Knowledge And Decisions

Even more of an historic landmark in political development was the Great Depression of the 1930s. Though liberal and conservative scholars alike have traced the origin of the Depression to catastrophic governmental monetary policies,⁷⁴ the popular interpretation and the political consensus both treat the Great Depression as showing the failure of the economic market and the inherent flaws of capitalism, demonstrating an “objective” need for government economic intervention. However disputable this belief, what is not seriously disputable is that the belief itself marked a turning point in the political and economic thinking of an age. It would be hard to explain how post-World War II America, in an age of unprecedented prosperity, widening opportunities, and virtually nonexistent unemployment became preoccupied with government guaranteed security, without realizing that only a decade earlier this generation went through a traumatic economic and social experience. The 1930s left more than a psychic legacy, however. Enduring institutions were created to deal with an episodic crisis. The severity of that crisis need not be underestimated because it was episodic. Millions of American farmers and homeowners found themselves on the verge of losing what they had worked and sacrificed for a lifetime to have, when monetary contractions beyond their control or foresight increased the real burden of their mortgages at a time when their incomes were sharply cut or lost altogether. When mortgage foreclosures were resisted by armed and desperate people, the government’s options were bloodshed or relief measures. However prudent, wise, or humane it may have been to aid destitute farmers, for example, to aid them by establishing enduring institutions meant that, decades later, billions of dollars would still be spent under entirely different conditions — much of it going to agricultural corporations.

Agriculture was, of course, only one of many areas in which permanent institutions were established to cope with an episodic crisis. Labor, aviation, electric power generation, public housing, dairy products, and a host of “fair-traded” items all became subjects of newly created federal agencies. The fiscal policies of the federal government were also permanently altered. Whereas years of government budget surpluses outnumber years of deficits in both the eighteenth and nineteenth centuries, and though the 1920s were a solid decade of surpluses, the 1930s were a solid decade of deficits — setting the stage for the general prevalence of deficits ever since.⁷⁵ The inflationary effects of these deficits can be seen in the doubling of the wholesale price level between 1931 and 1948, whereas it declined between 1831 and 1848, and, in fact, prices were lower at the end of the 19th century than they were at the beginning.⁷⁶ But aside from their economic effects, budget deficits have the political effect of insulating expenditures from immediate taxpayer knowledge.

The New Deal administration of the 1930s also introduced intellectuals into the government on a large scale — enlisting in the process not only those intellectuals actually in office but to a considerable extent also enlisting as natural partisans their fellow-intellectuals in the academy and elsewhere. This too has remained an enduring and expanding feature of political decision-making. The beliefs and fashions of intellectuals entered political decision-making, not under the open and challengeable banner of interest or ideology, but in the insulated guise of “expertise.” In short, it was another force tending toward the insulation of governmental decision making from effective public feedback. The opening of political careers (usually nonelective) to intellectuals also provided intellectuals inside and outside of government with an incentive for favoring the concentration of power. As Tocqueville observed more than a century ago: