RECESSION, Recovery, the market, profit taking, Dow Jones and NASDAQ averages, GDP, joblessness, factory orders, the Consumer Confidence Index. The phrases tumble out of television, radio, and newspaper reports like a waterfall. Many viewers, readers, and listeners often feel they are drowning in business jargon. What do these terms mean, and what does their movement signify for the economy, for our jobs, for our income? Most of us can make only vague sense of these abstractions, yet they are the fare of everyday news. Is the information conveyed by highly charged economic terms meant to shape our perceptions or to...

WE AMERICANS ARE NOT KNOWN for our long memories. Two generations after the beginning of the ten-year Great Depression, we seemed to have forgotten its crucial lesson: Unfettered free markets for speculative investment are a formula for mass unemployment, human misery, and even starvation. The Reagan Revolution that exuded the optimism of the late 1920s also brought a message of disdain for the idea of public goods, including Social Security, federal aid to education and health, and the public Medicare program. It was—in the words of the Michael Douglas character in what was perhaps the iconic film of the...

NO ACCOUNT of the development of twentieth-century U.S. economic, political, and cultural development can ignore the significance of the eight years of the Reagan presidency. Recall that Ronald Reagan’s predecessor, Jimmy Carter, had failed in his attempt to lead his fellow Americans in a moment of national self-reflection, when, in the wake of the onset of a global economic and political crisis, the fate of the nation had not been as uncertain since the Depression. Reagan strode into his second term of office on the heels of the unresolved Iran hostage crisis. His administration rapidly negotiated the hostages’ freedom and...

IF THE CLINTON years were marked by fiscal austerity, W’s administration may prove to be the most profligate in modern history. In his first term, Bush led the United States into two wars, which became the rationale for a sharp increase in military spending. The president also revived Reagan’s discredited defense-shield proposal (popularly known as Star Wars) and declared that in the future, America would spend billions to send a spacecraft to Mars. Then, on the eve of his reelection campaign, Bush sent to Congress a $400 billion Medicare-reform bill that would a provide prescription-drug benefit to retirees, largely by...

IN THE FACE of polls showing that voters ranked the economy as the number-one issue in the presidential election campaign, in April 2004 John Kerry issued a report that charged the Bush administration with plunging the federal government into more than $6.5 trillion in debt. The lion’s share of new spending, according to the report, was on “entitlements” such as the Medicare prescription-drug program. According to the report, entitlements would cost $4.9 trillion. On April 6, Kerry said that if elected he would make the “hard choices” of cutting social programs, if necessary, to redress the budget imbalance. But he...

IN 1936, as the world was enveloped by the Great Depression, John Maynard Keynes published his magisterial treatiseThe General Theory of Employment, Interest, and Money. Keynes noted that the normal operation of modern capitalism could stabilize profits at an acceptable rate of return for a given quantity of capital investment but could not produce full employment. Though Keynes was an economist trained in the classical liberal tradition, he was nevertheless compelled to conclude that government intervention to create public jobs was required to achieve an economy that approximated full employment. This proposition is especially valid in an age when...