The Stockman Episode

The point has often been made: If you hear someone in public life say that he is going to stand firmly on principle, you should take cover and warn others to do the same. There is going to be suffering. So it is, at least in economic and social policy and action.

This is not to say that stalwart ideological commitment is without purpose. A commitment to free enterprise or socialism, to liberalism, neoliberalism, conservatism, neoconservatism, or the new right, is eminently serviceable to self-esteem and as a form of self-identification. It also allows a certain freedom from thought: “That is my position and I stand on it.” And it helpfully classifies political expression and behavior, makes it more predictable, and serves to unite people in a highly visible way beneath a common banner. Further, ideology brings a dignified righteousness to social, political, and economic expression and action: “I am, let me assure you, faithful to my cause.”

What is less often recognized is that rigorous ideological commitment is of greatly negative value for governing a country, especially for making economic policy, and is a positive threat to social tranquility and economic well-being. Economic and social institutions are in a constant process of change; ideological commitment, by its nature and strongly avowed virtue, is static. Accordingly, guidance therefrom is likely to be obsolete, obsolescent, or irrelevant. Never is it so comprehensive in guidance as to take account of the greatly diverse circumstances of real life. The United States has survived, at least until now, by the willingness of governments, large and small, to make practical concessions to change and to diversity. A reluctant pragmatism has been our salvation.

Such, for example, was the Keynesian response to the increasing severity of booms and busts—the capitalist crisis culminating in the Great Depression. Such was the welfare response to the cruelty that the classical system once visited on the old, the unemployed, the helpless young, the handicapped, the homeless, and, of course, the minorities, all with resulting alienation and anger. Such was the response in the United States, as it was in all the other industrial countries, to the way the free market in its most nearly perfect competitive form subjects agriculture to intolerable uncertainty and economic trauma. Such was the response to the mistreatment of women and minorities. It has been, to repeat, by an inchoate pragmatism far outside any convenient ideological identification that the country has been held together.

The liberal mind, no doubt, has been more open to pragmatic accommodation than the conservative mind, but by no means exclusively so. Jesse Helms stands staunchly and rhetorically for the free market and for a uniquely rigorous quota and licensing system for the tobacco producers (or landowners) who help to assure his election. Similarly other stalwart southern conservatives with respect to peanuts. In the broader sense, there is the fact that no industrial or financial enterprise, if it is large enough, is any longer allowed to fail. First the speeches on the incomparable virtues of free enterprise, then the plea for this one socially urgent exception. Modern socialism, as I’ve elsewhere urged, becomes visible when the corporate jets descend on Washington.

The foregoing is background—or perhaps confession—for an appraisal of the recently published papers of David Stockman and the public discussion they have provoked.

As a writer, it must be said at the outset, Mr. Stockman has grave problems unrelated to ideology. One of them, insufficiently mentioned by his critics, is literary incoherence in the extreme. His grammar is bad, much given to obscene verb forms: “I just sat back concussed.” And he indulges in frightful invention: “By the first week of February I was an ambulatory bundle of contradictions.” Congressman Jack Kemp “has a seriousness of mind and intellectuality of approach that made him stand out like a lighthouse in a sea of fog.” (Later Mr. Stockman has him “giving goofy lectures about the gold standard.”) Stockman’s larger story also gets lost at intervals in a mass of inconsequential details and numbers. In his opening pages he pays warm tribute to the editors who took his earlier drafts and made them what they are in the book. Mr. Harper and Mr. Row should convene urgently a meeting on the competence and authority of these craftsmen. But perhaps their task was impossible.

Incoherence is a not altogether insignificant matter in a book that is intended to earn millions of dollars. The more serious problem is the commitment to an ideology. This also, in its way, is Mr. Stockman’s best defense. The commitment he strongly affirms; one chapter is entitled “The Odyssey of an Ideologue,” and he tells proudly of his movement from one surrender of thought to another. He seems never to have been able effectively to resist what he read—or even heard. As an undergraduate he fell strongly under the spell of the revolutionary left. Then he tells of being captured at Harvard by some World War II papers he discovered in the library. (I judge these possibly to have been a gift, so to speak, from me.) Then he read some White House documents that had been removed in a precautionary way from government files by his landlord, Daniel Patrick Moynihan. These, too, told him of the wonders of Washington policy making and action. Then came his association with the liberal Republican views of Congressman John Anderson and after that, most disastrously for the country and perhaps also for Mr. Stockman himself, the reading of the works of Friedrich A. von Hayek. (The latter figures in the story in a characteristically unfortunate phrase: Mr. Stockman tells of having wielded “a sword forged in the free market smithy of F.A. Hayek.”)

Along with Hayek and also Milton Friedman came the influence of the supply-side writings of Jude Wanniski and the paper napkin diagram of Arthur Laffer, which showed, roughly speaking, that the lower the federal income tax, the greater the revenue it would produce. Finally, and as Wall Street looms, Mr. Stockman indignantly, even righteously, rejects Wanniski, Laffer, Kemp, et al., goes radically into opposition and condemnation, and becomes an ardent advocate of tax increases to balance the federal budget. In the very last pages of his book he has some tolerant words on social democracy and the welfare state. Mr. Stockman, one feels, should not be allowed to read; he is altogether too available.

For most of his tour of duty at the Office of Management and Budget in Washington Stockman was a man of the market, relentless and uncompromising. This, it seems to me, is his protection against the sharpest criticism that his book has aroused, for the disagreeable way he attacks and even ridicules all his old administration colleagues and friends, high and low, without exception. This he certainly does. The President, in his telling, is an economic and fiscal vacuum. He is strongly in favor of high defense expenditure, acquiescent on other politically powerful budget claims, firm in support of tax reduction, strongly opposed to tax increase, and relentlessly against deficit financing. He resolves great issues with anecdotes from Hollywood and Sacramento. “What do you do when your President ignores all palpable relevant facts and wanders in circles?”

The President’s staff and advisers—Regan, Meese, Deaver—are also economic and social illiterates devoid of character and aroused to concern only by the evening television news. The cabinet officers are equally bad or worse in the protection of their bureaucratic turf and pork. It is not that the President, Donald Regan, and the others are economically and socially acute or even responsible; hardly anyone says that in criticism of Stockman. What they say is simply that no decent person leaves office and asserts such truth as he recounts.

All this, I think, is to misunderstand Mr. Stockman, and, indeed, the larger ideology of the Reagan administration. The market has its own ethic. One sells a marketable product to the highest bidder; this the market ethic holds to be defensible, indeed wholly good. Mr. Stockman knew what was needed to make his book salable. He wrote accordingly and sold. The much-criticized Mr. Deaver sold similarly as a lobbyist. No one can be surprised or rightly complain when the truly committed free-market ideologist puts himself and his friends in the service of his own pecuniary reward. Who wants some extraneous social ethic suddenly intruding here?

One must accord Mr. Stockman a more general, less personal defense on two other matters. He has been attacked for his coldhearted indifference to the effects of his budget reductions on people, specifically the poor, and for seeking the repeal of regulations important for consumers and workers. Another book, The Real David Stockman, first published in 1983 and now modernized and reissued, is both merciless and persuasive in this attack. It tells, as have numerous others, of the increase in the number of families falling below the poverty line; of the extent of hunger documented, for example, by the Physicians’ Task Force on Hunger; of the painful, vicious, and avoidable accidents and diseases to which, with repeal or nonenforcement of regulations, working Americans of less fortunate positions are subject.

No word of sympathy or concern for such citizens intrudes upon Mr. Stockman’s book, as none did on his administration. He regrets and deplores his failure to cut social services, the public regulatory apparatus, and other government activities further; he forgives himself and the administration only where, as in the case of Social Security the farm program, or the Clinch River reactor, the political opposition was simply too great. Where there was no political power with which to contend, he was adamant and frequently successful. Over all, the Reagan revolution failed: federal expenditures increased; so, of course, did the deficit. But where the opposing political power, as in the case of the voiceless poor, was lacking, it succeeded. It is for this partial and selective success that Mr. Stockman is called by liberals to account.

Given his ideological commitments while in office, it is hard to see why his liberal critics should be surprised. The classical system by which, in his successive surrenders, he was captured was never meant or thought to be compassionate. It accorded the greatest good to the greatest number and unashamedly left the lesser number to their fate. In other manifestations it attributed poverty to the unlicensed sexual lust of the poor. Or it accepted that hunger, illness, and death were nature’s way of strengthening and improving the race. People who strongly affirm their faith in the classical market should accept the consequences, however disagreeable or repellent, at least as long as no decisive constituent suffers. Liberals and cautious conservatives can reject the faith. They should not be surprised when a subscriber, even a temporary one, accepts or ignores its punishment and pain.

So much for the welfare state. The fact that it has greatly mellowed the anger and alienation, even revolutionary fervor, of a mere fifty years ago is not a matter of interest to Mr. Stockman. As I have just noted, sheltering capitalism from anger and alienation is, obviously, a conservative exercise. Mr. Stockman abhors—or while in office abhorred—that kind of conservatism. With some rather implausible ambiguity, he also takes the stand for another example of classical or Hayekian and Friedmanite rigor. That has to do with taxation and the rich.

It is agreed that Mr. Reagan came to power and was returned to power with the support of the most affluent part of the American population. Also that politicians ordinarily do something for the people who elect them. The most obvious reward that Mr. Reagan could give his supporters was a really substantial reduction in the upper-income rates of the personal income tax. This also accords with rigorous market theory. The rich (and their descendants) are entitled to their income. This is basic to the system—its very heart.

It is here that Mr. Stockman becomes, as does Mr. Reagan, a trifle ambiguous. Not help to the rich but incentives to work and invest are the thing. The notion that American business executives, the men and women of IBM, General Motors, General Electric, and Citibank, are relaxing in desuetude and idleness because of their tax bracket is unkind—defamatory of the very people who make the system go. So too of the entrepreneurs of Silicon Valley and Route 128 in Massachusetts. They think of themselves as very hard working executives, out at all times to do their best. Their resentment of any suggestion to the contrary is or would be extreme.

Yet Mr. Stockman levies this charge against them because he is unwilling to accept the fundamental truths of both the classical system and good democratic politics. The system that he advocates, to repeat, gives the rich what they earn or anyhow receive; nothing is more central in the views of Professor Hayek and Friedman. And surely the well-to-do citizens who successfully supported Mr. Reagan expected their own very tangible tax reward. But here Mr. Stockman retreats both from reality and from his system. Talking to William Greider of The Washington Post in the spring and summer of 1981 and for later publication in The Atlantic, he did say with admirable candor that what was really sought was tax reduction for the rich and that the supposition that they were idling away their time—in more common parlance, that they needed incentives to work and invest—was really a cover story, a Trojan horse, he said, designed to get tax relief for the affluent inside the political walls.

But in recalling his position in this book he retreats. Reducing taxes in order to do something for the rich he rejects. To suggest this is intolerable. He now asserts the cover story as the correct one—it is truly a way of getting those people back to work. In the early months of the first term of the Reagan administration, Hugh Carey, then governor of New York, came to Washington to protest the budget cuts for the poor, the tax cuts for the rich. The wrong people, he averred, were being hurt and helped. Mr. Reagan turned fiercely on Carey: “To say our tax cut benefits only help the wealthy, well, that’s a deliberate distortion and I’m not going to put up with it.” Now recalling the encounter, Mr. Stockman says, “It was magnificent.” His classical mentors, Professor Hayek and Professor Friedman, will be saddened when they read of this apostasy. What is wrong, they will say, with helping the rich? People are meant to be left with their income—to be free to choose. Mr. Stockman should have intervened in this conversation and told Governor Carey that, according to the economic faith he then espoused, it was wholly right to enrich the rich by tax reduction.

A third book on the Stockman episode, Stockman: The Man, The Myth, The Future by Owen Ullmann, tells much of what Mr. Stockman himself tells about his early life and his years in Washington. But it also takes him on to his new job at Salomon Brothers, a small but agreeable two-million-dollar estate in Connecticut, a company limousine to carry him into Manhattan, and prospective earnings, as they are called, of around a million a year. Some abrasive observers have criticized him for indulging in this largesse. That is their right, but again they should not be surprised. Mr. Stockman is still keeping the faith; doing so, he can hardly be expected to turn against the system when it now turns its income spout on him.

Another, nastier, group of critics, including some of his angry coreligionists, have said that he will keep records and after a few years sell out Salomon. This seems to me to be going too far. Consistency is the hobgoblin of little minds. Mr. Stockman has not been all that consistent. And one wonders, as a practical matter, if there is that much to be learned in a house like Salomon Brothers that, put in a book, would really sell.