Robert J. Samuelson

The transformation of labor since the creation of Labor Day a century ago tells, in many ways, the story of modern America. Paid labor was then all-consuming, generally backbreaking, done mainly by men, often dangerous and, of course, endless--that is, most men worked until they couldn't.

Back in the late 1970s, Cornell University economist Alfred Kahn briefly oversaw the Carter administration's voluntary wage-price guidelines. Kahn was (and is) a jovial soul whose power and influence suffered from his stubborn candor and sense of humor.

It may be that the U.S. stock market is still overvalued, even after a year of losses that have left all the major indexes trading well below their historical highs of early 2000 (11,723 for the Dow, 1527 for the Standard & Poor's 500 and 5049 for the Nasdaq).

Among the great connecting threads of American history is the precariousness of social and economic standing. From the start, Americans have had the chance of elevating their status and wealth while also facing the threat of losing both.

In 1967 President Lyndon Johnson appointed a 16-member commission--including congressional leaders, the Treasury secretary, the head of Congress's General Accounting Office and top economists--to overhaul the presentation of the federal budget.

One curiosity of this economic slowdown is that Federal Reserve chairman Alan Greenspan is trying to talk the country through it. The idea of Greenspan as a national therapist seems absurd, and yet it's true.

Let us now consider California's electricity mess, which is increasingly a political and public-relations phenomenon. California Gov. Gray Davis is doggedly trying to shift blame to President George W.

If nothing else, George W. Bush's energy program reminds us of one of the great paradoxes of American public opinion. By word, we are a nation of ardent environmentalists.

The economy's slide has one familiar feature: few, if any, economists predicted it. We should not be surprised. Economists routinely miss the turning points of business cycles and, indeed, have missed most of the major economic transformations of the past half century, whether for good or ill.

At last count, I was trailing way behind Bill Gates in life's wealth derby. His paycheck is bigger, he owns more stock and he lives in a bigger house. None of this bothers me.

;The great danger of any economic slowdown is that it feeds on itself. We already see signs of this in the United States. Weaker consumer spending and business investment hurt corporate profits, depressing stock prices and confidence, which then harm consumer spending and business investment.

The latest census seems to have been a consciousness-raising exercise--at least for the press. It has inspired a series of stories recognizing that large-scale immigration is transforming America. "Diversity" is, of course, the reigning cliche, but even while the press overuses the term, there's been a subtle and useful shift in tone and message.

We will soon learn whether the economy operates by the textbook. As the stock market falters, Washington is making the standard antirecessionary moves. In 2001 the Federal Reserve has already reduced short-term interest rates by 1 percentage point.

John Kenneth Galbraith, the economist and writer, coined the phrase "conventional wisdom" more than four decades ago in his 1958 best-selling book, "The Affluent Society." As Galbraith defined it, the conventional wisdom embodied the prevailing set of beliefs about any particular subject or topic.

The tax and budget debate is essentially a quarrel about political philosophy. President Bush wants to limit the size of government by depriving it of more money to spend.

The Napster adventure captures the Internet's confusing present and uncertain future. By many accounts, Napster is the fastest-growing new Internet application ever.

It may be back to the future for economics. Once upon a time, tax cuts commanded almost universal support among economists as the preferred tool for preventing recessions.

It may be a sign of the times that a 10th-grade history teacher recently assigned the following essay topic: What caused the Great Depression, and how do economic conditions then (the 1920s) and now compare?

The power crisis in California--rolling black-outs, two huge utilities verging on bankruptcy--is a fitting commentary on U.S. "energy policy." We Americans want it all: endless and secure energy supplies; low prices; no pollution; less global warming; no new power plants (or oil and gas drilling, either) near people or pristine places.

What George W. Bush ought to fear is Japan--not as a threat, but as a warning. A bit more than a decade ago, Japan was enjoying a phenomenal economic boom.

For some time, I have loudly and monotonously objected to large federal tax cuts. The arguments against them seemed overwhelming: the booming economy didn't need further stimulating; the best use of rising budget surpluses was to pay down the federal debt.

The president-elect--whoever he is--cannot be watching the economy with much serenity. What's driven this economic boom has been confidence in the boom itself.

Even the "information economy" (a.k.a. the "New Economy") isn't immune to the law of supply and demand. One hallmark of the economic boom has been an explosion of business investment, dominated by spending for computers, software and communications networks.

The widespread idolizing of Alan Greenspan may be the simplest explanation of why America's post-election melodrama has produced so little popular anxiety.

Alexis de Tocqueville (1805-1859) wouldn't have been surprised by the campaign's bitterness, with one candidate (Gore) cast as a liar and the other (Bush) as an imbecile.

Ours is a world of free-flowing capital. companies, mutual funds and individuals increasingly invest across national borders. This is one of globalization's most erratic--and brutal--upheavals.

The great paradox of this presidential election is that Al Gore is the "candidate of substance," while George W. Bush--the source of the campaign's few fresh ideas--is typecast as a hopeless dunce.

We now have the results of a huge experiment in human nature that teaches a critical lesson about social progress. The lesson emerges from the 1996 welfare reform, the mandated end to bilingual education in California and seven years of school reform in Texas.

In this election, the true conservative is Al Gore. He's conservative in the traditional sense that--at least judged by his words--he wouldn't change things much.

We are now testing a cardinal rule of American politics: that a presidential election is essentially a referendum on the economy. If the economy is thriving, then the incumbent party keeps the White House.