Who’s Right?

I started to tack this on to yesterday’s morning post, then decided to enlarge on it a little more in a new post. So here goes. Paul Silver writes at The Moderate Voice,

Political sands are always shifting. Labels become obsolete. Paradigms evolve. People with little interest in politics can find themselves bewildered to figure out who stands for what. Political parties are challenged to be in a constant state of reinvention.

I have been a Democrat and a Republican and an Independent. I changed when the parties changed. Now I find myself sliding back towards appreciating the Democrats because they are remaking themselves into a party of pragmatism and inclusion. The GOP has lost the benefit of the doubt that they are the party of fiscal restraint, organizational competence, the masters of foreign affairs. So what do they want to be? It is a new game.

I contend that the Republicans haven’t changed so much as have their bluff called. As I wrote here, the GOP modus operandi going back as far as I remember has been to bash Democrats and claim that if only the Dems would get out of the way the GOP would do so much better. But when they finally got complete control of both Congress and the White House they proved they have no clue how to actually govern. Bash Democrats is all they can do.

It is good to remember that, over time, the parties have reinvented themselves considerably. A century ago Republicans were (more or less) the progressives, and Democrats were, um, not. But if you look back over time at what American liberalism and conservatism have stood for, then for the past century or so liberalism (I’m talking real liberalism, not the made-for-TV version) has been about economic and social justice, whereas conservatism had been about protecting property, wealth, and privilege from the unwashed populist mob. And as much as my sympathies lie with the liberal side of the equation, I would argue that in a healthy political climate these two sets of values should balance and moderate each other.

Paul Silver continues,

We each have own way of organizing our worlds. I tend to embrace the progressive aims to move the world towards more fairness, health and opportunity. I tend to embrace the conservative method of optimizing free markets to most efficiently utilize resources. The most viable political movement that best combines these gets my money and vote. Apparently the next generation of leaders are sorting through the same choice.

Ah, yes. Free markets. In the 19th century (and today, in many parts of the world) the term “free market” was associated with liberalism. Once upon a time the opposite of “free market” was “controlled market,” in which government regulates prices and supply. A free market economy was liberal when most citizens were either farmers or self-employed artisans — shoemakers, silversmiths, whatever — as was the case in the early days of the Republic.

Back then “free markets,” along with “limited government,” were thought to be supportive of democracy, independence, equal opportunity, and civil liberty. Hence, free markets and limited government were “liberal.” “Strong” government, on the other hand, was thought to protect the aristocracy and special privilege, and was considered conservative. And in many parts of the world “conservatives” and “liberals” still sort themselves out that way. But not in the U.S.

A funny thing happened on the way to laissez-faire paradise — the Industrial Revolution. Industrialization and the rise of capitalism brought with it widespread exploitation of “free” labor by employers. In fact, in the early 19th century, as the economy in the northern states became dependent on manufacturing and many citizens dependent on jobs, white southerners hooted at capitalism and called it “wage slavery.” The “independence” of white plantation owners and farmers was, of course, purchased by, um, traditional slavery. One of the reasons so many poor, non-slave-owning southern whites supported slavery was that they’d rather be poor but independent subsistence farmers than factory laborers.

In the capitalist North it didn’t take long for a new kind of aristocracy to arise, and they were called “robber barons” and “tycoons.” And this new aristocracy found that limited government and “free” markets worked to their advantage. By the late19th century — during the so-called Gilded Age — America had devolved into a Hobbesian free-for-all in which the powerful few prospered to the detriment of many others. Those unfortunates forced to survive as being factory or farm laborers — “quitting” meant starvation — were not much better off than slaves. The fact that it was not government exploiting workers but capitalists operating outside government was a meaningless distinction.

Over in Europe, Karl Marx was writing about class struggle and predicting that capitalism was not sustainable and must be replaced by socialism. Socialism was harder to sell in America, however, because most white people still were either independent farmers or small business owners for whom a free market economy still worked pretty well, and socialism had no appeal for them. Those who sharecropped in the South or toiled in tenement sweatshops in the North were pretty much out of sight and out of mind for the majority until “muckrakers” like Upton Sinclair and Jacob Riis shoved the ugliness in their faces. Some people, at least, perceived that “free markets” were creating a new class of workers who were, in effect, slaves in all but name. Further, as the robber barons became more powerful they began to undermine democracy itself, and government was less “of the people, by the people, for the people” than it was “of big money, by big money, for big money.”

About a century ago, as the struggle between (anti-capitalist) socialists and (pro-corporatist) fascists was getting under way in Europe, American progressives considered less extreme alternatives. As explained by Theodore Roosevelt in his New Nationalism speech of 1910, through government the people could seek protection from exploitation and provide for equal opportunity within a capitalist economy. TR didn’t call his ideas “liberal,” but I think the New Nationalism speech laid the foundation of modern American liberalism. The ideas and values TR championed got little opportunity to be put into effect before the Progressive Era ended, however. Then a series of non-progressive Republican administrations in the 1920s supported laissez-faire policies that crashed and burned on Wall Street in October, 1929. (See “A (Pretty) Short History of Wingnutism.”)

When Great Depression began in 1929, conservatives blamed trade unions, saying they upset the glorious natural balance of capitalism and free markets. They argued that the government had to restrict democracy and restore profit margins to put the economy back on track. Socialists, on the other hand, called for a “command” or centrally planned economy that restricted civil liberty. Franklin Roosevelt said no to both “solutions.” He enlarged upon his distant cousin Teddy’s New Nationalism ideas, and he called the result liberal — a word previously associated with limited government, laissez-faire policies, remember. But it was liberal because it was based on the values of fairness, equal opportunity, civil liberty, and economic and social justice.

FDR was determined to protect neither the privilege of aristocracy nor “free-market” plutocracy. He built upon Cousin Teddy’s New Nationalism idea and promoted policies that protected ordinary folks from both the malefactors of great wealth and the boom-and-bust caprices characteristic of unregulated economies. As I explained in “Wingnutism” the New Deal had only a limited impact on the economy itself. But New Deal programs had a longer-term success in fostering economic stability. Federal deposit insurance, unemployment insurance, Social Security, increased government oversight of securities, and other New Deal innovations made Americans’ economic lives more secure and created a buffer against many of the factors that cause economic depressions.

Leapfrogging to the post-World War II era — in Harry Truman’s day liberalism had become populist and looked pretty good to many working-class whites who were benefiting from the New Deal, the GI Bill, and mortgage subsidies. In those days the Democratic Party and the unions had partnered up to reinforce the principle that Democrats were for the little guy, giving them pretty solid support among white working folks.

The achilles’ heel of liberal domestic policy was that FDR had made a deal with the devil (am I mixing mythical metaphors?) to get the New Deal enacted back in the 1930s. He caved in to the demands of southern Democrats to allow for racial discrimination. White workers enjoyed protections and benefits that black workers did not. So the economic gap between whites and blacks grew even wider. In the 1960s Lyndon Johnson launched some New Deal-type programs intended to reduce the gap; in effect, he finally broke down the racial barriers built in to FDR’s New Deal. And working class whites, who had once supported the New Deal, suddenly got conservative and began to spout off about the virtues of self-reliance and the evils of “dependency” on “government hand-outs.” I go into more detail here.

And the Right saw an opportunity, and before you can say “voodoo economics” white workers had bought into a big lie that busting unions and stripping away worker protections would make everybody free and prosperous. And, by the way, don’t expect government to do anything for you, unless you’re a big corporation.

So now it’s 2007, and a whole generation of people too young to remember much before the Carter Administration has been conditioned to accept, unquestioningly, the propaganda of the Right. “Free markets” are intrinsicallygood. “Deregulation” is always right. Any sort of government regulation is bad. “Big government” is bad. “Limited government” is good. And they mindlessly regurgitate these ideas without understanding their historical context or even thinking them through.

I say that none of these things is intrinsically bad or good. Sometimes the same economic policy will benefit one part of the population but devastate another. Sometimes taxes need to be lowered, and sometimes they need to be raised. Sometimes government regulations are stupid, and sometimes they are necessary. A nation needs to look at the situation in which it finds itself, and think many things through, before understanding which is the correct course.

Yes, knee-jerk ideology will sometimes provide an acceptable solution, but so will a Ouija board.

On the other hand, when something is tried over and over again and always turns out badly, one might think doing it a few more times expecting a better result is, um, nuts.

Paul Silver — who seems to be a perfectly nice fella, so I don’t want to be harsh here — actually says “I tend to embrace the progressive aims to move the world towards more fairness, health and opportunity. I tend to embrace the conservative method of optimizing free markets to most efficiently utilize resources,” without realizing that you can either have “fairness, health and opportunity,” or you can have “conservative method of optimizing free markets,” but you can’t have them both. Because the second thing will, inevitably, destroy the first. And I say that because it always has.

I defy anyone to show me a nation that has actually enacted pure “free market” policies that did not devolve into corruption, plutocracy, and worker exploitation eventually.

This is not to say that government regulators always make the right choices, but when you allow “the market” (e.g., the interests of wealth) to make decisions with no government oversight, you can count on enough of those unregulated capitalists to make enough bad choices to do considerable damage, like cheating people out of their life savings, or starving the Irish. It is inevitable, I say.

Ideologies are, essentially, strategies for making the world easier to understand by limiting one’s cognitive choices. They allow people to “get” complex issues by simplifying them. Ideologies often are based on how issues unfold most of the time, or something that has been successful in the past. But human civilization, and its political and economic components, are perpetually changing and evolving, means that an approach that might have worked in one century is a disaster in another. And if nobody ever sits down and thinks the issues out, all the way through, ideologies turn into something like superstition. It never rains when I wear my pink socks. Or, free markets always optimize the use of resources.

History tells us that complete deregulation more often results in the exploitation of resources and nasty boom-and-bust cycles, but telling that to some people is like telling a four-year-old there is no Santa Claus.

But let’s swoop back up to the beginning of this post, where Paul Silver says

The GOP has lost the benefit of the doubt that they are the party of fiscal restraint, organizational competence, the masters of foreign affairs. So what do they want to be? It is a new game.

Hard to say. American conservatism (which was not always married to the Republican Party) has been riding the hobby horse of free markets since the post-Civil War era, and I don’t expect them to stop in my lifetime. The Democrats are only just beginning to pick up the mantle of economic populism that they dropped many years ago, and the Washington establishment Dems remain mostly clueless. So we could see only incremental tweaks in both parties over the next few years, or we could see big changes and a major political re-alignment similar to the one the New Deal brought about. I think it could go either way.

But if the latter is the case, I see where the Dems could go with that, but the Republicans? I have no idea.

10 thoughts on “Who’s Right?

  1. Barbara,
    The point I intended to make was that I agreed with the aims of the progressives while I support the methods of the conservatives.

    I didn’t mean for these to be in conflict but rather in partnership.


  2. I didn’t mean for these to be in conflict but rather in partnership.

    And my point is that partnership isn’t possible. It’s like partnering up a lamb with an alligator.

  3. Part of the problem is the political meaning of “free market” is very different from the economic meaning (at least the theoretical one). In textbook capitalism, a free market requires quite a few disinterested, communal resources – a legal system and infrastructure among others – and it relies entirely on concepts like trust and disclosure.

    The political meaning is “one dollar, one vote”.

    And Milton Friedman was not an economist. He was an apologist for greed who spoke the language but understood nothing.

    (Sorry Maha, you probably don’t need anymore hate mail.)

  4. Once in a while, it’s good to rehearse the history, both to fix it all the better in our own minds and to help others catch up.

    And we have to point out again and again that the results of kicking away all the controls and regulations on the market that have been put in place since the Progressive Era would infallibly be, even in America, even at this late date, to restore the 14 hour day, the 6 day week, child labor, and all the horrors first forced on the attention of America by the muckrackers of a century ago.

    Not in a day. Not in a week. But over not too many years. We would see the plunge to the bottom in our own lifetimes, if the whole edifice of “Big Government” that the bare-knuckle conservatives want to kill off were eliminated.

    Nothing prevents capitalism from doing its worst but the intervention of the progressive-minded state to protect workers, consumers, the environment, and anyone and anything the oligarchs could get rich exploiting or destroying.

  5. PS. Since you mention those days, recall just how desperate must have been the condition of the working class in the cities for people to think it a better idea to go West with a mule, a rifle, a shovel, and a bag of flour.

    And to make a hovel out of dirt – a soddy – in which to try to survive your first winter. And maybe your second. And third.

    And maybe get killed in some spectacularly awful way by highly irritated Indians.

  6. Well said, maha.

    To me, the crux is this: “the conservative method of optimizing free markets to most efficiently utilize resources” sounds great, but what variables are being optimized, over which ranges, and how is ‘most efficient’ defined? “Fairness, health and opportunity” are seldom expressed in terms of monetary value, and therefore are easily dropped from market-based optimizations. Similarly for many social values. Mechanisms for expressing broad social values in cost/benefit calculations exist in, at best, the most primitive form. All too often, real world costs are simply ignored by the ‘efficient utilization’, yet they exist, and are paid by the citizenry.

  7. Great blog, Barbara. Well expressed. If I can wade in with an example that illustrates where a ‘free market’ works within regulation. Consider a nursing home; I am not there yet, but it could happen. The profit motive for that market operates in direct opposition to quality care. What’s worse the ‘consumer’ in many cases is unable to fend for his own needs, even when his very life is at stake. The ONLY answer is governement regulation, unannounced inspections, and the threat of steep fines and closing the facility if standards are ignored.

    Let’s say that fair regulation brings the industry to decent standards. There is a level playing field and the ‘free market’ philosophy can work. Within minimum standards, how much can I afford? What amenities do I want? Where do I want to be?

    I am not talking ABOUT the nursing home industry; that’s an example, a model I use as a touchstone when I am looking at the balancing act between imposing regulation and allowing competition. Both CAN happen, and should.

    Look at ANY industry from child care to mortuaries, insurance, banking, agriculture, construction. Ask yourself who is the ‘patient’; what’s the worst that could happen without regulation. Look at the other side of the coin. What’s the best way to encourage healthy competition and innovation without sacrificing the safety net of regulation for the consumer.

    Business exists to serve the consumer (or should). Government exists to serve the citizen (or should). When either or both forget who they are there for, we have the problem(s) we face today.

  8. Perfect.

    It’s posts like this one that leave me saying, “Thank God someone else is writing these things so that I don’t have to.” Leaves me more time to earn a living, take out the trash, and ride my motorcycle. Many thanks, Maha.

    Maha: “telling that to some people is like telling a four-year-old there is no Santa Claus.”

    And, when you tell them, you get much the same reaction – metaphorical kicking, screaming, and crying, coupled with shouts of, “you’re just sayin’ that because you’re a mean, hateful, librul, who HATES AMERICA!!”

    One of the biggest problems we have now is that an entire generation has come of age hearing others speak of nothing but the free market Santa Claus. My fear is that we’ll need to put ourselves through another worldwide economic depression in order to allow ourselves, collectively, to mature beyond our belief in the fairy tale Free Market Santa, whose unchecked greed brings prosperity to us all.

  9. Pingback: Austoon Daily » Who's Right?

  10. Why aren’t you just the National Philosopher? Seriously? Blogger Laureate or something. Wow.

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