The View From 1776

David Wessel writes in the November 30 edition of the Wall Street journal (here, if you’re an online subscriber):

In campaign rhetoric, Democrats raised expectations they would do more than Republicans to boost wages and living standards of ordinary Americans......Now Democrats have to deliver, or at least look like they’re trying.

......[Robert Reich, the former Clinton labor secretary], recites a familiar list: trade policy, industrial policy—government attempts to influence the flow of capital toward promising industries and companies—antitrust, publicly financed research and development, and stronger trade unions.

The sorts of policies advocated by Mr. Reich are what led us to economic and social disaster in the 1930s and again in the 1960s and 70s.  Those policies are also essential elements in the economic doctrine of Mussolini’s and Hitler’s Fascism.

In both Italian Fascism and German National Socialism, the political state had the last word in establishing wages, hours, production volumes, and sale prices of goods.  Unlike Soviet Communism, Fascism left property ownership in its original hands, recognizing that regulatory control was sufficient to carry out political and economic policies.  Labor unions remained in existence and were strengthened vis a vis industrialists, and farmers were assured higher prices. 

In common with the left-wing liberals of the Democratic Party, Fascists believed that private individuals and private business counted for little, if anything, in the creation of jobs and the necessary production of society’s goods and services.  People’s lives and livelihoods were viewed as the creation of the political state, which therefore had the last word in regulating human activity.

President Franklin Roosevelt, in his first inaugural address of March 4, 1933, put it this way:

Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.  Primarily, this is because the rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence……Our greatest primary task is to put people to work…It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of war……Hand in hand with this, we must frankly recognize the overbalance of population in our industrial centers and, by engaging on a national scale in the redistribution, endeavor to provide a better use of the land for those best fitted for the land.…It can be helped by the unifying of relief activities which today are often scattered, uneconomical and unequal.  It can be helped by national planning for and supervision of all forms of transportation and of communications and other utilities which have a definite public character…if we are to go forward we must move as a trained and loyal army willing to sacrifice for the good of the common discipline, because, without such discipline, no progress is made…We are, I know, ready and willing to submit our lives and property to such discipline because it makes possible a leadership which aims at a larger good.…With this pledge taken, I assume unhesitatingly the leadership of this great army of our people, dedicated to a disciplined attack upon our common problems.…

We already know from Democrats’ campaign rhetoric that, for starters, they intend to fix wages and to jack up income tax rates.

Why Democrats repeatedly come back to this Fascist program is one of politics’ great puzzlements.  It failed miserably, first under Franklin Roosevelt, then under Lyndon Johnson. 

Under Roosevelt, from 1933 until our entry into World War II in 1941, unemployment never averaged less than triple the level prevailing today.  Economic activity remained stagnant for eight dreary years.  Not until the 1950s did the stock market, the best single index of economic activity, regain its 1929 level.

Businessmen in the 1930s were frightened by Roosevelt’s continual attacks on them as “economic royalists” and his tripling income tax rates into the 70+ percent range.  Federal planners never stopped tinkering with new plans, bureaus, taxes, and regulations, which made increased production and new hiring by private business a chancy undertaking.  The National Recovery Administration (NRA) implemented an almost exact copy of Mussolini’s Fascist State Corporatism, with industry councils of producers and labor unions directed by Federal regulators.  Wages, prices, and production quotas were to be controlled by NRA administrators.  Farm production was nationalized, with prices fixed by Federal regulators and farmers told what and how much they could raise.

Repetition of the Roosevelt’s Fascist policies under the Great Society of the 1960s and 70s produced the second greatest economic and social disaster in our history.  We no longer had the NRA State Corporatism, but the numbers of Federal regulations climbed into the millions, while spreading to cover an ever-widening array of activity, all under an exploding list of new Federal agencies.  Fascist-socialistic income redistribution reached unprecedented heights with the Great Society’s vast array of welfare hand-out entitlements and with the replacement of equal opportunity under the law by affirmative action.

Inflation soared into the 20 percent range, causing families to lose more than half the purchasing power of their life savings.  Unemployment became a major problem, and manufacturing companies shut down across the industrial Midwest, turning it into the Rust Bowl.  Men began “moonlighting” (holding two and three jobs) and the rate of women’s participation in the full-time workforce roughly doubled, both just to make enough money to pay the rent and buy groceries.

Over the coming months, remember that when San Francisco and Harlem socialists lay out their aims, no matter what they promise, they are once again planning to push us off the economic cliff, further into Fascist State Corporatism.

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