We enter 2009 with the Democratic Party resurgent in Washington and the nation facing an ongoing financial crisis and what’s likely to be a deep recession. The Winter issue of City Journal features several significant essays taking the measure of our troubling situation.

In the farseeing “Can the Feds Uncrunch Credit?,” Nicole Gelinas assesses the government’s ambitious efforts to jump-start borrowing and lending—a vital part of our economy’s circulatory system that has all but stopped. Not only has the government embraced, perhaps overenthusiastically, its traditional role of money creator, recognizing that back in the 1930s, garroting the money supply transformed a severe economic downturn into the Great Depression; it has also assumed an unprecedented, and far more problematic, role as the private sector’s direct lender of first and last resort. By allocating credit, the federal government is now picking and choosing the private sector’s winners and losers. Its actions can’t prevent a long downturn, Gelinas believes, but they can delay a revival and make the country less competitive after we’ve finally bounced back. It’s an insight that Alexander Hamilton—“Modern America’s Founding Father,” as Myron Magnet describes him in his remarkable portrait—would understand well.

One of the true public policy achievements of the last two decades has been the 1996 welfare-reform act. However, as Steven Malanga narrates in the informative “Welfare Reform, Phase Two,” time-limiting aid and demanding work in exchange for benefits got so many people off welfare so quickly that many states grew lazy about getting their remaining welfare recipients back into the workforce. The controversial reauthorization of welfare reform in 2005 changed all that, reenergizing reform efforts and beginning a process that could eventually end welfare except for the most extreme cases. Will President Obama and congressional Democrats impede this progress? Obama’s choice to head up the Department of Health and Human Services is former Senate majority leader Tom Daschle, an avowed enemy of the original reform bill—one bad sign, says Malanga. A second is that Democratic congressional leaders Nancy Pelosi and Harry Reid are also longtime foes of reform. A crucial battle looms.

Another important battle on the horizon concerns charitable giving. American philanthropy is a vital force for good, expressing the imaginative genius and countless enthusiasms of its donors, writes Heather Mac Donald in “Never Enough Beauty, Never Enough Truth.” Unfortunately, a phalanx of liberal activists and Democratic pols doesn’t like this spontaneous creativity. It wants foundations to meet “diversity” targets in their giving and on their staffs. And if the charities don’t comply, the advocates threaten, they will push for new laws forcing them to do so. This is the very opposite of true diversity, a kind of liberal authoritarianism that increasingly threatens American civil society. Mac Donald’s essay is a call to arms to protect our rich philanthropic tradition.

There’s been much fervent talk about “green jobs” of late. Indeed, during the 2008 presidential campaign, candidate Barack Obama promised to help create millions of these eco-friendly positions—which, he claimed, would both stimulate the U.S. economy and make energy production greener. The only problem with the green-jobs claim, observes Max Schulz, is that it’s economically preposterous. For the government to promote green employment amounts to subsidizing unproductive energy industries at the expense of efficient ones, with harmful effects on economic competitiveness. There may be reasons to support green technologies, Schulz says, but economic vitality isn’t one of them.

Economist Edward L. Glaeser does some environmental myth-smashing of his own in “Green Cities, Brown Suburbs.” If we really want a greener planet, he points out, we should cheer on construction in places with undersized carbon footprints, like temperate California cities—often the very places where environmental regulations have made building the most difficult. Glaeser’s kind of commonsense reasoning is something we’ll need a lot more of as the Obama years get under way.

—Brian C. Anderson


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