11/21/2008 05:12 am ET Updated May 25, 2011

"I Told You So's" Everywhere

If you turned on Charlie Rose last night, you noticed a slice of the establishment discussing the limits of private markets. It is hard to believe your eyes and ears. Since the credit crisis, the establishment is registering their fears of free markets across the American landscape. But where were these people for the last thirty years? And, of course, where was the media?

It was almost impossible to make this case only six months ago on major TV, and almost as rare in the major print media. If you did, they thought you were a quack, and ostracized you. Or rolled you out when they were feeling guilty. Sometimes the print media consigned an occasional space for this forlorn, pitiable and unmanly view of the world, but not very many.

Such acquiescence to the mythological conventional wisdom that government was bad helped prolong the "dark ages" of the last generation, and lead to a moral and economic impoverishment of America -- flat wages, harsh inequalities, and the failures to improve education, pre-K, infrastructure, R&D, the healthcare system, manufacturing, and so on. According to those principles, tax increases always and everywhere undermined prosperity and economic growth; tax cuts were always and everywhere the answer. Big government was at best a necessary evil, diverting proactive money from business to unproductive social programs; therefore, minimize those social programs. Regulations merely made business inefficient with no benefits. Those who aspired to careers in government were by and large parasites.

In fact, there is no serious statistical evidence that either high taxes or big government undermine economic growth over time. To the contrary, big government countries and small government countries have both grown rapidly -- and at times both grown slowly.

The reason, as I outline in a new book, The Case for Big Government, just published by Princeton University Press, is that many government programs are critically necessary to maintain prosperity and stimulate economic growth. And moderately higher taxes don't subvert incentives.

Moreover, I discuss how America never truly had a laissez-faire government -- even from the beginning.

But finally, societies change, and government is the critical agent of that change. When we needed canals, railroads, and highways, government by and large built or financed them. When we needed primary schools, high schools and colleges, government financed them. When we needed sanitation systems and sewage systems, government supplied them. When we needed high tech research, government supported it. Government produced the key vaccines of an early age. When America changed, government built the institutions necessary to make the nation and its economy work.

I can only hope the dark cloud of misinterpretation and ideology has now passed. I suppose I should be happy there are so many "I told you so's" out there. But the hard sled of righting the course is still before us. And when public attitudes change, will these people stand forthrightly for a clear-eyed and pragmatic view of how to run this nation, even to their own minor detriment?