How grandiosity and lack of empathy created our modern malaise.

The Culture of Narcissism was an attack not only on the excesses and disillusionment of the '70s but also on the growth of institutions—the liberal state, corporations, and the therapeutic culture—that broke down the individual's independence and authority. Those institutions may have grown out of a need to protect us from depredations. But the unintended consequence was to replace our freedom and individual authority with insecurity and anxiety.

Thus was born the narcissistic personality of the 1970s. The cultural narcissist—as opposed to the clinical one, like Palin—can overcome the anxiety created by his or her lost economic and social independence, according to Lasch, only "by seeing his ‘grandiose self' reflected in the attentions of others, or by attaching himself to those who radiate celebrity, power, and charisma. For the narcissist, the world is a mirror whereas the rugged individualist saw it as an empty wilderness to be shaped in his own design."

Narcissism thrives only where positive authority—a world of role models who establish genuine, trusted leadership and an economic system where rules are defined and enforced—no longer presides. Lasch's narcissism was a direct result of the hypocrisy of the liberal state and its collapse under the multiple assaults of the Vietnam War, Watergate, the degraded environment, and the emasculating energy crisis.

In our own day, narcissism seems the direct result not of societal failure but of success run amok. (Though we've had our own fruitless, frustrating war with its concomitant betrayals of public trust and an awareness of impending environmental collapse, too.) Beginning in 1994—15 years after the "malaise" speech and 15 years before today—the United States turned itself inside out. The Republican congressional victory of 1994 brought about a libertarian detente between left and right centered around globalization, in the form of NAFTA, and cultural truce, where everyone agreed to disagree on hot-button issues like abortion.

The new order unleashed an explosion of wealth, new technology, and a reinvention of politics both domestically and internationally. The '90s ended up being the 1970s in reverse. Instead of the decline of industry, we had the upending explosion of the Internet. Where the 1970s had eroding pessimism, the 1990s had the optimism that "this time, it is different."

In both cases, the path from past to future was no longer clear, which created confusion and doubt about what rules to follow. Clinton's new liberalism sought deregulation and a return to personal responsibility, but only one side of the equation took hold. Throughout American society in the 1990s, authority was eclipsed by the unparalleled success of young people.