The brinksmanship in Washington over the federal debt ceiling caused me to think about our current difficulties. By and large liberals see in the present crisis images of dolorous unemployment lines and want more government spending; conservatives see a bankrupt banana republic and want cuts in spending. Whose vision is clearest?

The liberals have history on their side. The 1930s gave us pictures of men waiting at factory gates, groups idling on street corners, and tent cities of transients despairing of ever finding work. Unemployment—and with unemployment the threat of destitution, abject poverty, and angry rebellion—emerged as the dark, threatening motif of the era.

Those unemployed men could easily be given a hammer or sickle, as the upsurge in socialist and communist ideology in the 1930s demonstrated. Or they could put on the brown shirt of a fascist. Unemployed men in working class neighborhoods were the dry tinder of revolution.

As James Kurth points out in a lucid and insightful comparison of economic crises over the last hundred or so years (A Tale of Four Crises: The Politics of Great Depressions and Recessions, Orbis, Summer 2011), to a large extent the New Deal policies of the 1930s, whatever their economic value, were directly keyed to the social and political threats of unemployment. They amounted to a substantial revision of the social contract in America, interposing the federal government into the give-and-take of private economic relations, both as the (supposedly) disinterested coordinator (regulator) of competing interests, and as the reliable spender of last resort.

For the most part liberals today want to deal with the economic crisis by doubling down on government. It’s an entirely understandable political judgment. Work is fundamental to human dignity, as well as economic growth. And for most of us work is the source of our incomes, and thus our financial wellbeing, which is no small thing. So why not more spending to stimulate the economy?

But many of the political and cultural victories of liberalism have made employment less politically, socially, and culturally important than it was in the early decades of the twentieth century. As a result, today’s crisis isn’t the same as earlier ones.

Most importantly, unemployment is no longer a synonym for destitution. Unemployment insurance softens the blow. Welfare programs put a floor on how far one can fall. The entrance of women into the workforce over the last half-century means that many households now no longer depend on a single income. Unemployment is a terrible blow, but it’s not nearly as likely to be financially fatal as it was in 1932.

Then there are more subtle changes. In the earlier decades of the century, industrialization was highly focused: steel in Pittsburgh, textiles in New England, cars in Detroit. Moreover, plants employed great numbers of workers who lived in concentrated neighborhoods near their workplaces. Ethnic ties, ward bosses, and union organizers could transform despair into political anger.

Today, unemployment is often suburban and dispersed, largely lacking in the conditions for becoming an organized political force. Neighborhoods are not organized around workplaces anymore, and strong traditions of union membership and white collar presumptions of life-time tenure at a single employer have given way to a much more fluid approach to the way we earn our livings. In America today, animal rights activists and anti-globalization groups are far more likely to take to the streets than unemployed workers.

Unemployment remains a personal tragedy and a crippling economic experience. It is something families suffer, often acutely, but it has not yet threatened to reshape public life as it did in the 1930s. That may change if the crisis deepens, but I think not, again, precisely because of the successes of liberalism. The modern welfare state functions as a collective savings bank or insurance policy. If we add the indirect subsidies of the welfare state such as tax-favored retirement savings and home ownership, then a very comprehensive system comes into view, one that embeds the traumas of unemployment in the larger, collective system.

As a result, it’s the bankruptcy of the larger system—one in which government plays a central role—that now threatens us. Liberalism put the financial muscle of government at the center of economic life. This implicates government in the crisis we are now experiencing, as anxiety in financial markets about problems in Greece, Portugal, Spain, Italy, and other potentially insolvent governments suggests.

This crisis of sovereign debt has only been contained by the supremely credit-worthy reputations of the United States and German governments. Not surprisingly, therefore, it was this reputation—put simply the capacity of the United States to sustain its current trajectory of taxing, borrowing, and spending—that is now being heatedly debated. And in this debate American liberals fail to see that 2011 is not 1932. We can’t expand the already expanded state to deal with a crisis in which the financial role of the state itself—it’s capacity to tax, borrow, and spend in a way that promotes economic growth—is at the center.

The 1930s saw a crisis of capitalism, one that called for rescue by government. Are we now experiencing a crisis of government? It’s overreach? It’s profligacy?

I’m no libertarian. St. Paul was clear that government is ordained by God, and St. Thomas helps us see that a robust public sphere protects us from the consequences of our sinfulness, as well as helping us achieve the goods only possible in community. However, as Yuval Levin recently argued in National Affairs, at this juncture of history, if we care about preserving the goods of government, then we need to recognize the limits of government—and we need to gather the political will to impose those limits.

After he was invited to speak at Catholic University last spring, Catholic academics wrote a letter denouncing John Boehner’s efforts to reign in government spending. Perhaps Boehner’s ideas about tax policies are mistaken. Perhaps his spending priorities are misguided. Perhaps everything about the Republican Party’s economic analysis misses the mark. Prudent, reasonable people can disagree. But the Catholic academics who signed the letter failed to recognize that an insolvent government, however large and well meaning, can do very little good for it’s citizens. Today that’s not an insignificant danger.

R.R. Reno is Editor of First Things. He is the general editor of the Brazos Theological Commentary on the Bible and author of the volume on Genesis. His previous “On the Square” articles can be found here.

RESOURCES

James Kurth, A Tale of Four Crises

Yuval Levin, Beyond the Welfare State