this reductive process of historical memory. Big picture, he looks impressive. A man of unblemished optimism and an enduring hero to generations of Republicans, he stood tough and presided over the fall of the Soviet Union. And yet even as we learn more about Reagan, we increasingly overlook troubling details in favor of grand themes. Eleven years after his death, archives are opening, associates are speaking up, the ramifications of his policies are coming into perspective, and judgments are being reached. Brands’s biography—the first since Reagan’s death—is an important part of this process, since the author is a historian at the University of Texas whose judgments are well informed and credible. Brands’s conclusion is this: Reagan stands alongside Franklin Roosevelt as one of the two major presidents of the twentieth century. Roosevelt oriented the country to the left and defeated fascism. Reagan reoriented the country to the right and defeated communism.

There are many ways to respond to this claim. The first is to note that the extent to which Reagan defeated communism is a matter of lively debate. He had the good fortune to be president at a propitious moment. Decades of economic retardation had finally caught up with the Soviet Union. Eastern Europeans, led by Lech Walesa in Poland, had begun to resist Soviet oppression. And the USSR had buried three crusty old premiers in quick succession and selected an ambitious young reformer in the person of Gorbachev. He and not Reagan deserves credit for ending the Cold War, to the extent that one person must be feted. Yet Reagan’s opponents must concede that the president tested Gorbachev while giving him space to enact precarious reforms. We cannot know what Gorbachev would have done without Reagan pushing him, but it is a safe bet that the answer is: “Less.” Reagan broke with his party by negotiating with Gorbachev on the question of nuclear arms reduction, and by trying to change rather than contain the Soviet Union.

It is important to note that Brands’s conclusion about Reagan is not a partisan one. While pairing Reagan with Roosevelt, he acknowledges that both remain highly controversial presidents, and he does not take sides on the merits of their policies. Brands is correct that both Reagan and Roosevelt succeeded in pushing their respective agendas, which amounts to success of a kind. Reagan and Roosevelt also had comparable influence in pulling the national conversation hard to one side, although here again there is an asterisk. In the twenty-six years since Reagan left office, Democrats have held the presidency for fourteen years—not exactly a windfall for the right. Yet today’s Democratic Party is far more centrist, and the Republican Party is far more right-wing, than in the 1960s. This is partly a result of the rightward pressure that Reagan exerted over national politics.

With all this said, the important point is this: it is not possible to evaluate a president without examining the substance of his policies. And substantively, Reagan does not warrant mention in the same breath as Roosevelt. Not by miles. Domestically, Roosevelt saved the nation from an existential threat (the Great Depression), while Reagan merely steered it out of a funk (the 1970s). Roosevelt enacted structural reforms to protect the most vulnerable members of society, from the unemployed to the infirm to the elderly. Reagan systematically set about dismantling those reforms and deregulating the economy, leaving everyone to fend for themselves. Reagan also forged the unholy alliance between the Republican Party and the evangelical right: a marriage that continues to infect the United States with intolerance and anti-science thinking. The government-is-the-enemy mind-set that pervades the right today comes to us from Barry Goldwater via Ronald Reagan. As our roads, bridges, and schools fall apart around us, we have them to thank.

Brands is far more interested in big-picture themes about the Reagan presidency than its nuts and bolts. This seems a strange thing to say about a biographer, who necessarily records all events that pass before his camera. But while Brands is impressively detailed in recounting Reagan’s summitry with Gorbachev and his aggressive tax cutting, he is perfunctory when discussing Reagan’s role in, say, the environmental movement and non-Soviet foreign policy. In this way Brands’s Reagan reflects what we already know rather than challenging us to think about Reagan’s legacy afresh.

Disappointingly, Brands devotes merely six pages to Reagan’s impact on the federal judiciary, and most of these deal with his nomination of Robert Bork to the Supreme Court. We read in a few terse sentences that Reagan nominated the Court’s first woman, Sandra Day O’Connor, and also nominated Antonin Scalia and elevated William Rehnquist to the office of chief justice. Brands does not mention that Rehnquist was by far the most conservative member of the Court at the time, or that naming him chief was one of the most controversial and consequential acts of Reagan’s presidency. Nor does Brands explore Reagan’s politicization of the judiciary generally: the significance of his nomination of the shrilly partisan Scalia; the drive to make the federal appellate courts a forum for political warfare; Attorney General Edwin Meese’s efforts to create a young army of pedigreed attorneys who would eventually sit on the bench or fight to take back the academy. The current chief justice, John Roberts, was one of them.

Brands is much more impressive in his description of the Reagan presidency during the early fight against HIV and AIDS. Brands explains how Reagan pandered to the religious right and thus gave birth to one of the most noxious streams in contemporary Republican politics. If Rick Santorum’s dismal showing in the 2012 primaries is any indication, the evangelical right’s heyday has come and gone. But in the 1980s, Reagan harnessed the political power of that movement, pointedly declining to condone the “alternative lifestyle” of the gay community. He said almost nothing about the growing AIDS epidemic during his first term, funding AIDS research with anemic budgetary appropriations and no public support. When Reagan finally addressed the AIDS crisis in 1987, he appallingly called for mandatory testing for federal prisoners and listed AIDS as a contagious disease that could prevent the admission of a noncitizen to the United States.

Even returning to Reagan’s major achievements, the myths outpace the facts. He is lionized by the right today as the avatar of small government, but Reagan was, of course, the first president to preach this sermon while enacting the policies of big-government conservatism. He cut taxes and regulations, and shrank entitlement spending. But his defense spending accelerated at such a rate as to create enormous budget deficits of the type that Tea Party conservatives now claim to deplore. Reagan’s deficits caused the national debt to rise from $900 billion in 1981 to over $2.5 trillion in 1988. He consistently spent more than he had, and it took George H. W. Bush and Bill Clinton years to repair the damage and bring the country back into the black. Reagan revealed that modern conservatism isn’t so much about small government as about low taxes at any cost.

Reagan is at its best when Brands explores one of Reagan’s undeniable assets: his ability to communicate with the American people. His arsenal of stories and jokes matched Lincoln’s. Brands describes Reagan’s “wonderful voice, which, if anything, grew more seductive with the throatiness of age.” His trademark sunny disposition helped, of course. Brands observes that again and again Reagan told Americans what they wanted to hear: that they were a unique and extraordinary people, and that their country was a force for good in all things. But here Brands’s criticisms are more pointed, and they are on the money: “His message was an easy sell. He asked next to nothing of the people, neither the soaring sacrifice of John Kennedy’s inaugural nor the quotidian adjustments sought by Carter.” Reagan’s message was bound up in his personality. Brands denies that Reagan was merely an actor reading his lines, as some have claimed; his strong convictions animated his rhetoric and informed his broad policy goals. But Reagan was nevertheless a performer: “He was not,” Brands writes, “a warm person, but he seemed to be, which in politics is more important.”

Brands similarly pulls no punches when it comes to the great scandal of the Reagan presidency: the Iran/Contra affair. Congress had refused to appropriate funds for the right-wing Contras fighting to take Nicaragua from its leftist government. Since anticommunists were good, Reagan vigorously supported the Contras. In defiance of Congress, and in secret, his administration sold missiles to the government of Iran in return for the release of American hostages held in Lebanon. The administration then used the excess proceeds of the arms sales to support the Contras in Nicaragua. Reagan appears genuinely not to have known about the Contra connection. But he knew full well about the trading of arms for hostages, and falsely told the American people that he had not, in fact, made such trades. Reagan’s ignorance of Oliver North’s shenanigans when it came to the Contras was a product of his own terrible management style. Presiding over a dysfunctional cabinet and uninterested in the details of policy, he set goals that his staff members tried to meet.

Conservatives have a line about standing “athwart” history and yelling stop. It seems ironic to do precisely this when it comes to the canonization of Ronald Reagan. He was not a great president. And the more the conventional wisdom holds otherwise, the more forcefully this must be said. Reagan’s contribution to the end of the Cold War is without question his major achievement, and it was no small feat. Fifty years from now, nothing else about his presidency may matter. But Reagan was also the author of many of our current predicaments as a nation and a society. His anti-government worldview created the no-tax-raised-ever mentality of today’s right. Our store of compassion for the less fortunate dwindled and withered under his smiling influence. Our willingness to undertake cynical and blatantly illegal acts abroad reached its crescendo with Reagan’s machinations in El Salvador and Grenada. We are a more polarized country because of the way Reagan brought right-wing politics into the mainstream. “Trust but verify,” Reagan endlessly said to Gorbachev. Historians must do the same.

The post On Not Canonizing the Gipper appeared first on Washington Monthly.

The implications of all this for the next generation of would-be politicos is the subject of Running from Office: Why Young Americans Are Turned Off to Politics, a new book by the political scientists Jennifer L. Lawless and Richard L. Fox. The basic question is simple: How are we to run a democracy if no one will run for office?

Running from Office:
Why Young Americans
Are Turned Off to Politics
by Jennifer L. Lawless and Richard L. Fox
Oxford University Press, 232 pp.

Lawless and Fox, who have previously written about the gender gap in politics, conducted hundreds of interviews on this question, and largely confirm the conventional wisdom: young people are generally turned off to politics, which they perceive as a corrupt cesspool of incompetence and pointless flailing. Since the mid-1990s, a paltry 20 percent of under-thirty voters have voted in midterm elections. Had they gone to the polls in 2014, things might have turned out very differently. The authors do not, however, come close to establishing their major premise—that young people are more alienated than youth in generations past. Cranky graybeards have been griping about young people since time immemorial, so a book premised on today’s youth being unusually disconnected faces a high burden of proof.

Voting behavior is arguably the most reliable indicator of democratic engagement. While turnout among eighteen- to twenty-four-year-olds in midterm elections has fallen somewhat—from more than 30 percent in 1966 to around 20 percent today—presidential elections show a much less clear trend. Youth turnout was more than 50 percent in 1964, and has not been equaled since. But about 40 percent of the under-thirty crowd reliably shows up for presidential elections. In 2008, youth turnout was the highest since 1972. Moreover, the voting behavior of youth tends to track that of the population at large. Youth turnout is off somewhat from previous highs, but so is turnout generally.

Are fewer young people running for office than before? Here I suspect Lawless and Fox are on firmer ground, but they do not present much evidence on this question, either. In truth, the evidence may not even exist. As a twentysomething, I can at least provide anecdotal evidence on the subject. Even though I am, by the standard of my generation, a serious political obsessive, running for elected office strikes me as landing somewhere between “incomprehensible” and “I’d rather be thrown in jail.” And if I feel that way, imagine what regular people my age must think!

Regardless of their weak general thesis, Fox and Lawless have certainly tapped into the youth zeitgeist. Again and again, interviewees cite a lack of interest in political matters. In a survey of high school and college students, only 27 percent report checking political websites frequently, compared to 76 percent who check social networking sites. (Interestingly, they cite network broadcasts as the most popular news source, though less than half of respondents report watching them even every few days.) Less than 10 percent read political blogs, and even the Daily Show only hits 13 percent regular viewership among this cohort. Becoming a politician consistently ranks as one of the most undesirable jobs, and fully 61 percent report that they have never once considered running for office.

The authors’ worries are particularly on point when it comes to local government posts. There are roughly 520,000 elected offices in the United States, and far too many of them are uncontested. Even in state legislative elections, which are relatively high profile compared to, say, local school boards, just 57 percent have candidates from more than one party. As Saddam Hussein could have told you, it’s not much of a democracy when there’s only one option on the ballot.

All this would be a lot better suited to a book about general decay in democratic participation than about youth specifically. So what is happening? Again Lawless and Fox aren’t very convincing. They blame the culture and the media. Politics has become polarized, hyper-partisan, and bitter, while “almost all national news about politics is negative and combative in tone.” The political process is awash in a sea of money, and the whole system stinks of corruption. As a result, families avoid political discussion, and young people shut out what unpleasant political news manages to trickle in through social media.

There’s a rather anachronistic Progressive Era ideology underpinning this section of the book. The authors’ model of good politics seems to envision earnest, idealistic people joining up as a way to accomplish value-neutral good things for the American people as a whole. Young people’s actual political beliefs are beside the point; what matters is getting them into politics. That sort of pragmatism has a long American pedigree, advanced by figures from Walter Lippmann to JFK to President Obama. In the mid-twentieth century, when parties did not represent coherent ideological blocs, it wasn’t a bad shorthand for the actual mechanics of politics.

But times have changed, and the parties have become ideologically sorted, very nearly parliamentary style. Every Republican in Congress is now more conservative than every Democrat, which wasn’t true in the past. The mechanics of ideological politics are far different: one side attempts to force its agenda through over the objections of the opposition, rather than come to a compromise. Obamacare was such a policy, and it is still meeting with enraged resistance from Republicans, who would like to see the whole thing done away with.

The problem with parliamentary-style politics in America is that, most of the time, our national political structure requires a great deal of compromise to function at all. Periods of single-party rule, as in 2009-10 when Democrats controlled the House, Senate, and presidency, are very rare.

When it comes to ideological struggle, Republicans are far, far ahead in organization and political coherence, and they have used it to hold up the Democrats at every turn. Literally on the night Obama was inaugurated, Republicans pledged to conduct a campaign of maximal obstruction, and proceeded to obliterate the previous record for Senate filibusters. That hysterical partisanship has not been simple childishness from Republicans, but a conscious political strategy to create dysfunction for which they would not be blamed.

Given all of this, the bitter dysfunction and negative media coverage documented by Lawless and Fox are by and large the product of ideological struggle rather than some extra-political and cultural happening. It’s what occurs when a unified, disciplined, ruthless party operates in a presidential democracy that was carefully constructed to require lots of compromise.

That strategy is indeed worrisome—it led Republicans to repeatedly threaten national default to obtain policy concessions—but short of amending the Constitution, there won’t be any changing it.

Since their diagnosis of the problem is not very well aimed, Lawless and Fox’s solutions are mostly weak tea as well. Political video games, a Peace Corps for politics, new civics requirements for college, finding more female candidates: these ideas provide little hope for changing the current dynamic.

The authors do, however, offer one rather interesting proposal: creating an app that would contain a comprehensive database of all political offices throughout the nation. One major barrier to young people’s entry into the American political system is its sheer scale and complexity, and such an app could be extremely handy for political organizing and make it easier for this cohort to engage in politics.

Which leads me to a final point. I suspect what creates the sense of futility and disillusionment about politics among today’s youth is the interaction between the American tradition of disinterested, “responsible” politics and the reality of hyper-partisanship. This suggests that more ideology and partisanship, not less, might actually deliver young people into political candidacy.

If American youth realized that politics is the way to achieve things they consider important or valuable, be they higher wages and a secure retirement on the left, or abolishing food stamps and Medicaid on the right, then they might be motivated to look past the boring political news to the highly relevant policy content.

Given my own political beliefs, I’d say young Americans ought to form a grassroots left wing to challenge the right. Conservatives have already demonstrated the validity of this argument. Republicans currently hold most of the state legislative seats for which it is so difficult to find candidates. With their fervently ideological organizing, they have knocked off 910 Democratic state legislators since 2009.

To my jaundiced political ear, many of the complaints about politics detailed in Fox and Lawless’s book are right on. “I hate that elections are usually about choosing the shiniest of two turds,” said one interviewee. “A lot of politicians are just in it for the perks and the money,” said another. (Witness Eric Cantor’s instantaneous post-Congress career in Wall Street.) What young people haven’t quite realized is that not only will this situation not go away on its own, there is also no way to escape the massive influence of politics over their lives. The government has enormous impact on the economy, retirement, poverty, racism, and all of the other issues young people say they are concerned about. But closing down and ignoring politics out of disgust only makes it easier for those in power to make all those problems worse.

The post The Age of the Disengaged appeared first on Washington Monthly.

The Eternal Criminal Record
by James B. Jacobs
Harvard University Press, 416 pp.

The most debilitating consequence of having a record is employment discrimination. Three out of four employers run criminal background checks on all applicants, and some 90 percent use them for at least some hires. In studies, an overwhelming proportion of employers say they are unwilling to hire someone with a felony conviction. Many refuse to hire anyone with a record, period. The Equal Employment Opportunity Commission has declared that it’s illegal for companies to categorically exclude ex-offenders, but its rules leave enough wiggle room to make them difficult to enforce.

The single most important predictor of future crimes is whether or not an ex-offender finds work once he or she leaves prison. This creates what economists call a collective action problem: hiring ex-offenders reduces recidivism, which is in everyone’s best interest; but to any individual employer, the perceived risk of hiring someone with a record outweighs the marginal benefit to society.

The current landscape of criminal records and background checks developed under little scrutiny. It just sort of happened, according to the New York University law professor James B. Jacobs in his recent book, The Eternal Criminal Record. Jacobs tries to catalog and comment on every aspect of criminal record keeping in America. It’s an impossible task for one volume, and the result is an overbroad and sometimes meandering book, written in an academic’s flat prose. Still, for the patient reader, there is probably no better single source of information on the ways in which criminal records are created, stored, shared, and used.

In the United States, criminal court records have traditionally been available to anyone who wants to see them. For most of the country’s history, however, the files lived in what the Supreme Court called “practical obscurity.” To find someone’s record, you had to figure out which county he’d been prosecuted in, physically go to that courthouse, and hope the clerk could find the file. It was inconvenient and expensive.

All that changed with the birth of the Internet. In 1996, for instance, only 50 percent of employers used background checks for some hires. But as more and more information was centralized by the state and made available online—spurred by the Brady Handgun Violence Prevention Act of 1993, which required states to create statewide databases—the commercial background check industry exploded. These companies can now compile data—most often by buying records online directly from the courts—and in turn sell it easily and cheaply. Single-state searches cost as little as $10, while a comprehensive nationwide search may cost only $60. Checking applicants’ criminal histories has become perfunctory.

As Jacobs points out, this is a distinctly American story. In most European democracies, where the right to privacy and the goal of rehabilitation are taken much more seriously, court records are presumptively not available to the public. Your criminal history is your own business. In Spain, for instance, “only judges, prosecutors, certain police agencies, and the record-subject” can access records from the National Conviction Register. (People with unexpunged convictions, however, are disqualified from public-sector jobs.) In the United States, by contrast, privacy and rehabilitation take a backseat to transparency. The Supreme Court has recognized a First Amendment right to open court records, endorsing the view that access to those records is critical to holding government accountable.

It is deeply ironic that a legal custom based on the idea of preventing governmental abuse has had the practical effect of making criminal punishments more draconian. Not surprisingly, racial minorities are impacted the most. In a landmark field experiment in 2003, the sociologist Devah Pager found that having a drug conviction had a significantly bigger impact on employer responses to black applicants than to otherwise identical white applicants. A 2011 study found that black ex-inmates’ wages grow 21 percent more slowly after prison than whites’.

There is little question that former prisoners are more likely to have problems such as poor employment histories, alcohol or drug abuse, and the like. Amazingly, however, there’s no proof that simply having a criminal record makes someone a worse employee than someone who doesn’t. Pager also surveyed New York City employers on their feelings about hiring ex-offenders. Most said they wouldn’t hire people with convictions because of fears of theft, violence, or general untrustworthiness. Yet the employers who had hired ex-offenders within the previous year overwhelmingly reported positive or neutral experiences. Many believed that ex-offenders made better employees, because they have much more at stake, and are hugely motivated to keep their jobs.

Criminal history reports are notoriously inaccurate—according to a U.S. Department of Justice report, 5.5 percent of background checks erroneously report a record where none exists. But even a perfectly “accurate” system would suffer from the problem that most illegal behavior is never detected, let alone punished; criminal records are only a rough proxy. The past three presidents have admitted to using drugs that millions of Americans have felony convictions for possessing. The enormous discretion wielded by police and prosecutors determines whether a certain act leads to an arrest, indictment, or conviction.

The good news is that momentum for reform seems to be building. Sixteen states and dozens of counties and cities, including Chicago and San Francisco, have recently passed versions of “Ban the Box” laws, which generally prohibit employers (sometimes just public, sometimes public and private) from asking about criminal records until after the job interview. (The name refers to the box applicants are routinely asked to check if they have any convictions.) Some of the country’s largest employers, including Target, Walmart, Home Depot, and, as of April, even Koch Industries, have adopted the policy for their own hires.

Jacobs makes a few commonsense suggestions for reform: Congress should do away with some of the laws barring certain ex-offenders from government contracting jobs. More nonviolent crimes should be decriminalized to spare people records in the first place. Existing regulations on background check companies should be better enforced. And so on.

But he defends the basic premise that employers should have access to applicants’ criminal records. His argument boils down to a claim about individual fairness: since ex-offenders “are responsible for their tainted biography,” it’s not unfair to discriminate against them; meanwhile, since employers bear the risk of a poorly performing employee, it would be unfair to prevent them from getting relevant information.

It’s “not irrational” for businesses to want more information about applicants, he writes, so let’s not deprive them of the ability to find it. Perhaps it would be rational to want to know about someone’s physical and mental health records, too. But are we better off making that information public? We take for granted that the answer is no. Given the societal cost of pushing ex-offenders out of the labor market—which, according to the left-leaning Center for Economic and Policy Research, costs the U.S. economy between $57 billion and $65 billion in output—why shouldn’t the same logic apply to criminal records?

It’s possible to imagine a much saner approach than the one we have— although, given the lobbying power of the multibillion-dollar background check industry, it won’t be easy to bring about. As Jacobs writes, “computerization did not cause fundamental rethinking of public access,” but it should have. For starters, states should stop making records available for bulk purchase online.

The current default, that private employers have access to online criminal records, should be reversed. The First Amendment protects access to physical court files, but digital criminal records should be presumptively private unless there’s a basis for believing that allowing people with certain types of records to hold certain jobs would pose a serious risk for society. Jacobs proposes empowering a federal commission to make recommendations about what kinds of convictions should be legally disqualifying for what kinds of jobs. Better yet would be a commission that would determine, as a matter of regulation, which industries should be given access to what kind of criminal history information. Some, but not all, private employees have a significant impact on public safety or welfare. It would make sense for the transportation industry—think truckers, pilots, train conductors—to be able to do background checks in order to find out whether someone has been convicted of drunk driving, because substance abuse by someone in that position has a clear potential to put many people in danger. On the other hand, whether the cashier at Best Buy has a theft conviction may make a difference to Best Buy, but there’s no reason to think it’s something that will affect society at large.

It should be illegal to ask about or report arrests that didn’t lead to conviction, because the stigma attached even to an unprosecuted arrest lets the government circumvent the principle that a defendant is innocent until proven guilty. There should also be tighter restrictions on how far back criminal history reports can go. Research suggests that even some types of violent felons are no more likely than the average person to reoffend after three or four years out of trouble. Yet convictions remain a potentially permanent barrier to employment.

Jacobs, citing the work of fellow academics, argues that restricting access to criminal records would disproportionately punish members of highly incarcerated minorities who don’t have criminal records, because employers will use race as a proxy for criminality. One study even suggests that this effect might outweigh the employment gains among minority members who do have criminal records. That’s an important concern, but a more thorough 2008 study by Keith Finlay, an economist at Tulane, found that while increased access to criminal records since 1997 has hurt ex-offenders’ employment, it has had no statistically significant affect on employment rates among non-offenders.

The policies surrounding criminal records are mostly the product of inertia. They also embody the assumption that everyone who commits a crime is somehow forever bad, dishonest, or dangerous. For everyone’s sake, governments and employers would do well to revisit that assumption. As long as ex-offenders are systematically kept out of the workforce, it may be a self-fulfilling prophecy.

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We are what psychologists call “cognitive misers.” We naturally conserve our mental energy, and prefer the simple (less taxing) over the complex (more taxing). That’s why politics is easier when there are two parties, which can organize issues into simple binary choices: more government spending or less government spending; Wall Street or Main Street; good or evil.

With simplicity comes clarity; with diversity comes loss of control. Yet clarity, appealing as it may be, has some harmful consequences for our political institutions. It limits the ability to examine problems creatively, from multiple angles, and makes it harder to change anything. Good luck solving health care or energy or immigration or global trade in three plain-language pages. But once you allow in more angles and dimensions, you inevitably open up the process to who knows what.

The Politics of Information:
Problem Definition and the
Course of Public Policy in America
by Frank R. Baumgautner
and Bryan D. Jones
University of Chicago Press, 264 pp.

This conflict is at the heart of a fascinating new book by the political scientists Frank Baumgartner and Bryan Jones called The Politics of Information: Problem Definition and the Course of Public Policy in America. Baumgartner and Jones are grappling with a fundamental question of governance: How do we collectively solve problems whose complexity exceeds the cognition of any one person? And what happens when we attempt to impose simplicity on complex problems that defy such control?

At the risk of oversimplification (inevitable within the confines of a book review), we have two basic choices for how we orient our political institutions, particularly Congress. We can try to impose control and clarity on the chaos by clear top-down jurisdictions (for example, non-overlapping committee structures with powerful leaders). Or we can allow institutions that will look at problems differently, embracing the value of diversity in generating different perspectives (for example, messy overlapping committee jurisdictions, with proliferating subcommittees). The second option brings in more information but diffuses power. “Information and control are in inherent conflict,” write Baumgartner and Jones. “The more information, the greater the problem of setting priorities or maintaining control.”

Baumgartner and Jones are veteran political scientists who have been asking these types of big, system-level questions for more than two decades, both separately and together. Their first joint book, the seminal Agendas and Instability in American Politics (1993), borrowed the theory of “punctuated equilibrium” from evolution and applied it to public policy as a way of understanding change: long periods of stasis, followed by sudden bursts of change at critical moments when new narratives upset existing power structures. Their second book together, The Politics of Attention (2005), focused on the information-processing capacity of government, with an emphasis on that scarcest of commodities in the political environment: attention. Limited attention means that government tends to either ignore or overreact to new developments, and as a result, they wrote, the U.S. political system has “overreacted, hesitated, and lurched its way through scores of problems over the past 50 years.” Now, with the Politics of Information, they’ve shifted the focus to the ways in which government generates its own information.

The authors draw on one of the most impressive data collections ever assembled, the Policy Agendas Project, a comprehensive resource of bills, hearings, laws, media coverage, budgets, and other measures of what government actually does. (The full collection is available at policyagendas.org.)

This data shows how American government has, over the past six decades, gone through two distinct periods. In the first, from about 1950 to 1980, the government opted for more diversity and engaged in what the authors call the “Great Issue Expansion.” During this time, the range of different issues on the government agenda grew significantly. Congressional subcommittees became bigger. Overlapping jurisdiction proliferated. Government held more hearings, sought more information, paid attention to more problems, and, as a result, came up with more solutions. Diversity (what the authors call “entropic information”) triumphed over clarity. While the Congress of the 1960s and ’70s certainly made some mistakes, in no other period has the first branch solved more problems more productively.

In the late ’70s, the expansion of issues and staff gradually came to a halt, and the focus turned to a search for clarity. As the range of issues and the number of subcommittees declined, Congress reduced overall levels of committee staff positions. Congress also held fewer hearings. And the hearings it did hold were much more likely to be oversight hearings, rather than hearings that considered and evaluated new legislation. Notably, in 1949, 81 percent of congressional hearings were related to legislation; in 2005, just 11 percent of congressional hearings were.

This reversal was no accident. By 1980, the public had turned decisively against government. And at first the Reagan White House led the charge—Baumgartner and Jones cite Walt Williams’s description of Reagan’s leadership style as “anti-analytic” and note the 1980s White House cuts in funding for domestic policy analysis. As Baumgartner and Jones write, “One way to halt or slow the growth of government is to cut down on information.” In Congress, the Gingrich revolution of 1995 took this approach one step further. Gingrich slashed House committee staffs and budgets, and centralized more authority in the party leadership, a decisive blow against diversity and decentralization. Senate committee staffing levels
also declined.

The Politics of Information is, in part, an extended investigation of these basic patterns, with an impressive catalog of charts mapping the expansion and contraction of government information search. But an equally important contribution of the book is its convincing argument for why greater diversity of information is a necessary component of a dynamic politics capable of solving complex problems.

One reason why proliferating jurisdictions can contribute to policy productivity is that the more subcommittees or agencies that pay attention to complex multi-dimensional problems, the better the government can effectively solve them. As Baumgartner and Jones write, “[C]lear jurisdictions imply narrower definitions of what is at stake, what information is relevant, and how this information should be interpreted. Messy and overlapping jurisdictions imply contests about what is at stake, what information is relevant, and what goals we are trying to maximize.”

Contested jurisdictions also mean competition. And competition is good thing. The authors write, “Many quasi-independent venues for policy making and problem discovery and definition lead to dynamism and change.” Consider the politics of the 1978 airline deregulation bill, which replaced the existing price-and-entry regulation with a pro-competitive regime that brought down prices. Even though Senator Ted Kennedy chaired the Justice Committee instead of the more appropriate Commerce Aviation Subcommittee, he was still able to utilize significant staff resources to hold extensive hearings on airline price fixing, which galvanized significant reform. It is true that lax antitrust enforcement in the airline industry in the intervening years has undermined many of the purported benefits of the 1978 deregulation. But that shouldn’t understate the magnitude of a legislative accomplishment that went against the interests of a major industry.

This legislation came at the height of the Great Issue Expansion—a period that produced both the expert capability to enact a major reform as well as the decentralized power structures to allow this kind of reform to move forward. “Some may think that increased complexity and interaction among component parts in a system lead to gridlock and inability to act,” they write. “That is not the case.” Rather, the proliferation of jurisdictions created competition and therefore dynamism.

Another important consequence of declining internal information-generating capacity (which Baumgartner and Jones don’t mention) is that it makes government more reliant on outside sources for information. Since these outside sources are increasingly made up of biased industry lobbyists, this skews government priorities and perspectives.

The question now is whether we might be due for another period of expanding information diversity, and the openness and unpredictability it creates. After all, the authors note, U.S. budget data going back to 1790 shows a continual cycle of expansion, then stabilization, followed by more expansion, then stabilization again. And ignoring or failing to solve problems does not make them go away.

Our current polarized gridlock—a logical result of partisan centralization and hierarchy, not to mention deep Republican obstructionism—can only last for so long. At some point, the failure to solve long-ignored problems will put destabilizing pressure on the political system. What looks like deadlock is likely only a temporary stasis. Or, as the authors note in more scientific terms, “[A]s in all complex systems, equilibria are often partial.”

If history is any guide, then, a new politics of chaos, and subsequently openness, may arise sometime soon. Something has to break. A new period of legislative productivity may yet be ahead.

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