No, not the Grand Bargain that President Obama and Speaker Boehner negotiated last month. No, Alexander Keyssar is describing the grand bargain that saved American capitalism from fierce attacks between 1890 and 1940. In return for maintaining a capitalist system, progressives implemented three prongs: regulation, antitrust, and social insurance, that reduced inequality and ensured a social safety net. But all three prongs have been under attack since 1980 and the results are the crisis we are now in.
The regulation of business is decried now, as it was in 1880, as unwarranted interference in the workings of the market: Regulatory laws (including antitrust laws) are weakly enforced or vitiated through administrative rule-making; regulatory agencies are starved through budget cuts; Glass-Steagall was repealed, with consequences that are all too well known; and the financial institutions that spawned today's economic crisis -- by acting in the reckless manner predicted by early-20th-century reformers -- are fighting further regulation tooth and nail. Private-sector employers' fierce attacks on unions since the 1970s contributed significantly to the sharp decline in the number of unionized workers, and many state governments are seeking to delegitimize and weaken public-sector unions. Meanwhile, the social safety net has frayed: Unemployment benefits are meager in many states and are not being extended to match the length of the downturn; Republicans are taking aim at Medicaid, Medicare, Social Security and Obamacare. The real value of the minimum wage is lower than it was in the 1970s.
These changes have happened piecemeal. But viewed collectively, it's difficult not to see a determined campaign to dismantle a broad societal bargain that served much of the nation well for decades. To a historian, the agenda of today's conservatives looks like a bizarre effort to return to the Gilded Age (represented by titans like J.P Morgan, pictured), an era with little regulation of business, no social insurance and no legal protections for workers. This agenda, moreover, calls for the destruction or weakening of institutions without acknowledging (or perhaps understanding) why they came into being.