A few years back, when Congress was bailing out Detroit and banks were declared too big to fail, my dad and I started talking about the long-run implications of the federal government's increasing intervention in the economy.
Fresh off my first year as an economics major, I told him all about moral hazard and creative destruction. In my expert opinion, government wasn't the solution to the worsening recession; by crowding out private investment through deficit spending, by picking winners and losers in the marketplace and by promoting unrealistic spending through a program of artificially low interest rates, the government had helped cause the downturn. Its proposed "fixes" would only make things worse.
My dad asked me why no one was writing about this. I told him many economists were, but that they were doing it in such a way that you'd have to be familiar with multivariable calculus to follow their arguments. Now, in The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America's Future, Arthur C. Brooks has laid out a compelling, calculus-free case for market-based solutions to the current downturn.
In Brooks' view, America was founded on self-reliance and entrepreneurship. For centuries, those values made this country great. But, Brooks argues, in the 20th century, politicians abandoned those principles to pursue a policy of social engineering and arbitrary government intervention.
The results were disastrous, eventually leading to the housing bubble that helped spark the Great Recession. The Troubled Asset Relief Program, the stimulus bill and the passage of health care reform, he writes, only made things worse. To get the economy going again and to protect against such slumps in the future, Brooks argues, America should create an atmosphere conducive to innovation and growth by, among other things, lowering taxes, rethinking the way welfare is administered and abstaining from dangerous tinkering in markets.
Although its focus on free markets makes The Battle a libertarian manifesto, Brooks does not go to the anti-government extremes to which many of his ideological peers are prone. He envisions a limited but robust role for the federal government, particularly in the fields of public education and foreign policy. Although he opposes the kind of temporary, make-work jobs provided for in the stimulus bill, he believes the government can and should promote private sector job growth through its policies. The book seethes with hope for all America can be.
Brooks' reasoning is generally sound, and the book is extensively footnoted. Some figures are shocking: Brooks calculates that every one of the 640,329 jobs created by the stimulus came with a $429,000 price tag. Others fall flat. Brooks throws around all kinds of polling data to back up his claim that a "30 percent coalition" of liberal elites is imposing its agenda on America. Making up this coalition are the usual suspects: journalists, lawyers and Hollywood entertainers. But Brooks' position as president of the American Enterprise Institute, a public policy think tank, undercuts his claim that academia is infested with liberals. Such conspiracy theories better become Glenn Beck than a leading American intellectual.
In spite of all his research, Brooks does not adequately tackle many of the issues he raises. For instance, he asserts that, contrary to popular wisdom, Franklin Roosevelt and his New Deal coalition actually worsened the Great Depression by creating an atmosphere hostile to growth and recovery. While a number of economic historians have made similar claims, and while Brooks quotes a study by the Brookings Institution and refers to Amity Shlaes' recent book The Forgotten Man in support of his argument, he devotes only three pages to the issue.
If Brooks is right and the massive New Deal legacy of government interference actually harmed the U.S. economy, it would be a powerful argument against the progressive agenda. But without sufficient discussion of the many factors that led to and prolonged the Depression, Brooks manages to strike only a glancing blow.
Capitalism has taken a lot of flak in recent years, much of it earned. But for all its flaws, capitalism has served us well in this country for centuries. While other economic systems around the world have led to repression and, often, abject poverty, our commitment to innovation and free markets has brought us startling economic growth and personal liberty. The Battle may not be a great work of philosophical genius, but it is a timely reminder of the power of freedom.
Nathaniel French is a student at Southern Methodist University.