Wednesday, November 5, 2008

History Repeats Itself: A Look at This Election in a Certain Cyclical Perspective

I hope you are willing to bear with me on this long post.

So with last night’s election results, the nation moves forward with a new President and Congress. Part of me is overjoyed that this long process is finally over and part of me is intellectually curious to see how a Democrat controlled government will rule after years of Republican dominance. I see certain benefits to this change in the hopeful end of our cowboy diplomacy of late (though I’m no fan of the Democrat’s propensity to surrender national sovereignty to international organization either) and hopefully the end of a Republican party clinging to power via cultural battles. They have to begin some soul searching again and develop new ideas to actually govern, while at the same time I am willing to bet that for political reasons, the Democrats will largely avoid their own social issues agenda in the near future.

But the overarching shift that I see occurring right now in our balance of political coalitions is disturbing. JSK and many others continue to dismiss the notion of this as being a great leap in favor of government power and the social state, chalking this up to me worrying and over reacting. It is true, that we are not going to suddenly see a socialist workers paradise, or a sudden rise of the next Soviet Union, but I have never been saying that. The Republicans, if they survive recounts seem to have held 43 to 44 Senate seats, maintaining their power to filibuster, but even if they hadn’t we still wouldn’t have seen these extreme developments. What I do believe, however, is that we are about to likely take the next large step in the direction of a socialist democracy, and all the pains that accompany it. Six time early 20th century American Socialist Party Presidential candidate Noram Thomas said:

The American people will never knowingly adopt socialism, but under the name of
liberalism, they will adopt every fragment of the socialist program until one
day America will be a socialist nation without ever knowing how it happened.

If one looks back now at that party’s platform in the early 1900’s virtually all of its policies are now in place and his words have a prophetic feel to them. Take a look at Marx’s ten planks of how to transition a nation into Socialism. We have most of them at least partially implemented currently.

Along this theoretical framework, American history of the past century has been marked by a period of movement towards social democracy, followed by a period of backlash after years of poor economic conditions created or at least exacerbated by those very policies. In this latter period, most of the programs earlier created are not removed, but the growth of new ones is hampered. Then when the cycle repeats itself, it picks up from where it left off.

The first period was the Progressive era, and more in particular the Wilson years, where the Federal Reserve and income tax came into full fruition. In addition, America’s isolationist tradition came to an end with an expansion of government power abroad via the involvement of the country in WWI. Partially due to the war, partially due to high income tax rates to finance the war, and partially due to a Federal Reserve that had no idea what it was doing, the latter half of the period was marked by heavy levels of inflation and general economic pain in addition to the struggles of war. Between the burdens of the war itself, and the inflationary period, this episode came to an end with the overwhelming election victory of Harding with his pledge to “return to normalcy.” He and his congressional allies cut taxes, reduced the size of the military and largely governed in a hands-off approach, in direct contrast to their Progressive predecessors. He and Coolidge thereafter presided over a period of general peace and prosperity.

This changed however, when Hoover, a big government president, who redirected his previously laissez-faire party into one of trade protectionism, much higher tax rates, wage controls in industry, centralized industrial and agriculture planning, government regulation and so on. Scrambling to react to the Stock Market crash, these large government responses only exacerbated the situation, turning a recession into the beginnings of the Great Depression. Despite Hoover being the most interventionist President to that date, this didn’t stop FDR from blaming the current situation on the free market and Hoover not doing enough. FDR rose to power as a savior figure, promising to do so by greatly increasing the power of the government. His policies elongated the Depression by taxing investment heavily, creating uncertainty in markets, and driving up unemployment particularly in the 1937 “Depression within the Depression.” This latter phase was partially driven by the implementation of the Wagner Act, which had the effect of forcing increased union wages without any increase in productivity while labor demand was already weak and by raising taxes for Social Security. They combined to drastically raise unemployment. These policies were the same things Hoover did in 1930 just rehashed and taken further. Rexford Tuggwell, one of FDR's advisers later commented that although no one would admit it at the time,

...practically the whole New Deal was extrapolated from programs that
Hoover started.

The backlash occurred starting in 1938 and 1940. Despite FRD winning a third term on the grounds of the developing WWII, his liberal congressional allies were defeated in these two elections. The Republicans gained many seats in the Congress and allied with the Southern conservative Democrats, this “conservative coalition” was formed. First led by Senator Taft and later Senator Goldwater, this coalition marginally controlled Congress from 1938 until 1964 with the exception of two of Truman’s years. Though not powerful enough to repeal most of the New Deal programs (as many members now wished to preserve those programs already created), it largely prevented the creation and expansion of new ones. Government policy in this era focused around infrastructure development and scientific research, and not increasing wealth redistribution and social engineering as it had in the New Deal. Further aided by Kennedy’s large tax cut, this period was one of general prosperity.

The cycle reset itself beginning in 1964 with LBJ’s crushing victory over Goldwater, where he gained a large number of Congressional seats. Government went back to the business of increasing wealth redistribution and social engineering. Furthermore, the Federal Reserve started expanding its role again, trying to not only provide price stability but by actively trying to increase employment operating under the notion of the Phillips Curve. This Congressional coalition ruled until 1980, and its Presidents following LBJ were all big government proponents (accept maybe Ford, but he had little policy influence in his two years). As Nixon famously exclaimed, “We’re all Keynesians now.” He continued LBJ’s intervention with price controls, more market intervention, high taxes and via getting off the gold standard completely, now gave even more control to the Federal Reserve. These years from LBJ through Carter saw ever increasing inflation and rising unemployment, a deteriorating fiscal situation and under performing financial markets.

After years of pain, the message that Goldwater failed to win by, Reagan used to sweep to victory in 1980 and with him a new Congressional coalition. The Republicans took the Senate, and gained enough seats in the House that along with the Southern “boll weevil” Democrats, gained an effective majority. In a period of reducing social programs, deregulation, lower taxes, and tighter monetary policy, prosperity began to reemerge. With the exception of the first two years of the Clinton administration, this new Congressional coalition held control from 1980 until 2006 (though they stopped governing this way in the 2000s). Unemployment rates steadily decreased, inflation lessened and the stock market saw its greatest 20 year period in history. This too changed however. Much like Hoover, our outgoing president has been a big government ruler. He took a previously small government party and turned his years of governance into the largest spending increase over a 6 year period (2000 to 2006) since LBJ. The government increased regulations heavily in the wake of September 11th and via Sarbanes Oxley, diminishing the US competitive position, energy markets were manipulated through ethanol and trade protectionism, the fiscal condition worsened, and government continued to gets its hands more involved in housing markets via Fannie and Freddie and the FHA. Foreign intervention became the dominating political issue via Iraq and Afghanistan. And just as FDR blamed a big government Republican for being laissez-faire, so has our next President blamed Bush and the free market, when in reality as I have talked about before, our real mess was largely due to poor government involvement (here and here).

So now there returns a liberal pro-government majority in the Congress, with a President promising larger government yet again. The question now is that is this simply a two year period, as with Truman and Clinton where it is only a pause in the smaller government portion of the cycle, or is this the beginning of the next phase? I hope it is the prior. It may be so, considering this election was more about the electorate being against Republicans then for Democrats. However, I feel it is likely the later. The Republican Party is a damaged brand and is blamed for the mess that we are currently in. The Party furthermore was no longer governing on the small government principals that got them elected in the first place. Also and very importantly, the narrative that was supported by both presidential candidates this year, that “greed” and the lack of government regulation is the root of our mess, is commonly held amongst the electorate. The message of small government is therefore greatly harmed at present. McCain’s concession on this argument has probably done more for the cause of large government than anything else, because it now admits politically and solidifies that the popularly held lessen from our recent problems is not the overreach of government trying to manipulate housing markets but that it was a failure of the free market. That is now mainstream, accepted by both parties with only fringe political forces arguing otherwise. Unless the Democrats now overeach and attach to themselves a lable of being too extreme, then it will be quite some time before the electorate is both in favor of small government again and at the same time trusting in the Republican party to deliver that.

So we are now going to likely have to feel a period of pain again, just as was required in past cycles, before the electorate is once again willing to accept the notion that as Reagan said, “Government isn’t the solution to the problem. Government is the problem.” It took about 7 or 8 years in the Wilson era to come to this conclusion, 10 to 12 years in FDR’s, and about 16 in LBJ’s. It may then be another decade before we wake up in this phase. Enlightening in Obama’s victory speech last night was the following disclaimer about his Presidency that was very slyly snuck into his speech when referring to our problems, economic and other:
The road ahead will be long. Our climb will be steep. We may not get there in
one year or even one term...

He is setting the narrative already for his 2012 reelection. If he gets many of his advocated polices through, raised taxes on capital, greater union power, protectionism through double taxation of foreign profits, and market intervention, which are all strikingly similar to the policies implemented during the past rises of government power that exacerbated our situation, he too will only postpone our recovery now. He is showing us already that his message in the face of a still troubled economy will be the same as FDR’s; that being blame your predecessor for the problems to deflect critisism away from your own failures. FDR and his coalition were able to successfully do that for eight to ten years. I hope this President will not have as much success at that. So maybe Obama will rule in a manner different then what he has said on the campaign trail, and maybe I will be very wrong in my predictions, but if history is a guide, I think we are in for a period of malaise and rough times.



I'm not sure why I'd even attempt to temper EJB's concerns. Frankly, I'd be happy to accept them as perfectly valid and believe that the GOP is in the midst of being relegated to a prolonged minority status. I say this for two reasons: first, much like the penitent man must suffer to attain atonement, the GOP should be punished for the last eight years of incompetent leadership; and second, because I hope that such punishment will help purify the party - and by this I mean, return it to the party of small-government proponents.

I agree with EJB when he posits that much of what we witnessed on Election Night was a public backlash against the GOP for President Bush. The message was loud and clear. Similarly, I also agree with EJB in that I believe the Dems will not push their social agenda anytime soon - Democratic strategists should recognize that the election was not a liberal mandate, but instead an "anyone but them" decree.

EJB lays out the Arthur Schlesinger model of the cyclical nature of American politics quite nicely. Although I have some minor quibbles with his assertions (Wilson as the catalyst of the Progressive Era? TR might have something to say about that), we're not here to debate about the historical accuracy of the Schlesinger model. I would argue, though (as commenter Kim points out (Hi Kim!)) that there is reason to believe that there is a strong undercurrent of fiscally-conservative thought amongst the younger generation. The unprecedented internet popularity of Ron Paul and burgeoning young conservatives like Bobby Jindal testify to this latent potential. If conservatives of that mold step up within the next four years, the 2012 election will be quite interesting - and dare I say it, EJB's concerns might be overstated. So buck up, young Reaganite, your future is not so bleak.

One other reason to question the legitimacy of the fear of Obama ushering in a socialist paradise is the Bill Clinton/George Bush example of unfulfilled expectations. What I mean is that, prior to Clinton taking office, the country expected him to implement all sorts of liberal policies - like universal health care, increased social welfare spending, etc. Instead, because of the deficit left to him by the previous administration, Clinton went small-government and drastically slashed the budget. He famously declared that the era of big government was over. Enter George W. Bush, who, so the country thought, would stick to his campaign promises of cutting taxes and spending. Nobody could have guessed that a conservative - a mere 15 years after Reagan - would increase the strength of the federal government in such ways as we have seen. And as I pointed out in my previous post, Obama has surrounded himself with Clinton aides (Rahm Emmanuel and Robert Rubin, to start). So perhaps we should expect the unexpected from Mr. Obama.

Finally, before I get into my major point (which, as you should all expect of me by now, involves the judicial system), I'd like to respond to the idea that our society has "partially implemented" Marx's ten planks of transitional socialism - because, honestly, I just don't see it.

1)Abolition of all property in land and application of all rents of land to public purposes.
Well...we still have privately owned property and land is not rented for solely public purposes. In fact, we have a pretty strongly supported system of private property in this country. True this Lockean system was undermined by Kelo...but let's be serious, Kelo has not been extended by any District Court. Nobody likes that decision and in fact, many States have enacted legislation directly contrary to its holding. So we're 0 for 1, thus far.

2)A heavy progressive or graduated income tax.
We could have a year-long debate about the definition of "heavy" but I'll be nice and concede this one. You got us there - Sixteenth Amendment? Totally socialist. Next.

3)Abolition of all right of inheritance.
I can tell you, after suffering through four agonizingly painful months of studying property law, that we are nowhere near the implementation of this one. Inheritance of land and chattels is still the default rule in every single State. In fact, the State can only inherit property if the decedent has absolutely no living kin survive him. And, even more interestingly, Article III, Section 3 of the Constitution expressly forbids "Corruption of Blood" and "Forfeiture" as a punishment for Treason. Looks like we're 1 for 3.

4)Confiscation of the property of all emigrants and rebels.
While it is true that there are many in Texas who would whole-heartedly support a law like this, we've yet to see one in any State (thankfully). 1 for 4.

5)Centralization of credit in the hands of the State, by means of a national bank with State capital and exclusive monopoly.
Here we do see some similarities. We have a Federal Reserve which does act as a national bank. The State does have an exclusive monopoly on the type of currency we can use, as well. But credit is not wholly centralized in the State and there is no such monopoly there. Perhaps Obama will act to fully nationalize the credit system due to the crash, but isn't that the crux of our disagreement (whether that will actually happen or not)? This one gets half a point: 1.5 out of 5 now.

6)Centralization of the means of communication and transport in the hands of the State.
Amtrak! I knew it! Socialist bastards. Private communication companies are prevalent. Private transportation companies are prevalent. We do have the DOT, but they're regulatory...they don't own the means of transport. This one fails. 1.5 for 6.

7)Extension of factories and instruments of production owned by the State...the improvement of soil in accordance with a common plan.
Again, I suppose we could argue that the Department of Agriculture does fulfill this tenet, somewhat. But there's a huge difference between regulating agriculture and "improving soil according to a common plan." Farm subsidies abide, but there are still privately owned farms and factories. In fact, it is the norm. I'll be generous and give this one a half point. 2 for 7.

8)Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.
Industrial agricultural that would be a sight. And to dispel the notion that we're all equally liable for labor, I point to myself as evidence. I don't do anything. 2 for 8.

9)Combination of agriculture with manufacturing industries; gradual abolition of distinction between town and country, by a more equitable distribution of the population over the country.
Zuh? I mean...I guess we could argue that the rise of federal supremacy has acted to "gradually abolish the distinction between town and country," but that's a stretch. Our federalist system, especially since the Rehnquist Court, has never been stronger. And what's all this jazz about redistributing the population equally over the country? Evidence that this has not happened: electoral college. 2 for 9.

10)Free education for all children in public schools. Abolition of children's factory labor.
Socialist scum! How dare they want to educate all children free of expense and liberate them from factory work! Seriously, public schools aren't free in the sense that we pay for them through taxes. Plus "all children?" Not even close, sadly. Though we have abolished child labor. So this is a half a point that I think we should be proud of.

The final tally, then is 2.5 out of 10. We're 25% socialist; mainly because we ended child labor, set up the DOT and Dept of Ag and we have the Federal Reserve. I think I'm OK with this.


But here's the real meat of my response to EJB's post. I am most interested not with what EJB has included in his post, but what he has chosen to leave out of the discussion. He mentions the Executive and the Legislative branches and details their progressions, but nowhere is the Judiciary mentioned. This is a key issue when pondering the question of whether Obama's policies will move us even further to the left than FDR and LBJ because it will be the Supreme Court which will ultimately sign off on any Obama-created socialist policy - and it's where we can definitively distinguish Obama's future term(s) from FDR's or LBJ's.

Now, any socialist policy that would continue the work of the New Deal or Great Society would need to be passed pursuant to the Commerce Clause. Everyone pause to shudder while we think of what has become of the Commerce Clause. FDR's Supreme Courts (the Hughes Court and the Stone Court) essentially aided FDR's New Deal by drastically expanding the definition of "commerce" and altering the previously entrenched constitutional interpretation of the Clause. The Court packing scheme that FDR tried to use was not a result of the Court stonewalling him - but actually an attempt to get the Court to approve of every single proposed measure, rather than a mere majority of those measures.

The Hughes Court (1930-1941) included such "judicial activists" as Louis Brandeis, Oliver Wendel Holmes, Harlan Stone and even Hughes himself. These Justices sided with FDR's "commerce" interpretations and helped usher in the New Deal. In fact, only four Justices (McReynolds, Butler, Van Devanter and Sutherland -known collectively as the "Four Horsemen") stood up to FDR during the 1930's. The addition of Benjamin Cardozo gave FDR the edge he needed. Also important to note, FDR had nine Supreme Court appointments starting with Hugo Black in 1937 and lasting through Rutledge in 1943. The other seven were Reed, Frankfurter, Douglas, Stone (to Chief Justice), Byrnes and Jackson. By the time the Stone Court (1941-1946) rolled around, it was filled to the brim with FDR supporters. Thus, the New Deal was approved and facilitated by a very progressive, very executive-deferential, Supreme Court. (Though, if any of you Supreme Court history buffs out there want to yell at me about calling Frankfurter an FDR supporter, I'll accept your criticism...he was the only one, though, who really went conservative after appointment.)

As for LBJ, EJB himself admitted in a previous post that the mid-60's was the height of the Progressive Court. LBJ presided under the Warren Court (1953-1969), which included the most liberal/progressive Justices ever amassed on a single bench. William Brennan (my favorite Justice of all time), Thurgood Marshall, Hugo Black (the very same FDR appointment), Harry Blackmun (who authored the Roe decision), Byron White (who, despite the name, sided with Justice Black quite often), Potter Stewart (a centrist who leaned left) and Tom Clark. The Great Society stood absolutely no chance of being ruled unconstitutional by these guys. None.

Now we have Obama, who comes to the Oval Office in the midst of the Rehnquist "Federalist Revolution." The leading case is US v. Lopez, it was the first time in over seven decades that the Supreme Court limited the government's interpretation of the Commerce Clause. Lopez and its progeny (most importantly Morrison) signaled the end of the Progressive judicial movement. It also sent a message to the country that the Court would no longer defer to the President or to Congress; they would be entirely willing to strike down a democratically passed law if they felt it stretched the Constitution too far. This was a monumental swing. Here's the majority in Lopez: Rehnquist, O'Connor, Scalia, Kennedy, Thomas. Now here's the important part - George W. Bush sealed Obama's fate with unbelievably excellent (in conservatives eyes) Supreme Court appointments. Chief Justice Roberts, who clerked for Rehnquist, is his predecessors student - and an apt one at that. Justice Alito will easily fill in the void that O'Connor left. Thus a strong majority still exists (Roberts, Alito, Scalia, Thomas, Kennedy). Even more encouraging for those worried about a socialist rebirth, none of those five are going anywhere for the next eight years. Scalia is 72 but shows no signs of slowing. Kennedy is 72 as well, but has expressed no hint of retirement plans. Thomas is 60. Alito is 58. Roberts is 53 (53! A thirty-year Roberts Court is entirely possible! Blech...). Thus, any Supreme Court vacancies that Obama would get to fill would likely be liberal Justices (I'm looking at you Stevens, Ginsburg and Souter - all of whom have expressed their desire to retire if Obama is elected).

So, I too apologize for the length of this post, but I feel that it was important to note. I think it is the most important issue regarding this debate, because, again, it is the Supreme Court that must ultimately decide the fate of any proposed legislation. Fiscally-conservative conservatives (or Goldwater republicans or classically liberal republicans or small-government conservatives or whatever you guys choose to call yourselves these days) can rest easy in the knowledge that their hold on the judiciary (in the Supreme Court at least) is pretty strong. That's one thing Bush did well for his party.