Until about six months ago, George W. Bush’s presidency would have been deemed a failure primarily on account of the botched war in Iraq. Excepting a few prophetic naysayers, almost everyone agreed that the economy under Bush was modestly healthy, with growth rates averaging 2.5 percent over the course of his two terms and unemployment holding at a relatively low average of 5.2 percent.

Remarkably, in the wake of the devastating attacks of Sept. 11, 2001, the economy did not slide into a recession—at least not officially. The stock market sagged dramatically in the immediate aftermath. But the economy quickly recovered, extending the longest expansion period between recessions, dating back 17 years. Some credit was due to the Bush tax cuts passed between 2001 and 2003.

Yet beneath this happy statistical story, a darker narrative was taking shape. Despite rising productivity and growing GDP, the wages of middle-class Americans stagnated. Median incomes fell by over $1,000 between 2000 and 2006, amid the loss of over 3 million manufacturing jobs. In his first speech as Treasury secretary, Henry Paulson acknowledged that “amid this country’s strong economic expansion, many Americans simply are not feeling the benefits.” Fed Chairman Ben Bernanke also recognized troubling developments, telling senators in 2006, “inequality is potentially a concern for the U.S. economy … to the extent that incomes and wealth are spreading apart, I think that is not a good trend.” Evidence suggested that the tax cuts disproportionately benefited the wealthy, while the lower classes received little and the middle class’s gains were obliterated by increases in the federal budget deficit, which cost them $3.74 in interest for every dollar in tax savings.

Free-market conservatives generally defended Bush. But even as they did, the ship of the American economy was streaming straight for an iceberg. The federal deficit burgeoned from $144.5 billion in 2001 (1.4 percent of GDP) to $962 billion in 2008 (6.8 percent of GDP). Over 80 percent of the increase in debt was due to the tax cuts—which accounted for about half of the total amount—and spending on the wars in Iraq and Afghanistan. The overall debt of the United States government grew from $5.8 trillion to $10 trillion between 2001 and 2008, a 72 percent increase. Under Bush, the federal government wasn’t just spending like a drunken sailor—it was burning money at a rate that would have put a fleet of inebriated midshipmen to shame.

Over the first seven years of the Bush administration, the trade deficit also rocketed from $380 billion to $759 billion, due in large point to our dependence on foreign oil. In spite of the president’s 2006 State of the Union declaration that Americans were “addicted to oil,” he did little to break that habit. Rather, he oversaw the influx of an additional 250 million imported barrels per year over the course of his presidency.

The microeconomics of the Bush years were as damning as the macro picture. The American consumer was increasingly tapped out, as the personal savings rate plunged from 2 percent in 2001 to a negative amount in 2007. Still, many of our countrymen thought of themselves as wealthy because of huge increases in home equity—a belief that turned out to have been built on inflated housing prices propped up by a corrupt mortgage industry and regulators who willingly looked away.

That hollowed out economy came crashing down this fall. The stock market plummeted—the Dow Jones average stood at 10,659 on Inauguration Day 2001; in the worst days yet of the present crisis, it swooned into the 7,000s. The financial industry nearly collapsed. We saw actual runs on banks. The government lurched wildly, and the world finally plunged into what most observers believe will be a protracted and painful recession. In response to all this, George W. Bush presided over the nationalization of our mortgage industry and much of the banking industry, in addition to some major insurance corporations. The president who sought to usher in an “ownership society” instead supervised the socialization of large swaths of the financial sector.

By nearly every measure, Bush was a poor steward of the American economy, and he will be faulted almost exclusively for the economic crisis. But in fact, most of the factors contributing to this cataclysm were the result of long-term trends encouraged by Republican and Democratic administrations alike. Income stagnation and inequality, loss of manufacturing jobs to outsourcing, massive public indebtedness, falling personal savings, growing trade deficits, increasing oil imports, the expanding dominance of the financial sector in the overall economy—none of these were recent developments.

The longer story obscured by this year’s dramatic collapse is the gradual but intentional abandonment of a functioning American economy and its replacement by a counterfeit kind of economic health based on borrowed money, cheap goods and services made with inexpensive exported and imported labor, and reliance on foreign resources. The creation of this shell of an economy required the transformation of our workforce from one that produced goods to one that consumed products made elsewhere—effectively, the replacement of workers by consumers. The immediate reward of everyday low prices was more instantly palpable to Americans than the slow but steady loss of jobs and the tacit acquiescence to cheap labor by free markets that required the opening of all borders.

American workers have gradually become accustomed to perpetual anxiety, assuming this to be an ordinary condition of advanced economic man. As a pleasant distraction—if not an opiate—the economy came to be defined by entertainment and consumption: two-thirds of economic activity consisted of buying and selling. This perverse system was sustained by stagnant wages and borrowed money. Older virtues like thrift and moderation were shelved as the broader culture encouraged immediate gratification without concern for consequences. Just do it!

Blame Bush—but not just Bush. Elite ambitions for mobile capital combined seamlessly with messages from the popular culture that encouraged license and the loosening of traditional bonds. Economic experts and social, educational, and political leaders spared no effort in persuading the public that an ungovernable process called “globalization” required this transformation. The benefits of worldwide economic integration were largely directed at consumers, and the costs would be felt by workers—as if the two were distinct. A main aim of globalization was to dislodge particular loyalties and patterns of life and replace them with an ethic of individual autonomy, a libertarian worldview, and a financial system in which the consequences of economic actions were difficult to discern. Mortgages were thus made available to almost any borrower so that financial institutions could later repackage and sell the debt to numerous other parties, wholly diffusing responsibility.

In this environment, party affiliation—even so-called “liberal” or “conservative” leanings—mattered less than whether a person possessed mobile skills. Riches were available to those who abandoned scruples and loyalties, who eagerly joined an economy in which efficiency and profit were the solvent that melted traditional patterns of restraint and virtue. What was most necessary was to foster what market capitalism excels at producing: short-term thinking. Gratitude to the past and obligations to the future were shorn in the name of present returns. The idea of trusteeship was rejected for the quarterly report or even the daily stock price as reported in minute and dramatic detail on CNBC. We were promised a golden future based on 10 percent (or better) annual market returns, when the real economy grew at a quarter of that rate. Greed, speculation, and spendthrift ways were actively inculcated in the wider culture and easily found a home amid a populace bereft of the old mainstays of culture.

For much of this period, our political leaders battled over whether a free market or an activist government should hold sway. These seemingly fierce battles obscured the deeper truth that our particular form of free market favors big government and vice versa. Government has always arranged the playing field for the advantage of swift flows of capital. The market, meanwhile, has steadily undermined local loyalties and rendered small-scale solutions increasingly ineffective, thus ensuring our fealty to a tutelary state.

The mortgage crisis has highlighted the tight bonds between a large central government and large centers of financial power. We have also witnessed the way in which a “flat” world permits no quarantine: a financial virus encounters no barriers. Within a few weeks the entire world economy was brought to its knees by America’s bad mortgages. The myth that structures could be built so large that they could not fail should have been laid to rest with the sinking of the Titanic. At least now we have seen the end of the idea that there is some fundamental antipathy between big government and big business.

Conservatives will now enter a time of rethinking and regrouping. It would be the height of folly for the Right’s political masterminds to try to concoct again the particular brew that led to the electoral victory of a deeply unconservative Republican Party under Bush. In the wilderness years to come, conservatives should spend some time encountering minds that paid attention to the notion that conservation is at the heart of conservatism—among them E.F. Schumacher and Wilhelm Roepke, both of whom focused on a form of economics that was mindful of the moral health of the society.

An economy that undermines the virtues of a citizenry, and eviscerates the culture that reinforces those virtues, has lost its purpose. Yet it is too simple to lay full responsibility for the recent collapse on Bush. He perpetuated a bankrupt system, but the rot runs deeper than the last eight years. 

Patrick J. Deneen is Associate Professor of Government and holds the Markos and Eleni Tsakopoulos-Kounalakis Chair in Hellenic Studies at Georgetown University.