Our grandchildren won’t believe our stories about the 1990s. Yes, there really was a time before the World Wide Web and ubiquitous portable communication devices in sub-Saharan Africa. Yes, you really could travel to some foreign countries without a passport, without a return ticket, without a credit card, and without entering multiple government databases. Yes, the Pittsburgh Pirates really did once play winning baseball.

But as the Bush-Obama era of bailout economics and Keynesian rehabilitation settles into something like cruising speed, perhaps the most fantastic fact to swallow will be that once upon a time the United States had a president who restrained government spending, balanced the budget, argued forcefully for the benefits of free trade, and declared that “the era of big government is over.” And he was a Democrat.

I come here not to mourn Bill Clinton, nor to give him sole credit for accomplishments that would not have happened without a hostile Republican Congress, but rather to lament the mostly unremarked passing of the political movement that made his economic successes possible. Its disappearance has meant the biggest expansion of the federal government since World War II.

Starting with the Reagan landslide in 1984 and ending with John Kerry’s flaccid resistance to George W. Bush’s re-election in 2004, liberals and Democrats went through a two-decade cycle of re-examining their previous philosophical and technocratic assumptions, embracing (or at least grudgingly accepting) some key elements of market economics and competition, then backtracking at least partway toward hoary old labor politics. The party’s fortunes in capturing the White House ebbed at the beginning of the economic rethink, flowed at its height, then ebbed again during its final days.

This 20-year process encompassed many different strains and went by several names—neoliberalism, the Third Way, the New Democrats—but underscoring most of it was a sound judgment that Ronald Reagan and Margaret Thatcher effectively destroyed traditional labor politics, a slow-building acknowledgment of the benefits of global trade and industrial privatization, and a nagging suspicion that lefties in the West too often looked like unmanly, unelectable sourpusses. Better to cheerfully embrace the 21st century, á la Clinton and the early Tony Blair, than grumble in your cups about industrial malaise, declining union ranks, and unequal economic outcomes.

The seeds of the New Democrats’ demise were already flowering by Clinton’s second term, when an increasingly hostile progressive-left flank reacted with fury to gung-ho globalization, elective wars in Yugoslavia, and welfare reform (see our Q&A with longtime neoliberal and welfare reform advocate Mickey Kaus). Only the Republican-led persecution of Clinton’s sex-related crimes rallied progressives back to his side, and that support did not carry over to Vice President Al Gore, despite his last-minute lunge toward “I’ll fight for you!” populism. Ralph Nader’s 2.9 million votes in 2000 were both the deciding factor in the electoral contest and a stinging rebuke of Clintonomics.

This restive sentiment on the left was enough to push the stentorian bore John Kerry into concocting outrage at “Benedict Arnold CEOs” in 2004, but the pose was undermined both by Kerry’s surface insincerity and the fact that his top economic advisers were rushing around reassuring business journalists that all free trade agreements were safe. No Democrat outside of Kerry’s immediate family voted for the candidate with enthusiasm, and after his routing by a proven incompetent it was time to throw the old playbook out once and for all.

Neither Kerry nor the more solidly neoliberal New Democrats were only or even primarily differentiated by their economic philosophies, and therein lies a key reason for their demise. The movement, like so many major-party fads, was primarily motivated not by ideas but by the desire to regain and retain power. And a fundamental element of that mission was to identify and noisily reject past party tendencies that were seen to be unpopular among centrist voters.

So these New Democrats didn’t merely refuse to be soft on crime like the touchy-feely ninnies in Dirty Harry movies; they were tougher on crime than the most hardened Republican. Clinton famously demonstrated his conviction that Democrats “should no longer feel guilty about protecting the innocent” by flying back to Arkansas in mid-1992 to oversee the execution of the brain-crippled cop killer Rickey Ray Rector, and once-rising New Democrat star Gray Davis was notorious as California governor for extolling the criminal justice policies of Singapore and rejecting his own parole board’s very rare recommendations of leniency. New Democrats were some of the worst politicians in America when it came to expanding the War on Drugs, dreaming up new categories of people to execute, and degrading civil liberties for crass political gain.

http://reason.com/archives/2010/07/06/the-death-of-neoliberalism