COUNTRIES, like individual people, sometimes become the victims of their own successes. Failures inspire new ideas and new experiments. But the successes, remembered too well, are elevated in memory to sanctified formulas applied without much thought to changing circumstances. That seems to have happened to one of the great successes of American economic policy, the long boom of the middle 1960s. You can see it in the Reagan administration's defense of its budget.
For five years, from early 1961 to 1966, the American economy expanded at spectacular rates. People's incomes rose dramatically. Production soared. Unemployment dropped below 4 percent. Those were the halcyon days of economic politics--a rare combination of good luck and brilliant management. Prosperity rose so fast that people could see and feel it.
A lot of Americans quickly came to consider that kind of good fortune to be merely normal. When you currently hear people talking about getting the economy back on the track, it's worth asking what track they have in mind. Usually it turns out to be fast track of those memorable five years.
The idea of the early 1960s as the normal standard of economic performance first became explicit a decade ago, in the McGovern wing of the Democratic party. Now it seems to have migrated to Mr. Reagan's White House, where it has become the justification of the excessively optimistic economic forecasts on which the budget is based. How can you call these forecasts unrealistic, the budget document argues, when in fact they are not quite so high as the actual figures for 1961-66?
That great expansion was produced by a remarkable series of circumstances. An extremely cautious administration had just been replaced by one that was much more adventurous and active. But there were the factors that no president controls--technological developments, demography, the state of foreign markets. Perhaps even more important was the national state of mind. The people who built that boom were the children of the Depression, who wanted economic growth and security with a single- minded passion that has since dissipated. And you ought to keep it in mind that this boom, hallowed in recollection, had in its later stages certain disquieting aspects. The last year of it was propelled by the military spending for Vietnam. Inflation was still low in 1966, by present measure, but it had tripled in those five years and, as it turned out, it was on the rise.
In retrospect, the boom of the early 1960s clearly represents, not a sustainable trend, but an extraordinary and temporary swing far above it. There's no grounds whatever to believe that the rate of economic growth can be forced to those levels again any time soon. In the meantime, one real menace to economic stability is the persistent impulse, in both political parties, to keep recklessly trying.