chapter  12
11 Pages

The U.S. economy: The disadvantages of having taken the lead

This is institutionalist storytelling that puts social theories and events in their historical context and leads to broader insights into the human condition. Hamilton describes the origin, nature, and result of the social malaise that drove the United States off course in the 1980s. He explains that the loss of the two wars that the United States had started in the 1960s left the majority of Americans with an abiding cynicism toward government. President Lyndon Johnson had declared war on poverty and set a goal of ending the poverty level of living by 1976. With enough resources and with the right changes, the goal could have been met, but the resources were not provided and the changes were not made. The war on poverty was lost. The war in Vietnam was lost as well. The War on Poverty should have taught us that poverty was deeply embedded in the social structure and to eliminate it, we would have to change the social structure that supported it. Instead of learning practical lessons from the war on poverty or from the war in Vietnam, most Americans came to believe that government was largely ineffective. This has led to a return to laissez-faire economics. Now Americans blame all problems on a government that has grown too large and powerful, and place all their faith in a return to the market. Hamilton warned in 1982 that they were wrong. He was right.