Tuesday, October 21, 2008

FYI: It Still Won't Have Been Tried

Actual socialists know: Barack Obama ain't no socialist.
These are hard times to be a socialist in America. And not just because there's a bourgeois-bloated Starbucks on every other corner, thumbing its capitalist nose at the proletariat.

No, it's tough these days because you've got politicians on the right, the same guys who just helped nationalize the banking system, derisively and inaccurately calling the presidential candidate on the left a socialist. That's enough to make Karl Marx harumph in his grave.

Local communists, rarely tapped as campaign pundits, say Sen. Barack Obama and his policies stand far afield from any form of socialism they know.

John Bachtell, the Illinois organizer for Communist Party USA, sees attempts by Sen. John McCain's campaign to label Obama a socialist as both offensive to socialists and a desperate ploy to tap into fears of voters who haven't forgotten their Cold War rhetoric.

Via Ta-Nehisi Coates.

I remember reading that the head of the American Communist Party was asked by a reporter if "FDR's New Deal carried out the communist platform?"

The man responded: "Yeah, on a stretcher."


PG said...

Even the punditry, never mind the regular people with real jobs, of this country has an inaccurate sense of history.

Frum points out that it took the Democrats twelve years after the epochal 1980 election to make a substantial break with the party’s past. “And I think there were probably more people in the Democratic Party in 1980 who were willing to rethink the New Deal than there are Republicans in 2008 who are ready to rethink our party’s first principles,” he says. “So I think it’s going to be a very long, very difficult conversation.”

This goes along with Richard Epstein and others calling Obama an "unreconstructed New Dealer." I would just like to ask, what was so bad about the New Deal? The New Deal gave us the SEC, which, hamstrung in the face of new financial instruments though it has been for the past decade, nonetheless is better than nothing. The New Deal gave us the FDIC to prevent bank runs, which has worked pretty well. Rural electrification and modernization of farming; repeal of Prohibition; National Labor Relations Act; Social Security -- this is the stuff that historians have recognized as helping Americans keep their faith in the fundamental practice of capitalism.

I suspect what Frum and his ilk really mean is that Democrats have rethought the Great Society. There certainly has been a great deal of rethinking about the effectiveness of welfare, Head Start, bilingual education, NEH and NEA, public TV and radio, and these have proven to be more fertile targets for modern conservatives than the Tennessee Valley Authority has been.

Cycle Cyril said...

What was so bad about the New Deal?

It prolonged the Great Depression by at least seven years.

As for the New Deal burying socialism/communism, it originated from socialism:

The second standard [mis]understanding is that the Brain Trusters were moderate people who drew from American history when they wrote the New Deal. If their philosophies were left wing, then that aspect ought to be treated parenthetically, the attitude was. But the leftishness of the Brain Trust was not parenthetical. It was central.

PG said...

CC, you seem to have mistaken the New Deal as a whole -- and in particular, the measures that were not just for the present emergency -- for a much smaller set of policies:

1. Exemption from antitrust. No Democrast have advocated such exemption. Indeed it was the conservatives on the Supreme Court who knocked down the long-standing prohibition on vertical price restraints -- collusive price-fixing being one of the factors identified in the UCLA study as exacerbating the Depression.

2. This antitrust exemption was made possible through wage controls. These were ended upon the end of WWII and haven't been pushed by a Democratic president again, although Nixon instituted wage and price controls. Again, Obama hasn't endorsed government controls on wages, although McCain's big idea for the bailout was that companies participating in the bailout be forbidden by law from paying more than $400k to any employee, even if the company fired its failed executives and was trying to attract new talent. (Obama sponsored a bill with the far more conservative measure of requiring corporations to allow shareholders a non-binding advisory vote on executive compensation, so shareholders' views would be clear to the board and the board could keep it in mind for the future. McCain did not support this legislation.)

Neither antitrust exemption nor wage control has been a lasting legacy of the New Deal, unlike the aspects I cited, so the idea that Democrats had to get over the virtues of such exemptions or controls in order to win the White House again is ludicrous. Clinton's electoral success illustrates my point that it was the Great Society, not the New Deal, that Dems had to rethink: Clinton's great legacy was welfare reform, and I suspect the next Democratic president will have to overhaul the federal government's role in education.

Incidentally, Ben Bernanke, Bush appointee as Fed chairman and a well-known authority on the economics of the Great Depression, has been seen by the WSJ editorial board as "endorsing" Obama by praising his economic plan.

PG said...

Sorry, the first sentence of 1. should be:

"1. Exemption from antitrust. No Democrats have advocated such exemption since 1952."

Cycle Cyril said...

So you asked a general question and I responded likewise and then you responded with a but...

Here's my but....

Yes, FDR did a couple of good things such as SEC and FDIC but overall he did more harm.

Rural electrification by private ventures was subverted by FDR (see the second link in my above comment), modernization of farming was ongoing before FDR and would have continued with or without him (as would the repeal of Prohibition). He merely ensured higher food prices, at a time when people had no money. The National Labor Relations Act provided an "exemption from antitrust" actions for labor. This created abnormal market forces that reduced employment. Finally Social Security is an excellent concept but it is built as a Ponzi scheme.

I agree that Clinton's legislative legacy is welfare reform, but this was a consequence of the influx of Republicans in 1994. Prior to that he attempted, in effect, to expand the Great Society by instituting universal health insurance.

PG said...


Certainly if you ignore the sentence immediately before my question, it sounds like a query as to whether there was anything at all bad about the New Deal. However, read in context, the question was about what aspects of the New Deal that are supported by Obama, that "unreconstructed New Dealer," were so bad. Moreover, your link to the UNCLA study doesn't support your assertion that the New Deal as a whole extended the Depression; it supports only the idea that two aspects of the New Deal that were gone before Obama was born -- antitrust exemption and wage control -- extended the Depression.

When pundits talk about Democrats' attachment to the New Deal, they aren't talking about the parts that FDR instituted as temporary measures in response to an emergency; they are talking about the aspects of the New Deal that have lasted. The parts that have been dead for decades are irrelevant unless you can point to a part of the Democratic platform that attempts to resurrect them. Similarly, the Great Society programs I mentioned as needing to be rethought by Democrats all were ones that are still in existence today.

The claim of your link that TVA somehow "gutted" private sector electrification is a bare assertion unsupported by evidence. In contrast, look at this contemporaneous (1935) account of cooperation between TVA and private sector companies.

The NLRA was an exemption from antitrust laws only in the sense that those laws had been inappropriately used to prevent workers from forming unions in the first place. Look at the text of the Sherman Act: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony."

This law was being applied to prevent unions from forming even though interstate commerce was not nearly so broadly read by the Supreme Court as to permit the federal government to regulate intra-state commercial activity. In other words, at a time when the Supreme Court was striking down federal legislation as insufficiently supported by the interstate commerce clause, the Sherman Act was being used to stifle intra-state unions.

Little bit of a selective, politicized interpretation of what the Constitution means.

Cycle Cyril said...

Semantics is certainly important in this world as is context but your sentence concerning is there anything bad about the New Deal in or out of context is straight forward. If you wish to clarify I have no problem with that, I do it all the time - particularly with my wife, who is never wrong.

With regards to Obama the issue is not which aspects of the New Deal he likes or dislikes. The issue is whether an activist government is appropriate and if so how so. I bring up these issues because, as the New Deal so demonstrates, when you combine the power of government and the inability of anyone to predict the inevitable adverse consequences of good intentions that should, in my opinion, dictate a minimalist and consistent approach when seeking a solution for the vast majority of problems.

If you look at my second link in the comment above or read Amity Shlaes' book The Forgotten Man it was more than anti-trust exemption and wage control. The erratic economic policies of the FDR administration, its attacks on private initiatives, including those by the TVA against private utilities (again see the Shlaes references) and its acceptance of the widespread labor union activity particularly strikes all contributed to the prolongation of the Great Depression.

Please note that with regards to labor unions and their strikes I am not commenting on whether it was legal or constitutional but pointing the fact that if a company has only a limited amount of money for labor costs (in the depression fewer people were buying) and labor costs could not be reduced for any individual worker then more individuals were out of work. This was a fact in the Great Depression and is a factor why the American motor industry is dying and why France, and Europe in general, because they can't fire employees, has a higher rate of unemployment.