The Age of Entitlement: America Since the Sixties

by Christopher Caldwell

What was playing out, as arguments shifted from race to sex, was an old problem, one of the oldest. Human beings, as individuals, require flexible institutions for the sake of their sexual fulfillment. Human beings, as a society, require uniform and even somewhat rigid institutions for the sake of order and self-perpetuation.

Once social issues could be cast as battles over civil rights, Republicans would lose 100 percent of the time. The agenda of “diversity” advanced when its proponents won elections and when they lost them. Voters had not yet figured that out. As soon as they did, the old style of democratic politics would be dead.

“Political correctness” was a name for the cultural effect of the basic enforcement powers of civil rights law. Those powers were surprisingly extensive, unexpectedly versatile, able to get beneath the integument of institutions that conservatives felt they had to defer to. Reagan had won conservatives over to the idea that “business” was the innocent opposite of overweening “government.” So what were conservatives supposed to do now that businesses were the hammer of civil rights enforcement, in the forefront of advancing both affirmative action and political correctness?

At a time when political conservatism was alleged to be triumphant, politics came under the dominance of progressive movements that had been marginal the day before yesterday: questioning the Western literary canon, arguing that gays ought to be able to marry and adopt, suggesting that people could be citizens of more than one country, and so on. These disparate preoccupations did not spring up simultaneously by coincidence. They were old minoritarian impulses that could now, through the authority of civil rights law, override every barrier that democracy might seek to erect against them.

Consider “bilingual education,” which, though never written into law, had been mandated by the Supreme Court in Lau v. Nichols (1974) and sketched out in various federal Office for Civil Rights guidelines between 1970 and 1975. By the 1980s, bilingual ed was so widely despised in public opinion polls, had been so often discredited in academic studies, and had led politicians into so many embarrassed apologies and backpedalings that most Americans were under the impression it had been abolished. It had not. Almost all of the programs set up in the 1970s survived intact into the twenty-first century, as New York mayor Michael Bloomberg discovered in 2004 when he tried and failed to end the bilingual ed program there.

Only with the entrenchment of political correctness did it become clear what Americans had done in 1964: They had inadvertently voted themselves a second constitution without explicitly repealing the one they had. Each constitution contained guarantees of rights that could be invoked against the other—but in any conflict it was the new, unofficial constitution, nurtured by elites in all walks of life, that tended to prevail.

As long as Americans were frightened of speaking against civil rights legislation or, later, of being assailed as racists, sexists, homophobes, or xenophobes, their political representatives could resist nothing that presented itself in the name of “civil rights.” This meant that conflict, when it eventually came, would be constitutional conflict, with all the gravity that the adjective “constitutional” implies.

Certain things would no longer be made in America at all. The country would therefore become an economic part rather than an economic whole, rendering nonsensical, at least for a while, all kinds of inherited cultural and political beliefs about sovereignty, national independence, and social cohesion. In this sense the New Economy was like the new constitution. Over the fifty years leading up to the election of 2016, those who found ways to use the newly unleashed powers flourished. Those who continued to believe they could trust in old traditions, or vote their way to the country they wanted, lost ground.

Sneaking a manufacturing operation out the door one stage of production at a time aroused less disruption, suspicion, and controversy than moving it lock, stock, and barrel. Avoiding controversy was of the essence. The voting public’s permission was required to emancipate American capital owners from the American workforce. It was granted in principle in the battle over the North American Free Trade Agreement (NAFTA) in 1993.

This position became a model, rhetorically, at least, for revivifying moribund social-democratic parties everywhere. Imitators of Clinton were elected in all the major industrial countries of the West: Wim Kok in the Netherlands in 1994, Tony Blair in the United Kingdom and Lionel Jospin in France in 1997, Gerhard Schröder in Germany in 1998. But there was a problem: It was never clear how these left-behind workers were supposed to be protected, especially since globalization was accompanied everywhere by a hollowing out of welfare programs and an atrophy of trade unionism. Helping the less well off no longer meant helping them find jobs. It meant helping them borrow money.

Bill Clinton deregulated private-sector borrowing, creating an even more illusory picture of prosperity. George W. Bush and Barack Obama incurred debts that no politician in Reagan’s time had dreamed of. Those debts would be paid by a third party: the children and grandchildren of the Baby Boomers. By the time of the presidential election in November 2016, the national debt stood at just under $20 trillion and the government’s unfunded liabilities were at least five times that.

On November 12, 1999, Clinton signed legislation repealing Glass-Steagall. “The era of big government is over,” he had said in his 1996 State of the Union address. But that was not true. What was over was the way big government had heretofore been financed. The United States transformed itself from a welfare state that operated through taxes and transfer payments to one that operated through regulations and credit markets.

Let us look at these GSEs. The Federal National Mortgage Association (Fannie Mae) was launched as a government bureau with the New Deal of the 1930s. It became a company in 1968, when Lyndon Johnson, desperate to bring his war budget closer to balance, privatized it. Most investors understood that privatization as a fiction, meant only to take the government’s housing debts off-balance-sheet, but its consequences were real enough. The office now became a corruption-sowing hybrid. It was public in the sense that it carried an implicit guarantee of government support—which the government bailout it received in September 2008 would make perfectly explicit. But it was private in the sense that its government-connected executives earned salaries that, by the turn of the century, ran into the tens of millions. In 1968, Congress also calved off part of Fannie Mae to form the Government National Mortgage Association (Ginnie Mae). Two years later it established the Federal Home Loan Mortgage Corporation (Freddie Mac), in order to give the other GSEs “competition.”

Bill Clinton, elected in 1992, made this mission his own. Starting in the summer of 1994, he crusaded against the dearth of private housing credit in poor, black, urban neighborhoods. He used the term “redlining,” which described the practice, illegal for decades and subjected to intense federal scrutiny since the Fair Housing Act of 1968, of systematically denying credit to black neighborhoods. The word would have meant little to Clinton’s white supporters, but it was part of the basic vocabulary of the civil rights movement. It imparted to blacks the incendiary accusation that the lower rates of mortgage lending to black people were due not to their poverty but to a conspiracy of racist bankers.

There was no evidence of redlining. Clinton’s allegation rested on a study from the Boston office of the Federal Reserve, the shortcomings of which were laid out almost immediately on the front page of the New York Times business section. Once the effects of poverty were adequately modeled and two outlying banks put aside, there was no discrimination to be found. There was inequality, certainly, but inequality was not the same thing as discrimination.

Sometime between the passage of Lyndon Johnson’s civil rights laws and the long Bush-Clinton march through the country’s financial institutions, the victims’ perspective had won. Now any inequality was an injustice, and one did not need a clear account of what had caused it to demand redress from the system.

By the time Clinton left office, the Department of Housing and Urban Development (HUD) required that low-income loans make up 50 percent of the GSEs’ portfolio. Republicans never objected. As long as the “payment” was in the form of a risk distributed across society, with no dollar sign in front of it, then it must be free.

George W. Bush’s administration in the new century raised the GSEs’ quota for low-income loans to 56 percent. That brought an astonishing deterioration in the quality of housing assets. By 2007, high-risk mortgages (as distinct from low-income ones) made up 22 percent of the

“Easy credit has large, positive, immediate, and widely distributed benefits, whereas the costs all lie in the future. It has a payoff structure that is precisely the one desired by politicians, which is why so many countries have succumbed to its lure.”

The “off-balance-sheet liabilities” of the finance crisis were largely those of the civil rights revolution.

Without extra money, the country could no longer afford to pay for both a pre– and a post–Great Society social order. When we speak of “polarization” today, what we mean is the conflict between those two social orders, newly reactivated under conditions of curtailed resources. Anti-racism, women’s rights, sexual liberation, world hegemony, government through technology—none of these was free. All would have to be paid for, which meant that they would be fought over. Some people, the public rightly began to suspect, would have to surrender what they considered their rights and submit to a political order designed for others’ benefit. A long-running and deceptively natural-seeming period of “both . . . and” was being replaced by the more usual human condition of “either . . . or.” That is the drama that would enter its final stage with the presidential election of 2016.

McCain’s strength was his heroism as a Navy pilot and prisoner of war in Vietnam. Obama’s was his opposition to the losing war that George W. Bush had chosen to fight in Iraq. Almost all nationally prominent Democrats had bet that backing the war would seem the more patriotic option. Now that Bush had added the near-destruction of the world economy to his trophy case alongside his two lost wars, any Republican nominee would probably have been sunk. Since Democrats were still the party of bureaucratic expertise and bold government action, Obama was well positioned to address the finance crisis. But because his political career had been built at the intersection of billionaire finance and community-based race activism, the very place where the crisis had occurred, he was also well positioned to symbolize it.

At the level of constitutional abstraction, it had always been true that civil rights laws created two classes of citizens. Now it seemed to be true as a matter of lived experience. Every tool of civil rights rhetoric had been used by the White House not to challenge privilege but to protect it.

Obama’s presidency extinguished an important illusion on which the consensus for civil rights laws had rested: the illusion that its more intrusive tools would be temporary. There would be no need for affirmative action, Americans trusted, once we were all standing on Martin Luther King’s mountaintop. In the then most recent Supreme Court examination of affirmative action, Grutter v. Bollinger (2003), the University of Michigan Law School had assured the court that it “would like nothing better than to find a race-neutral admissions formula” and would get rid of affirmative action as soon as it did. That assurance was taken seriously. Justice Sandra Day O’Connor wrote in her opinion: “We expect that twenty-five years from now the use of racial preferences will no longer be necessary to further the interest approved today.”

That was an implicit promise of Obama’s candidacy. At the 2004 Democratic National Convention, he had said, “There’s not a black America and white America and Latino America and Asian America; there’s the United States of America.” It was a shock, then, when Obama governed in such a race-conscious way. Apparently there was much, much more still to be done, for almost all of Obama’s policy making was tied up in race and identity.

If the more intrusive tools of civil rights were not a temporary set of measures, as Justice O’Connor assumed, but a permanent regime, then everything appeared in a different light. Then working-class white people were not engaged in any heroic enterprise of welcoming their black neighbors. They were being ousted, rather, on someone else’s say-so, from their niche in American life. They were not saints but suckers. Although Obama was the opposite of an incendiary politician, this interpretation of things, as it sank in, had an alarming effect on the public, especially when it was coupled with similar impressions they were forming about the economy.

The information-gathering capacities of the new internet firms brought them into both collusion and competition with government. Google claimed to predict the onset of flu season better than the Centers for Disease Control. SWIFT, the Brussels-based financial telecommunications company, could generate precise measures of total economic activity in a society by using the data from the bank transfers it handled. When pundits sought new ways to harass Russia, they often suggested denying its banks access to SWIFT’s services. Google and SWIFT were private companies—yet their regulatory and public information roles made them look like governments in embryo.

No sooner had big government been “discredited” than the computer revolution tipped the balance of power back in its favor, much as the introduction of artillery in the fifteenth century, by permitting the reduction of upstart noblemen’s castles, had restored certain lost prerogatives of kings. With the help of technology, Reaganite capitalism undid the democratic achievements of Reaganite politics. The problem was not the expansion of government until it crowded out the private sector—it was the expansion of the private sector until it became a kind of government.

Internet bosses often sought to absolve themselves of responsibility for this inequity by presenting it as a free-market transaction. But that was not true. The internet was no longer something one could take or leave. The problem was not that a new public square had been created but that the old public square had been destroyed. The bookstore where you could go if you didn’t like shopping at Amazon was no longer there. The social gatherings for high school girls bored with Facebook, or for high school boys who didn’t feel like strapping on headphones and shooting people in virtual reality games, no longer happened.

Citizens had a “choice” whether or not to join the new networks cropping up, but it was actually a choice only for people middle-aged and older, who already had an economic or social status earned offline. For the youngest generation—those born in the last two decades of the twentieth century—opting out of the web meant opting out of society altogether. They were called “digital natives,” but native-born status appeared not to offer the perquisites that it had in the old analog world of national citizenships.

It is worth again recalling Alan David Freeman’s distinction between the “perpetrator” perspective on civil rights (which seeks only to eliminate bias, and will leave things alone when bias cannot be proved) and the “victim” perspective (which assumes bias, and seeks to eliminate the inequality associated with it). The perpetrator way is punctilious and slow-moving; the victim way dramatic and disruptive. For half a century the victim perspective had been imposed by courts, backed with the threat of criminal and civil penalties. Eventually people lost the ability to tell the difference between inequality and racial discrimination. In almost all of the media coverage of the COMPAS controversy, the two terms were used as synonyms. Indeed, it was evidence of bad faith to assert that an inequality might ever result from something other than discrimination.

Americans were remarkably un-cynical about the wealth of the wealthy, even after the financial crash of 2008. In 2010 the investor Warren Buffett won praise for backing President Obama’s suggestion of a 30 percent minimum income tax for those making over a million dollars a year, a guideline that Obama tried to endear to the American public by attaching Buffett’s name to it. Buffett admitted he paid a rate of only 17.4 percent (about $6 million) on his income of $40 million a year. It took the supply-side economist Arthur Laffer to point out—correctly—that in 2010 Buffett’s net worth had actually risen not by $40 million but by $10 billion, a figure that was 250 times as large as the one Buffett cited. And, because it was in the form of unrealized capital gains, it was almost completely sheltered from income tax. Buffett’s effective tax rate was not 17.4 percent but 6 one-hundredths of 1 percent. He was proposing to raise it to 12 one-hundredths of 1 percent. The so-called Buffett rule was a means not of tapping Buffett’s wealth but of sheltering it.

Over time, the law evolved so that “charitable gifts” were understood to include not just buying soup for the homeless but also “educating” the public about such contentious political issues as abortion, education, health policy, or gun control. Philanthropy, the Princeton historian Olivier Zunz wrote, is “a capitalist venture in social betterment, not an act of kindness as understood in Christianity.”

The danger that such incentives would draw the rich into a political role incompatible with democracy had long been understood. The Massachusetts chief justice Horace Gray addressed it squarely in the middle of the nineteenth century in Jackson v. Phillips, arguing that trusts aimed at changing laws are something other than charities. Gray held that a charity could fight slavery—“a bondage which [Massachusetts] law regards as contrary to natural right, humanity, justice, and sound policy.” But fighting for female suffrage involved changing the constitution. Those who did so were therefore not engaged in charity and not “entitled to peculiar favor, protection, and perpetuation from the ministers of those laws which they are designed to modify or subvert.”

The Kennedy and Johnson administrations invited philanthropists back. The Ford Foundation, established to allow the family members of Henry Ford to keep control of their automobile company in the face of the inheritance tax that went into effect in 1936, became a pillar of the civil rights movement. Its officers did community organizing and set up the inner-city community action agencies that were command centers of the War on Poverty. “In effect,” wrote the political scientist and later senator Daniel Patrick Moynihan, “the Public Affairs Program of the Ford Foundation invented a new level of American government.”

What Harry Hopkins had seen as the biggest danger of philanthropy, the domination of democratic institutions by energetic and moneyed elites, Miller now saw as its promise. Despairing of the country’s “two-party tyranny,” he even called, midway through the Obama administration, for a “patriotic billionaire” to make a run for president as a way of shaking things up.

In the vocabulary of the nonprofit sector, the word “governance,” with its overtones of flexible technocratic planning, had replaced “government,” with its overtones of slow-moving institutional accountability. By 2008, “governance” was being used 30 times as often as it had been half a century before. Governance was more lucrative than government, and offered an army’s worth of leadership roles for meritocratic stars. Diversity mandates, set-aside requirements, and affirmative action criteria—they saddled corporate executives, nonprofit administrators, and university deans with big responsibilities. But they also assigned them a governing role that was much more a perquisite than a hindrance.

But both kinds of minority, elite ones and marginalized ones, live under threat from democratic majorities, and benefit in the same way from laws passed to constrain majority power. Public political discussion has been slow to draw a connection between the “good” stymieing of democratic majorities by the civil rights legislation of the 1960s and the “bad” stymieing that followed in its wake.

Whether or not Barack Obama was well disposed to oligarchy, he was operating in a society in which rich people had more and more sway over government and politicking. He used and emulated the power of philanthropy. His education reform Race to the Top did not straightforwardly fund state education departments. It made available billions of dollars in federally budgeted prize money to reward the states that were quickest to adopt the “Common Core,” a curricular philosophy that Bill Gates had used his foundation and its $40 billion endowment to push.

2011, with money from his own foundation and George Soros’s Open Society Foundations, Bloomberg launched a Young Men’s Initiative aimed at mentoring and advancing black and Latino men. Was this a sop that a shrewd urban politician was lobbing at an important voting bloc? Or was it the personal initiative of a nice guy who just happened to be mayor and that only a churl would cast a suspicious eye at? President Obama sought to scale Bloomberg’s program for non-white boys up to national level, renaming it “My Brother’s Keeper.” Friendly banks subject to government regulation (such as American Express) and foundations linked to military contractors (such as the Northrop Grumman Foundation) funded the program for the last two Obama years.

The administration used its ingenuity to fund programs without recourse to congressional appropriations. Between 2012 and 2014, U.S. financial enforcement agencies collected $139 billion in fines from the banks they regulated—an amount larger than the entire federal budget in the early years of the Vietnam War. That fines could serve as a form of taxation was a principle familiar to anyone who had ever driven through a small-town police speed trap, and in 1998 a consortium of state attorneys general had, through the courts, confiscated as damages a quarter-trillion dollars of tobacco companies’ assets in the so-called Master Settlement Agreement.

President Obama’s policies were sometimes popular, sometimes not—but he often spoke as if the normal give-and-take of society’s democratic institutions were an obstacle to governing rightly. He mused aloud about bypassing Congress on controversial matters, especially guns, and then did so. He ruled by executive order, delaying by fiat the implementation of his signature Affordable Care Act. The Consumer Financial Protection Bureau that he established in 2010 drew its funding from the semi-independent Federal Reserve, not from Congress. Obama appointed the CFPB’s first director, Richard Cordray, through a recess appointment, bypassing Congress in that way, too. He sought to regularize the status of millions of illegal immigrants using his war-making authority, a move for which his defenders claimed the Emancipation Proclamation as a precedent.

But Sunstein was leaving out the first and most important step. What is good for people, at least for free people, depends on their priorities. The question becomes empirical only once a priority has been set. The important political matter is who gets to set it. Thaler and Sunstein were disguising the arrogant project of setting priorities as a modest and commonsensical project of measuring outcomes.

If there’s no Homo economicus, there’s no Homo democraticus. In a lot of languages the word for “vote” is the same as the word for “voice” (ΓΌЛΌС, Stimme, voix). Democracy is the system in which the voice of the people is sovereign and beyond appeal. Nudge puts conditions on that sovereignty. In this sense its principles are those of civil rights law, in which the voice of the people is sovereign, once it has been cleared of the suspicion of bias. If people are blocked by bias from understanding the “true” nature of human relations, authorities have the license, even the obligation, to overrule them. Civil rights thus does not temper popular sovereignty, it replaces it. What we call political correctness is the natural outcome of civil rights, which makes fighting bias a condition for the legitimacy of the state. Once bias is held to be part of the “unconscious,” of human nature, there are no areas of human life in which the state’s vigilance is not called for.

regulation. Gay rights was advancing pari passu with the radical feminist cause of delegitimizing such institutions and the traditional idea of masculinity that they served. In some lights, the two causes, feminism and gay rights, had come to seem one.

Gays sought sanctuary not just in buildings but in institutions. It was a long time before it occurred to anyone that marriage might be one of them. In 1973, when the Homosexual Rights Committee of the Southern California Branch of the American Civil Liberties Union (ACLU) made a list of six long-term priorities, marriage was not on it. In 1983, gay leaders had an opportunity to grill Democratic presidential candidates Walter Mondale and John Glenn about issues they cared about.

They didn’t mention marriage. In 1991, when the National Gay and Lesbian Task Force asked its membership to rank civil rights issues in order of importance, marriage did not even make an appearance. As Paula Ettelbrick, the legal director of Lambda Legal, put it in 1989, “Being queer isn’t setting up house and seeking state approval for doing so.”

Judge Margaret Marshall of the Massachusetts Supreme Judicial Court announced that there was no rational basis for denying gay people the fruits of marriage. There was sleight of hand involved: Marshall reasoned from, not to, a redefinition of marriage, taking it not as a foundation of society anterior to and recognized by government but as a welfare institution established by government, like a dog park or a VA hospital, which carried a “cornucopia of substantial benefits.” The more important anthropological question of what marriage was could thus be replaced by a different question, that of equal access to state favors, claimed less on gays’ individual behalf than on behalf of the families they had formed.

That approach reversed the burden of proof on all marriage questions that came before courts. Barely a decade later, as a landmark gay marriage case approached the Supreme Court in 2015, the activist and law professor David Cole could speak of “discrimination on the basis of sexual orientation, such as the same-sex marriage bans at issue in Obergefell.” Bans? It was one thing to say that an antiquated definition of marriage needed to change with the times, quite another to say that an intent to harm gays (for in order to have a “ban,” there must be an intent) was one of the reasons marriage had arisen in the first place.

After Goodridge, it was clear that gay marriage did carry a threat, because, as we have said, it overturned the understanding that marriage was something antecedent to government. On that antecedence rested the inviolability of marriages and families, the convention that what they did, how they built their little micro-community of love, was none of the government’s business.