Whatever their political party, American leaders have generally subscribed to one of two competing economic philosophies. One is a small-government Jeffersonian perspective that abhors bigness and holds that prosperity flows from competition among independent businessmen, farmers and other producers. The other is a Hamiltonian agenda that believes a large, powerful country needs large, powerful organizations. The most important of those organizations is the federal government, which serves as a crucial partner to private enterprise, building roads and schools, guaranteeing loans and financing scientific research in ways that individual businesses would not.
Today, of course, Republicans are the Jeffersonians and Democrats are the Hamiltonians. But it hasn’t always been so. The Jeffersonian line includes Andrew Jackson, the leaders of the Confederacy, William Jennings Bryan, Louis Brandeis, Barry Goldwater and Ronald Reagan. The Hamiltonian line includes George Washington, Henry Clay, Abraham Lincoln, William McKinley, both Roosevelts and Dwight Eisenhower.
Michael Lind’s “Land of Promise” uses this divide to offer an ambitious economic history of the United States. The book is rich with details, more than a few of them surprising, and its subject is central to what is arguably the single most important question facing the country today: How can our economy grow more quickly, more sustainably and more equitably than it has been growing, both to maintain the United States’ position as the world’s pre-eminent power and to improve the lives of its citizens?
Lind, a founder of the New America Foundation in Washington and the author of several political histories, acknowledges from the beginning that his thesis will make some readers uncomfortable. “In the spirit of philosophical bipartisanship, it would be pleasant to conclude that each of these traditions of political economy has made its own valuable contribution to the success of the American economy and that the vector created by these opposing forces has been more beneficial than the complete victory of either would have been,” he writes.
“But that would not be true,” he continues. “What is good about the American economy is largely the result of the Hamiltonian developmental tradition, and what is bad about it is largely the result of the Jeffersonian producerist school.”
Hamiltonian development built the Erie Canal, the transcontinental railroad, the land-grant universities and the Interstate highway system. In the process, the United States became a giant, interconnected market, a place where companies like Standard Oil, General Motors, John Deere and Sears Roebuck could thrive. The government — and the American military in particular — also played the most important role in financing innovation at its early stages. The industries that produced the jet engine, the radio (and, by extension, the television), radar, penicillin, synthetic rubber and semiconductors all stemmed from government-financed research or procurement. The Defense Department literally built the Internet.
The United States is like “a gigantic boiler,” Sir Edward Grey, a British foreign secretary during World War I, said, according to Winston Churchill. “Once the fire is lighted under it, there is no limit to the power it can generate.” Lind’s aim is to make Sir Edward’s point in the active voice: the government has often lighted the flame, and big business has often generated the power.
And Lind has a strong case to make. He cleverly notes that Jeffersonians themselves often have a change of heart when they find themselves running the country and responsible for its well-being. As president, Jefferson altered his position on federal support for canals, roads and manufacturers. His successor, James Madison, signed a bill creating a national bank, having previously denounced the idea. The leaders of the Confederacy, after decrying centralized power, realized they needed an economic machine to finance a war and started “a crash program of state-guided industrialization from above that was more Hamiltonian than Hamilton,” Lind writes. Modern Jeffersonians, like Reagan and George W. Bush, have campaigned on spending cuts, only to expand government while in office.
For all its logical rigor, however, the book’s thesis does suffer from
one basic flaw. Lind never quite explains how the United States has
ended up as the richest large country in the world, with per capita
income about 20 percent higher than Sweden’s or Canada’s, almost 30
percent higher than Germany’s and almost 500 percent higher than
China’s. If anything, other countries have pursued more Hamiltonian
policies in many ways than the United States, without quite the same
success.
What, then, can explain American economic exceptionalism? Education
plays an important role (and receives only sporadic mention in the
book). This country long had the most educated, skilled work force in
the world, which, as other economic histories have persuasively shown,
helped American workers to be among the best paid.
Beyond education, the United States also has a culture that is arguably
different from that of any other power — more individualistic, more
risk-taking, more comfortable with the workings of the market. If you
were looking for a name for this culture, you might choose Jeffersonian.
by David Leonhardt, NY Times | Read more:
Illustration by Thomas Porostocky
