The Magazine


Aug 18, 1997, Vol. 2, No. 48 • By DAVID FRUM
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"It's a good thing Americans have a holiday formally set aside for Thanksgiving. It means there is at least one day a year on which complaining is prohibited. Not that complaining is an altogether bad thing -- America's endless dissatisfaction is an important spur to progress -- but it is often a very misleading thing. Especially in politics, where Americans are prone to complain about the problems of poverty, when the country's most troubling problems may be based on its inability to cope well with abundance.

If one were to read through the past 15 years of popular analysis of the American economy, one would be horrified by the endless prophecies of disaster. Remember "deindustrialization"? "Hollowing out"? "Sunrise industries" and "Atari Democrats"? Remember the savage attacks on paper entrepreneurialism and the so-called coastal economy? And all the while, serenely ignoring the best advice of experts like Felix Rohatyn and Lester Thurow, Robert Reich and Chalmers Johnson, the American economy went chugging magnificently along.

This month is the fifteenth anniversary of the onset of one of the great booms of American history. August 1982, the month that Mexico defaulted on the debts run up by President Lopez Portillo, was the nadir of the 1980-83 slump. For a second it looked as if Mexico (and Brazil, which had sunk into nearly equally desperate trouble) would drag the international banking system down with it. But Federal Reserve Board chairman Paul Volcker arranged an elegant bailout, Ronald Reagan signed it, and since then --with a brief pause in 1991 to digest the savings and loan debacle -- the American economy has never looked back.

In 1982, Americans produced $ 3.2 trillion worth of goods and services. This year, they will produce nearly $ 8 trillion worth. Those figures aren't adjusted for inflation, but then, there has hardly been any inflation to adjust for. The rate of growth of the American economy has hardly been electrifying -- it's averaged a little better than 2.5 percent a year since 1982 -- but it hasn't needed to be electrifying. When you start with a big enough pile of cash and keep on adding a little bit to it every year for a long enough period of time, you end up with an absolute mountain of cash.

Many people, even now, find it hard to believe in the prosperity of the United States. The left-wing press sank so deeply into the habit of denigration during the Reagan years that it ended by getting stuck. There's a fascinating passage in Dick Morris's book in which he recalls urging President Clinton's White House staff to stop poor-mouthing the economy. He showed them a poll that divided the public between those who thought the economy was in good shape and those who thought it was in bad shape. Whom do you think the optimists are backing in 19967 he asked. Dole, they all replied. Wrong, said Morris; they're backing the incumbent. It's a good story, because it suggests that, no matter what they say in public, the Clinton people deep down suspect that this is still Ronald Reagan's economy: They want to believe the worst of it. It's a good story too because it sheds light on an interesting curiosity of American journalism: Morris's speech to the White House staff coincides almost exactly with the sudden collapse of interest at the New York Times in gloom-and-doom stories about " downsizing."

As for conservatives, so many of us have become so transfixed by the -- quite genuine and horrifying -- problems of American society that we have become almost inured to the good news about the American economy. Besides, for those on record as having predicted that Clinton's 1993 tax increase would plunge the country into endless economic night, the whole topic of prosperity is an awkward embarrassment, best avoided.

But this is evasive. It's time to look America's good fortune squarely in the face, rather than engaging in partisan squabbles over exactly who deserves credit for it. And since it's August, the traditional season for journalistic thumb-sucking, maybe the best way to think about this prosperity is by indulging in a great bout of wholly speculative theorizing about the future.

Here's the question: What if it doesn't stop? What if the American economy continues to grow at its stately 1982-97 pace for another 15 years? That would imply that by August 2012, the United States will be producing $ 21 trillion worth of goods and services annually. What difference will it make?