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Thursday, October 20th, 2011
|Democrats, Republicans, and Wall Street -- some history, part I
A lot of ignorant blather about Republicans and Big Business has been thrown up in recent years, by self-interested "progressives" as well as ignorant Occupiers of Wall Street. They fail to see that Big Business's current choice of political leadership is one, B.H.Obama. In his unprecedented spendiferousness [both puns fully intentional], Obama returns the favor. This is nothing new. The Democrats have been playing games with the nation's financial sector and blaming the other side for it since the beginnings of their party.
Andrew Jackson, the co-founder of the modern Democratic Party (with Martin Van Buren), hated banks but needed somebody to fund his schemes. He managed to kill off the Second Bank of the United States (and thus bring on the Panic of 1837, just in time to doom Van Buren's presidency). He preferred what were called at the time "pet banks" -- local institutions whose proprietors were on his side. He loved him some sweetheart deals. Nothing new there.
Jackson also wanted loose standards on currency and loans. He was the original champion of "The West" (meaning, in that day, everything beyond the Appalachians). In order to settle the country, he wanted to make it easy to borrow money to buy land. This was portrayed as a boon to the settlers, who voted for him in droves; in fact, the settlers were hardest hit when the shaky banks they got their loose money from failed, as they did all too frequently. The real winners in Jackson's soft money economics were the rich (or intending to make it rich) speculators, who bought and sold land with dizzying speed. Without the need to show a truly solid bottom line, the speculators made huge fortunes, whether the settlers succeeded or failed.
The speculators in Western lands turned out to be the same people who bankrolled the expansion of slavery, too. The "Slave Interest" was inextricably tangled up with populist politics. The hardscrabble white settlers were co-opted to support a system they at first (and often consistently) found repugnant; like today's stooges, they couldn't see how supporting Jacksonian Democracy wound up supporting ever-more stringent restrictions on freeing slaves, ever-harsher laws to recapture fugitive slaves, and the ever-louder chatter about nullification and secession.
My point here is, the Democratic Party was born demagoguing economic issues. Some things never change. The Republicans, of course, didn't come on the scene until 1856, so their views on these early 19th Century issues can only be guessed at. Their predecessors, the Whigs, were appalled by the Jacksonians' ways, but they never found a coherent set of issues beyond their opposition to Jackson himself. In the end, their inability to finesse the slavery issue broke the Whigs apart and left the field to the new Republican Party, of which more in my next.
|Democrats, Republicans, and Wall Street -- some history, part II
The Republican Party was not, in its beginnings, much concerned with economics beyond an opposition to chattel slavery, or, at least, opposition to its intrusion into parts of the country from which it had previously been excluded. The first great principles, then, to develop within the party were the preservation of the Union, the elimination of slavery, and the protection of civil rights for African-Americans. These have been prominent parts of the Republican platforms and history ever since. That the party of slavery, of Jim Crow, and of the KKK -- the Democratic Party -- has often been successful in tagging their opponents as racist is one of the ironies of history.
Between the Civil War and the Great Depression, however, economics were front and center of many an election. Some of the issues of that day (e.g., bimetallism and the tariff) are hard to grasp today. Others are more enduring. But the whole question of Big Business emerges at this time in our history.
The first Big Business concern was the Railroads. To unify the country in one great transcontinental grid was the achievement of the age. It took a lot of government support to do. And so, the Railroads -- the first truly national corporations -- were born as conjoined twins with government funding. The Railroad barons bought and sold politicians, even as politicians touted Railroads as a means of developing the wealth of their States and Territories. As the nation boomed economically following the Civil War, large financial institutions -- the "Trusts" -- also developed, as did large conglomerates assembled by financiers such as John D. Rockefeller, J.P. Morgan, and others.
Big Business was largely indifferent to party politics. Except for the Railroads' need for subsidies in the form of land, government had little to offer the financiers. The presidency was comparatively weak, and Congress met only part-time. The Wall Streeters formed an aristocracy of money that governed themselves. Newbies were cautioned, "Buyer, beware," for there was no regulation -- and no mercy for those who weren't "in the know." The two major parties didn't have much to do with Big Business, either.
The Democrats pursued an on-again, off-again love affair with free silver and bimetallism, attempting to update the loose money policies of Andrew Jackson for the conditions of the day. "You shall not crucify mankind upon a cross of gold," declared William Jennings Bryan, although fellow Democrat Grover Cleveland was a supporter of the gold standard. Truth to tell, the Democrats of that day didn't much understand economics (not much has changed there, either). Once, J.P. Morgan had to point out to President Cleveland that he hadn't enough gold reserves left in the Treasury to meet the demands of its largest creditor; he wound up loaning the government enough money to meet its obligations, for which Cleveland was uncomfortably grateful.
Meanwhile, the Republicans were the party of Small Business, which was the engine of progress in those days. The period between 1870 and 1910 was the great age of the family business, based in the small city. It culminated in a couple of bicycle repairmen from Dayton building the first powered flying machine. From Ball Jar in Muncie to the Goodyear and Goodrich rubber companies in Dayton and Akron, to the various early automobile manufacturers all over northern Indiana, the land was dotted with new businesses providing new products for an expanding market.
The Republican Party is still highly supportive of Small Business, including family farming, Chapter S corporations, and so on. Small Business is the primary creator of new jobs. Small Business is the land of risk and reward, whereas Big Business has become bureaucratic and risk-averse. Small Business is interested in maintaining fair competition among all players, which is their only means of competing with the 800 lb. gorillas in the room. Big Business, while mouthing "free market" platitudes, is far more susceptible to the lure of monopolism, of self-regulation, and of massive public-private deals (including bailouts). Big Business likes
government rules, because they have the wherewithal to comply with them, while Small Business goes broke keeping up with the paperwork.
Big Business and Big Government go hand-in-hand, and their incestuous union is at the center of our current troubles. The Democrats, being more in favor of Big Government than Republicans are, like to rail against Wall Street even as they and the wizards of finance buy and sell each others' souls in markets to which ordinary people cannot find entrance.
|Democrats, Republicans, and Wall Street -- some history, part III
It's hard to achieve perspective on one's own times. I can write with much greater clarity on 19th Century issues than on 20th (or 21st!) Century ones. The past is seen as from a distance, whereas the present is the woods we are currently lost in. There is no horizon in the present. And it is not my intent in these few posts to write a partisan screed saying that Democrats are the Party of Plain Awful while Republicans are the Party of Civic Good. I'm trying to say something about the dance of the two parties around the issue of Wall Street.
There are a couple of things that stand out from the welter of mere data that we should pay attention to. The first is the rise of Progressivism. The Progressive Movement has had supporters and champions from all over the political spectrum. Teddy Roosevelt and Woodrow Wilson (who despised each other) are both routinely called "progressives." What is Progressivism?
At bottom, Progressivism is an elitist philosophy of government that sees ordinary citizens as helpless or incompetent without the aid of an omnicompetent government. Government, or "experts" consulted by government, should make people's lives better. This requires an enormous growth of government to accomplish, and an increasing intrusion of government into ordinary people's lives. In Europe, Progressivism was called "Fascism," and was first much hailed. Benito Mussolini was admired by mainstream American commentators for "making the trains run on time."
During World War I, Woodrow Wilson's administration began policing ordinary people's opinions as well as mandating price and wage controls. They hoped this would continue after the war, but the nation "returned to normalcy" under the Republicans. With the coming of the Great Depression, the old Wilsonites advocated government takeover of everything. "We planned in war!" they said, meaning we should plan (i.e., control ordinary decisions by everybody) in peacetime. Much of the New Deal came from this impetus.
After World War II, the great age of the Multi-national Corporation was born. American corporations spread out over the globe. "What's good for General Motors is good for the USA!" some said. Some Republicans were in favor of this, though President Eisenhower warned of a "military-industrial complex" that bore an interesting resemblance to what Soviet Communism later called "the metal eaters' alliance." The great problem of the Multi-national Corporation wasn't its militarism, however, which only reflected the age in which it was then operating. The great problem of a multi-national is that it is accountable to nobody. No nation's laws can restrain it.
Government -- including the U.S. government -- eventually took notice of this threat to its sovereignty. Some years ago, there was a lot of negative press being generated about it. Congress passed a few laws and the Multi-nationals moderated their behavior a bit, but what happened behind the scenes was a renewal of the kind of conspiratorial cooperation between the two that we see today. Big Government and Big Business became partners. Eventually, Big Government declared certain corporations (but not others) "too big to fail." And all of us got stuck with the price tag for bailing them out.
The rise of the Tea Party was a spontaneous reaction to the ever-more intrusive role of government and its ever-more irresponsible stewardship of the economy. The Tea Party folks have had to fight to be recognized within the Republican Party, which officially says it believes in small government. Actually, the GOP really just believes in smallER
government -- smaller than what the Democrats are proposing. And that means that the Democrats have been allowed to set the bar for the new normal. As long as the establishment Republicans are less outrageous in their infringements on liberty or offering smaller handouts than the other side, they're seen as the adults in the room. The Tea Party challenged that notion. How that will all work out is still unknown.
Meanwhile, the Democrats continue to work both sides of the street, taking more money from Wall Street than anybody while saying that they're for the Little Guy. Their motto is We're Only Trying to Help (and those other guys are racist fat cats).
And they have finally lost all sense of shame about promising people things. If you had told me four years ago that anybody could blow as much money as the current administration has (and for no discernible benefit) and still be asking for more, I'd have thought you were on something.
The Democrats are now unabashedly the party of Big Government and Big Bailouts. The Republicans are the party of Not So Much. Whatever sensible folk once were part of the Democratic Party, they have been driven out; there are no conservative Democrats any more. Which doesn't mean that the Republicans are a consistently better alternative. At the rate we're going, the only question is whether we'll all go over the cliff in two years or twenty -- unless one party recovers a sense of reality.
Can the Tea Party sympathizers yank the GOP back into line with its historic commitments to Small Government and Small Business? Not just to win the next election, but to govern that way? And will the public finally see that Less is More? All that remains to be seen.
|A primer on class warfare and all that -- part I
"Class warfare" is a Marxist concept. It divides all of society into Upper and Lower Classes, the oppressors and the victims. Middle Class people are lumped in with the Upper Classes as people to be eliminated (as the Communist Party ordered the elimination of the Russian kulaks
during the Great Purge), so that the Dictatorship of the Proletariat can be established. Still, Marx didn't invent the idea of social classes. Even the Norse said that in the beginning, there were three brothers from whom all of mankind descended. The first was named Jarl, the second Karl, the third Thrall (i.e., "noble," "freeman," and "servant").
In America, we talk a lot about the Middle Class. Most of us see ourselves as Middle Class. But who are the Middle Class? What does it mean to be part of this group that all the politicians are trying to woo?
Well, let's go back a bit. In medieval England, there were two basic orders or classes in society. There were nobles and gentry (people with coats of arms and wealth). And there were peasants (serfs, villeins, a few freeholders). One group made the rules and the other obeyed them. The middle class in a feudal society such as England in the 13th Century was made up of a few artisans and merchants who mostly lived in cities or towns that had royal charters. A royal charter meant that the freeholders of that city constituted a self-governing corporation. The electorate wasn't extensive, but it was highly conscious of its need to protect its rights against kings and bishops who might diminish them. Serfs who managed to escape their lot and live as free persons in a chartered town for a year and a day were considered to be free in law as well as in fact. "Town air is free air" the saying went.
The independence of the chartered towns led to the creation of wealth, for those who had no inherited wealth in land nor inherited place in the aristocracy had only the assets their industry could create. But, since each family worked for itself as they decided best, their industry created a lot of wealth. Eventually, the City of London (which is a smaller place and a smaller group than the city of London, if you catch my drift) had enough wealth that it could grant or loan the king money he needed. That made them valuable to those who ran the country. And so the towns and their artisans and merchants and guilds grew.
When America was founded, class divisions were present, though in a far reduced form. Few real nobles wanted to immigrate to America. Most of those who came here came looking for opportunity such as had been denied most people back in Europe. Many of the lower orders -- especially those who agreed to be indentured servants for a term of years to pay for their passage -- helped people America. Yet in this new land, many who were previously poor earned enough money and acquired enough property to rival the burghers of the towns of England. A few became very rich, though after the Revolution, nobility as such became distinctly anti-American.
There are two common theories that explain who the Middle Class are and how they came to be so prominent in America. The first is Karl Weber's idea, known as "the Weber Thesis," that capitalism (which nourishes a strong Middle Class) was encouraged by Protestantism and its idea that all of us are equal before God. Weber especially thought that Calvinism was the engine that set men free to acquire wealth unashamedly. He saw the mercantilism of Great Britain and the early industrialization of places like Glasgow and New England to be indicative of a practical Calvinism.
Those of us who are part of the Wesleyan-Arminian family tell a different tale. The Wesleyan Revival in England and its spread through America brought thousands out of poverty. "Earn all you can, save all you can, give all you can" -- as a response to the gift of God in Jesus Christ -- basically created the modern Middle Class in England. Some say it prevented a French-style revolution in Great Britain. The phenomenon whereby spiritual self-improvement yields weath as a by-product, though, was noted long before by medieval monks, who said, "Discipline creates abundance; but abundance, if it be not checked, will destroy discipline." Modern sociologists of religion refer to the phenomenon as Redemption and Lift.
So, America from the beginning was strongly oriented toward rewarding folk who would work hard, or who were trying to be better themselves in character. It was a place where someone could rise in life. Nobility was not aimed at, but wealth was. And wealth was obtainable. Following World War II, "working class" folk saw their standard of living rise so much that they began to see themselves as Middle Class, too. All of which explains why every politician claims that he's going to help the Middle Class. There are lot of Middle Class voters, and a lot of people who'd like to be Middle Class even if they aren't, yet. It's how America defines itself. Despite the presence of both rich and poor, we are a Middle Class nation.