Few outside the Democrat party understand what has just happened in the historic primary season that recently ended. But in those primaries, the party made a fundamental decision that marks a dramatic turning point in American politics.
Bill Clinton swept up the Democrats in 1992 based on the new politics of the Democrat Leadership Council (DLC), which he headed. The DLC sought to remake the Democrats based on recognition of what had then just happened in the real world of American politics. Reagan’s Republicans had won three straight national elections, thrashing unreconstructed liberals like Mondale and Dukakis in landslides.
The DLC sought to accommodate what they saw as the valid components of the Reagan Revolution. The historic battle between capitalism and socialism was over, and capitalism had won. The Democrats had to modify their policies and their rhetoric to recognize that. Most importantly, they had to accommodate the essential vision that led to the political success of the Reagan Revolution — the American people overwhelmingly favored the policies of economic growth over the policies of taxation and redistribution (“It’s the economy, stupid”).
This meant that Democrats had to build on, not reject, the essentials of free markets, and the realities of globalization. Democrats didn’t have to swallow the whole libertarian agenda to succeed in this new environment. But they had to project an agenda that plausibly would advance economic growth, not ignore it and all of its possibilities and implications, or even actively undermine it. This became Bill Clinton’s awkwardly expressed “Grow the Economy” theme, which was meant to imply that it was still the government that would be producing the economic growth through its wise policies, not the decentralized free market by itself.
This meant, in turn, that the Democrats were not going back to income tax rates of 70% and even 90% as in the heyday of the Left. They could still raise tax rates somewhat on “the rich,” especially if they promised at the same time to cut taxes for the middle class, a central theme of Clinton’s 1992 campaign that was completely forgotten after the election. But it was also time to recognize and embrace the realities of free trade, and the desirability and overwhelming popularity of welfare reform based on work requirements. It was also time to recognize and extend the successes of deregulation.
The Democrats went along with it because having lost 3 straight national elections, and 5 of the last 6, they were hungry for power. President Clinton stumbled out of the gate because he didn’t initially lead with this vision that won him the election, but rather with Hillary’s old 1930s warhorse vision of socialized medicine. That produced the historic Gingrich Revolution of 1994. The insight that made Clinton’s presidency a success is that he then went along with the policies of the Gingrich congressional majorities, attacking and trimming only what could be projected as its excesses. The result was robust economic growth, and even a booming budget surplus, vindicating Clinton’s DLC vision. Thus Clinton became the only Democrat since Roosevelt to serve two consecutive terms, with only one more Democrat, Woodrow Wilson, having accomplished that since Andrew Jackson.
BUT THE DEMOCRAT IDEOLOGUES, what Howard Dean later described as the Democrat wing of the Democrat party, hated and despised what they saw as Clinton’s sellout. It was these people who, once Dean self-destructed, nominated the ultraliberal John Kerry in 2004. Right after departing service in Vietnam, Kerry had actually falsely accused his fellow American servicemen, on an international media stage, of committing war atrocities. Somehow, the Democrats to this day cannot understand why that came back to bite him.
The great showdown for the soul of the Democrats came in the 2008 primaries. Barack Obama, the most left-wing of all elected national Democrats, ultimately captured the hearts of the Democrat ideologues. Hillary never really believed in her husband’s neoliberal DLC policies. Personally, she herself was still with Eleanor Roosevelt and the Old Left of the 1930s. But recognizing the political success of her husband’s vision, and the political failures of the more left-wing candidates, she tried to project neoliberal responsibility and rhetorically hearkened back to the DLC successes of her husband’s administration. That made her the target of the Democrat ideologues, resulting in her defeat.
Elections have consequences. Obama’s left-wingers have now completely routed the DLC out of today’s Democrat party. Make no mistake about it. The New Left is now in charge of the Democrats, with Obama, Pelosi and Dean at the helm. This is not your father’s Democrat party, or Bill Clinton’s.
The political bible of this left-wing resurgence is a 2004 book What’s the Matter with Kansas? by Thomas Frank, a left-wing writer. Frank reviews in detail the politics of his home state of Kansas to argue his thesis that Republicans have successfully used distracting social conservative issues like abortion, guns, and gay marriage to win majority support from working-class voters for conservative candidates who support free-market policies contrary to the economic interests of that same working class. This book is widely credited with inspiring the strategic vision that led to the Democrat takeover of Congress in 2006. It has also led some putatively conservative writers to argue for a new lefty version of conservative economics so Republicans and conservatives can stay in the game in competing for working-class votes.
The social conservative movement, Frank writes, “rallies
citizens who would once have been reliable partisans of the New
Deal to the standard of conservatism.” But once those conservatives
are elected, what do they do?
Over the last three decades they have smashed the welfare state, reduced the tax burden on corporations and the wealthy, and generally facilitated the country’s return to a nineteenth-century pattern of wealth distribution. Thus the primary contradiction of the backlash: it is a working class movement that has done incalculable, historic harm to working class people.
Having rolled back the landmark economic reforms of the sixties (the war on poverty) and those of the thirties (labor law, agricultural price supports, banking regulation), its leaders now turn their guns on the accomplishments of the earliest years of progressivism (Woodrow Wilson’s estate tax; Theodore Roosevelt’s antitrust measures). With a little more effort, the backlash may well repeal the entire twentieth century.
THIS IS A REVEALING book about what is happening in American politics today, though in none of the ways intended by the author. For one thing, as the above quotes show, it reveals that the lefty Democrat base of Obama, Dean, and Pelosi is not living in the real world. Now that the conservatives have “smashed the welfare state,” why is it that spending on Social Security, Medicare and Medicaid is at record levels for each program, the highest in history, with the three programs now slated to lead over the next 35 years to the Federal government doubling in size relative to the economy (GDP)? Having rolled back the War on Poverty, why are we still spending close to $700 billion each year on means-tested welfare programs, more than we spend on national defense? Add up Federal, state and local spending on education, and you will find that total is higher than spending on national defense as well, at record levels, higher than ever.
American corporations now suffer the second highest corporate tax rate in the industrialized world. The top 1% of income earners now pay 40% of all income taxes, almost twice their share of the national income. It is the Democrat Left that wants to roll back historic labor law reforms, seeking laws to deny workers their longstanding right to secret ballot elections on unionization, which would allow union thugs to beat them, literally, into publicly signing cards to recognize union control over their jobs. The latest farm bill was for $300 billion, even though farmers earn more than the national average, with most of that taxpayer money actually going to the richest agribusinesses. Theodore Roosevelt’s vision of antitrust was rolled back almost 30 years ago now, based on extensive academic research in the 1970s showing that the original version of antitrust during the “progressive era” was mostly emotional nonsense. Robust antitrust law now focuses on actual restraints of trade, such as price fixing.
Frank also reports to us that conservatives in Kansas had cut state taxes so “compulsively through the nineties” that “the only route remaining” for the state government “is the one conservatives have insisted we take all along, on the state as well as the national level: government, that hated entity, will simply have to wither away.” The Tax Foundation reports that Kansas has the 25th-lowest tax burden among the 50 states.
In 250 pages, the book never actually gets around to arguing for its essential foundation that free-market economics is contrary to the interests of the working class. It simply assumes that point, as revealed on the first page, where Frank recounts a discussion with a friend about an “impoverished” Great Plains county that had voted overwhelmingly for Bush in 2000. “How can anyone who has ever worked for someone else vote Republican?” his friend asked. End of discussion. Frank saw that as a brilliant insight into political economy to open his analysis, indeed, “the preeminent question of our times.”
More is revealed when Frank later explains his personal story a
about how he came to embrace the Left’s understanding of class and
economics (Marxism). Frank grew up in a prosperous, though not
rich, family in the Mission Hills area of Johnson County, Kansas,
the elite, rich, upper-class suburb of Kansas City, the richest in
all of Kansas. As a youth, he was a patriotic, free-market
conservative on his high school debate team. But in college, the
Left turned him with the argument that all his supposed reasoning
and theories regarding the wonders and success of the free market
were merely self-interested rationalizations for the wealth he was
born into. Frank writes,
The theories of the universe that I had developed so painstakingly…were but fantasies that arose directly from my particular perch in life. Here was I, a Mission Hills lad, growing up in one of the regional arcadias of American capitalism…and what I had managed to do was invent a romantic justification for precisely the system of social arrangements that had made Mission Hills possible.
So the Left successfully used white guilt to convince Frank to drop all reasoning, logic, and common sense as self-interested claptrap, and to embrace the Left and socialism, on faith. In other words, it was like a religious conversion. That is why he and others on the Left never argue for socialist, neo-Marxism, they simply assert it as self-evident, because for them it is a religion adopted on faith, not a matter of economic analysis. That is why they are often so mean and personal rather than advancing a reasoned discussion of ideas, because they are engaged in a religious war, not an academic seminar debating the possibility that their religion might be false.
I RECOGNIZE the trick well. The Left tried to use it on me at Harvard. I laughed it off. I came to Harvard looking for the best arguments for socialism, the Left, and modern liberalism. Instead of offering me reason and logic, they tried to browbeat me with guilt. I wasn’t buying it. I went to Harvard believing in both Jesus Christ and Ayn Rand. Despite the dominant Left’s best efforts to the contrary there, today I still believe in Jesus, and Von Mises, and Hayek, and Friedman, and Mundell, and Laffer, not to mention Locke, and Jefferson, and Nozick. What the naive Left, represented by Frank, fails to recognize is that socialism, Marxism, indeed, the liberal “welfare state,” are all merely a “romantic justification,” a “self-interested rationalization” for the aggrandizement of government power and the true ruling classes. That is why for so long all the tin pot dictators of the Third World tried to pass themselves off as Marxist revolutionaries.
Of course, my parents didn’t give me much of a foundation for liberal guilt. Both high school dropouts, they achieved a good measure of prosperity by hard work, surpassing my grandparents, who never finished grade school. But my mother could only dream of places like Mission Hills. They all became lifelong Republicans, starting in 1952, seeing the Democrats as just putting more burdens in their way.
It is Frank who unfortunately missed the 20th century. For what it demonstrated is the utter failure of socialism, Marxism, and all the fantasies of the Left. West Germany versus East Germany, South Korea versus North Korea, Japan versus China, the United States versus Soviet Russia, Miami versus Cuba, capitalism produced vast wealth and prosperity, the Left and its socialism produced utter failure. That is why today the supply-side revolution, tax cuts, privatization, deregulation and free trade are sweeping the world, not because the working class has become confused by abortion, gun control, and gay rights.
We can see the same contrasts right here in America. Liberalism has had dominant control in most major cities for generations now. But the working classes have fled those cities, which have declined dramatically in population and fallen deeper and deeper into economic failure. In his recent bestseller Real Change, Newt Gingrich documents this in the example of Detroit, where a conservative hasn’t been seen in government for probably a hundred years. Since 1950, the population of Detroit has fallen from 1.8 million to 871,000. From 1947 to 1967, Detroit lost 120,000 manufacturing jobs. Today, it enjoys the highest unemployment rate in the nation, with one third of its residents in poverty. The largest employer in the city is the public schools, with the city government second largest. Less than one-fourth of freshmen in the city’s public high schools graduate in four years, even though the city spends more per student than rich Marin County, California, which graduates 97% of its high school freshmen on time.
This is the result of government by the progressive proud liberals Frank yearns for. When the nation focused on the squalor and poverty in New Orleans at the time of Hurricane Katrina, what it was witnessing was the result again of decades of liberal programs and misrule.
The working class of Kansas votes for capitalist candidates because they understand this. They know that they are not going to prosper by sharply raising taxes on investors, employers and American corporations trying to compete in a global economy. Prosperity is not going to be achieved by crippling the economy with harsh economic and environmental regulatory burdens. They are not going to gain the robust prosperity they work for by voting themselves burdensome government handouts that will drive the economy down through overwhelming government spending. They know their economic goals are only going to be achieved by real economic growth that empowers them to earn their own way.
THE FORMULA FOR PROSPERITY for working people is no great secret. Enforce property rights and freedom of contract. Keep taxes as low as possible to maximize the incentives for investment, entrepreneurship, business expansion, innovation, inventiveness, and work. Minimize regulatory burdens to what is essential for public safety to avoid unnecessary economic costs. Maintain a stable currency. It has worked all over the world, and throughout history, wherever and whenever it has been tried. Again, the working people of Kansas, and all across America, know this, even if Frank and the increasingly left-wing Democrat party base doesn’t. Indeed, even uneducated Central American campesinos know it. That is why so many of them embark on risky adventures to sneak into America.
But, still, Frank crucifies the DLC for its “criminally stupid
strategy”. Frank argues that the DLC,
has long been pushing the party to forget blue collar voters and concentrate instead on recruiting affluent, white collar professionals who are liberal on social issues. The larger interests that the DLC wants desperately to court are corporations, capable of generating campaign contributions far outweighing anything raised by organized labor. The way to collect the votes and — more important — the money of these coveted constituencies, “New Democrats” think, is to stand rock solid on, say, the pro-choice position while making endless concessions on economic issues, on welfare, NAFTA, Social Security, labor law, privatization, deregulation, and the rest of it.
Frank indicates the solution in saying, “by dropping the class language that once distinguished them sharply from Republicans, [Democrats] have left themselves vulnerable to cultural wedge issues like guns and abortion and the rest whose hallucinatory appeal would ordinarily be far overshadowed by material concerns.” What Frank is preaching is for the Democrats to go on the offensive against people like those of Mission Hills and Johnson County with taxes high enough to really hurt, and regulatory takeovers of their businesses, and to offer the working class a sweeping array of new government handouts that will expand the politics of dependency. If the Democrats would do that, the working class would forget about abortion, guns, and Jesus, and start voting Democrat again.
This doesn’t give credit to the reality of social conservative issues. Indeed, the whole thesis makes no sense. Not only is the economics all wrong, as discussed above, but the political analysis is missing something also. Why would social conservative issues make the working class vote for conservative economic policies supposedly contrary to their interests? There is nothing stopping always opportunistic candidates from running as social conservatives and economic liberals. Frank is missing something in failing to explain why this hasn’t worked. We will see what is missing next week when I discuss Grover Norquist’s new book, Leave Us Alone.
YET FOR THIS YEAR’S politics, Frank’s analysis is seen as the new strategic foundation for the Obama, Pelosi, Dean Democrats. Obama slew the DLC Clintons by running explicitly to the Left. And he is not shy about continuing to run on proposals not just to raise taxes, but to sharply increase every federal tax, to fund the most massive increase in new government programs and handouts in world history, not just for the poor but for the working class and the middle class as well. The confidence that this will work grows out of Frank’s analysis.
It won’t work. I don’t think Obama’s unabashed, ultraleft liberalism will work even in this year when the hip business community still thinks the Democrats will just bring back Clinton’s DLC business friendly policies of the 1990s. They have no inkling that the Franks of the world see them as the new lambs to be slaughtered on the altar of the latest neo-socialist political and economic experiment.
And it won’t work over the long run, because the Left has never been living in the real world. That is why they failed so spectacularly throughout the 20th century. If elected, either Obama will abandon the neo-socialism of Frank, and of his own past, or it is he and Frank’s new new Democrats who will be crucified on a cross of gold, after they bring the glories of the economic policies of Hugo Chavez to these shores.
What Frank and his cohorts most fundamentally fail to recognize is that the rise of socialism was itself a “backlash” against the rise of industrial capitalism. It tried to address the resulting concerns and dislocations of that time, roughly from the 1870s to the 1930s. It is based on a fundamentally wrong, rudimentary, economic analysis of the time, of the great class conflict between workers and employers, when real capitalist economics is based on the cooperation of workers and employers, of capital and labor, to great mutual benefit. Consequently, the persistent neo-socialism of today does not address real problems, needs and concerns of the modern world now close to a hundred years later. It has been left behind in our politics because it is hopelessly outdated, not because of confusion over God, guns and gays.
A real problem, however, is that a huge portion of Western intelligentsia is stuck in the nostalgia and romance of the intellectual and political battles of that 1870s to 1930s era. The loss of their intellectual resources, and their actual persistent battle against the modern world and its highly effective economic system, is a huge drain on the West, and America in particular, the hugely successful bastion of capitalism that is the target of the worldwide Left’s religious rejectionism. It would be a huge breakthrough for America, and the entire world, to bore through to this frozen-in-time intellectual class, and get them to realize that they need to move on. Capitalism is here to stay.
Taxes, Education, Trade, Barack Obama, Bill Clinton, Economics, Business, Social Security, Medicaid, Religion, Abortion, Environment, Law, Russia, NATO, North Korea, Socialism, Conservatism, Medicare
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
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