The Failure of Balance Of Power In the New Deal

Great comment/article by Bruce, but I have one caveat to raise: the oil shock and the crisis of profitability of the 1970’s. I think those have more to do with the failure of the New Deal than a lack of boomer discipline.

I’ve noticed ever since Bernie Sanders ran in 2016 that there’s this (honestly) reactionary tendency on the left to try to return to New Deal Keynesianism, 1.) as if it were socialism, and 2.) without understanding what change in material conditions led to its collapse in the first place.

Sure, “we didn’t have enough discipline” or “it was sabotaged by those evil ” are a part of the problem, but they don’t address why the system itself wasn’t resilient enough to weather crises or withstand those adversaries. And honestly, they’re the same excuses conservatives and Nazis use for why their imagined past utopias failed, just that they blame feminists, left wing college professors, or Jews instead of capitalists and billionaires.

And to Purple Library Guy’s point, I think it goes to show why social democracy is a temporary bandaid at best and not a permanent solution, because it doesn’t actually remove or resolve the root cause of the problem: the capitalist economic system itself.

I would 100% take the New Deal and the Great Society over the modern political hellscape we’re entering, but they failed for a reason and we have to learn from and confront the real reasons why if we’re ever going to get out of this alive.

Much of the New Deal was actually preparation for the big war to come, which many of the movers and shakers around Roosevelt wanted.

When ordinary people had it good by the 1960s, they stopped caring

There’s a “world war” the “greatest generation” fights, then those wonderful idyllic fifties, then it’s all over. Good god.

This isn’t to say that most of the things Bruce mentioned initially:

the theory that the political power of citizens working together could oppose and balance the power of the wealthy and business corporations. Labor unions. Public utility regulation. Savings & Loans and credit unions and local banks to oppose the money center giants. Farmers’ cooperatives. A complex system of agricultural supports to limit the power of food processors. Antitrust. Securities and financial markets regulation.

weren’t helpful and aren’t urgently necessary now. It’s simply that there is much more to the story than this. There was much to build on, but there was much to be desired as well, and much that needed to be fundamentally changed.

When ordinary people had it good by the 1960s

Who are these “ordinary people” Bruce? The New Deal established and cemented redlining, which is correctly notorious for its wanton discrimination against blacks, but was also directed against poor and “lessers” generally. It was actually much more akin to a centrally-planned intentional dividing of the population largely by race, to a lesser extent by religion and national origin. It also greatly impacted poor and less desirable whites, so class overall was a big issue. It did all this via control and management of the resources necessary to survive in the new world being created.

https://academic.oup.com/jah/article-abstract/108/1/42/6295167?redirectedFrom=fulltext&login=false

https://web.archive.org/web/20170317143050/https://fairhousing.com/resources/history-insurance-redlining

The wish for a “permanent” solution or an “automatic self-regulating” solution to the problem of governing from below the elites that dominate us from above seems to me to lead in the direction of dangerous illusions.

At the most fundamental levels, a political society and its organized system of production and distribution is constantly changing, driven in the first instance by the churn of generational change and in the second by learning, depletion, accumulation, technological change et cetera. Political societies and their political economies can not be put into a finished state or, really, any sort of stasis prolonged thru generations. Human societies renew themselves or fail thru cycles of birth, growth, decay and death because human societies are fundamentally organic and rooted in an unstable earth.

It is not as if experiments in final solutions have never been tried. The Bolsheviks were determined to wrest the means of production from the rich in the name of socialism and they did so, at the direction of Stalin. Doesn’t mean we cannot try again, but some caution with regard to such ambitions and the permanency of their effects might be indicated.

The political arithmetic of 500 is not something I could defend, but the point is not mathematical. The anthropological point is that people institute governments — formal systems of custom and law — in an often futile attempt to constrain from below the potential rapaciousness of social organization by domination when usurped by sociopaths. Hierarchies can generate enormous “political” power that can be applied to remarkable achievements and amplification of human productive capacity, but they put a few in charge of the many and that often doesn’t work out well for the many. Satan would rather rule in hell than serve in heaven, and so we all get hell unless we can find ways to keep Satan and his minions out of the seats of power created by large-scale cooperation directed thru hierarchies.

That such efforts to constrain elite power succeed to some degree may be attributed in part to the desire of at least some elite factions not to share hell when a quieter and more pleasant and honorable life is an option. Historically, the willingness of medieval and early modern English monarchs to share power with assembled parliaments of local notables has often been explained by a desire to economize on the costs of domination, costs that can escalate with diminishing returns — the expense of manufacturing consent being less than the expenditure for constant riot suppression or civil war. For centuries, English governments calculated on what might reincarnate Wat Tyler. “Absolute power corrupts absolutely” is an English dictum, too, and argues that selecting for angels may not be as effective in keeping Satan from power as simply not feeding any individual the poison of too much power, while retaining for the state altogether unlimited theoretical authority provided a consensus for its exercise can be assembled. A lot of democracies elsewhere have floundered on popular disgust with parliamentary bickering and indecision and been tempted by the apparently rational and expedient alternative of a unitary executive. (France has had mixed results with Napoleons.)

Competing narratives regarding whether the Commons constrained the arbitrary rule of the Monarch or the Monarch constrained the rapacious Nobility followed, giving rise to the idle pastime known as political science.

The New Deal was a surprisingly successful interim attempt to push back against the burgeoning political power of Capitalism set in motion by the Industrial Revolution(s), even if later subverted. Its success can be attributed in part to good planning and political organization, some of it long latent in dissent and well-considered critiques, and in part to the accidents of political circumstances.

FDR took advantage of his family name and its connection to cousin Teddy and the earlier Progressive Movement, an institution-building movement that was in many ways profoundly conservative. The most radical initiative FDR took in his 100 days was to effectively end the Gold Standard, which he did with a rapid-fire succession of enactments that could hardly be more radical, entailing the near-absolute prohibition on private ownership of gold specie or bullion. That was politically possible because the Democratic Party had inherited the radicalism of the Populists from Bryant and because FDR was very clever in continuing a nominal gold standard, showily housing vast quantities of gold at Fort Know and so on. The eventually successful agricultural policy reforms I mentioned were a second try within the New Deal context, but part of a succession of efforts that began in the 1920s when a severe agricultural depression took hold after the artificial boom of World War I.

Ian has sometimes laid emphasis on high marginal income tax rates as a key feature of what made the New Deal successful, as well as, contrariwise, what made the Reagan Revolution so corrupting. I agree. Very low marginal income tax rates have led to reckless behavior, as well as cemented an alliance between professional managers as a class and finance capitalists as a class, which is inimical to the general welfare. That high marginal tax rates were earlier acceptable to the rich, though, is due in large part to the accident of the World Wars and the need to stabilize the value of the large national debt accumulated to finance the war efforts, a necessity they by and large accepted as a class, just as the very rich accepted a degree of institutionalized “socialism” in the form of unemployment compensation, socialized pensions and health care (in Europe) as long as the working and middle classes paid for it themselves.

It is often said that it took the advent of WWII to fully end the American Great Depression and I think that’s right. From 1936 onward, an implicit stalemate in the political struggle over the distribution of income was holding the country back from full employment. The Keynesian prescription, which professional economists endorsed after WWII, was inadequate in not prescribing the necessity of institutional reform in finance and collective bargaining and not identifying the need to rebuild the asset stock of the working and middle classes. The New Deal, taken altogether, was decidedly better than Keynes in these points. But, it was the coming of War as well as its aftermath that broke the stalemate that had taken hold in the mid-1930s over the distribution of income and risk in the economy and triggered a massive shift toward greater economic egalitarianism the momentum of which carried into the 1960s.

There’s a fair quantity of political propaganda available to obscure this basic outline. The allegedly automatic self-regulating “market economy” of the Chicago boys, Samuelson and Friedman, is part of this, obscuring the fact that the organization of the economy is accomplished almost entirely by bureaucracies and their rules. The Chicago School’s “Market Economy” took no account of finance and misanalyzed money. Another distraction engineered by economists is the counterfactual trope of meliorating the market economy’s “natural” distribution of income with tax policy. Some of the propaganda is less subtle, such as the oft-repeated slander that the New Deal was racist in design and worked against the welfare of blacks. Those who never knew any real history are disabled from using it if not from repeating it.

Finally, let me say I agree with Dan and elkern that the New Deal carried with it the seeds of its own destruction. Its success and the success of the Great Compression of income distribution during the war effort and GI Bill era created new problems that the decaying political coalition assembled to back the New Deal did not anticipate. Who knew the CIA would grow up to assassinate a President (or at least cover it up so that no one could ever trust that they knew anything for sure ever again)?

There is a recent article in “The Atlantic” purporting to explain why the American People demanded an end to the New Deal. I am sure that was the same election which we all voted for Global Warming.

I am in my ’60s now. I remember a high-school economics teacher ranting about the horrible injustice of the incompetent, inefficient U.S. Postal Service having a government-enforced monopoly.

It wasn’t until years later I found out why the Post Office has a monopoly; because no one actually wants to compete with the Post Office; they just want to appropriate the Post Offices most profitable markets, and to not serve rural routes and probably small towns.

While I was growing up amidst the wealth of the New Deal I can’t remember anyone explaining to me why and how it existed.

But I damn sure remember what in retrospect were really attacks on it.

Almost the first thing said in the first Political Science course I took; U.S. Presidents have almost no effect on the economy.
That the U.S. economy after WWII is provably more prosperous under Democratic administrations was an ‘anomaly’.
The best antidote is a graph showing by-month U.S. GNP 1928-1941. Look at that line. Yes, there is a dip in it (endlessly exploited to pretend that the New Deal was failing) where FDR listened to inflation hawks.
But I don’t understand why WWII is necessary to the story.
Ronald Reagan changed the fundamental structure of the U.S. economy by ignoring 50 years of anti-trust law.
When Jimmy Carter destroyed the hard-won, exquisitely thought-out regulatory state, (too late Steve Bannon) supposedly egged on by Ralph Nader, I remember exactly no one explaining that if we wanted to see the future, all we needed to do was go straight back to the 1920s.
In 1968, we actually had universal single-payer health insurance. It just wasn’t through the federal government. Blue Cross/Blue Shield were state-level, non-profits that charged every member the same flat rate. They were slowly, ever so slowly subverted by for-profits who were allowed to cherry-pick away their healthiest customers. I don’t remember anyone making it an issue while it was happening.

All I heard were attacks on the status quo, and hardly any defenses.

By the way, who designed and engineered the intellectual sewage lagoon in the first place from which Milton Friedman finally emerged? Who spent decades of time and money filling it up with Friedmanogenic sewage to begin with?

A detailed history of that might be useful too. And a detailed history of all the anti-New Deal laws and rules written by the Upper Class Occupation Government so that people might figure out how to “walk back the cat” on repealing hostile laws and un-writing hostile rules and regulations.

And also a detailed history of all the movements and activities of bunchloads of people in regionalocal areas parallel to government and outside the scope of its powers to enhance their own and eachothers’ survival.

It stinks. The comment above which started with, 15 years ago I came up with….,
was supposed to be the second part of a 3 part comment on the thread about mass immigration. I have to seriously wonder if I lost my chance to change the history of this decade by misplacing this comment.