The Redefinition of Liberal Act of 1933 and the Descent of Obama

A couple of posts originally undertaken two years ago that I've dug up and reexhumined in light of my current burial in the neo-classical economics of Mises and Hayek. The posts have been condensed, revised, extended, and embalmed.

The understanding that the left embodies the antithesis of liberalism is not new. For example, in the forward to Human Action (1949), Mises writes that "I employ the term 'liberal' in the sense attached to it everywhere in the nineteenth century and still today in the countries of continental Europe. This usage is imperative because there is simply no other term available to signify the great political and intellectual movement that substituted free enterprise and the market economy for the pre-capitalistic methods of production; constitutional representative government for the absolutism of kings or oligarchies; and freedom of all individuals for slavery, serfdom, and other forms of bondage."

Not only did the left steal this beautiful word, "liberal," but then went on to spoil it due to their misguided and destructive policies. So now they use another word, "progressive," but the problem is the same, since it is probably fair to say that nothing in the world has accounted for so much human progress as the implementation of classical liberal policies -- most recently in China and India, where nearly a billion people have been lifted from true poverty (not the American kind) since 1990. Prior to that, communist China was obviously a basket case, but so too was India, which was a socialist country from its inception until finally abandoning that dysfunctional approach after the end of the Cold War.

At any given point in our history, progress would have been arrested or slowed if we had adopted the illiberal collectivist policies of the left. As Mises writes, "None of the great modern inventions would have been put to use if the mentality of the pre-capitalistic era had not been thoroughly demolished by the economists. What is commonly called the 'industrial revolution' was an offspring of the ideological revolution brought about by the doctrines of the economists. The economists exploded the old tenets" that had held development in check and were deeply anti-progressive.

But things are no different today. "What is wrong with our age is precisely the widespread ignorance of the role which these policies of economic freedom played in the technological evolution of the last two hundred years." Again, the only way the mystagogic left could avoid this economic reality was to lurch into the pervasive irrationalism, emotionalism, authoritarianism, and anti-intellectualism we see today. Mises called this revolt against reason and liberty "polylogism," whereas now we call it the monocult of multiculturalism or the dreary uniformity of "diversity."

The Forgotten Man is one of the best books ever written on the Great Depression. It's written by a mainstream journalist in a very evenhanded and understated way, to such an extent that a narrow-minded leftist might even be lulled into reading it, only to realize too late that their whole worldview has vaporized. A good alternate title would have been, Everything You Think You Know is Wrong, Moonbat!

It's amazing to me that the angry left was so hysterical about President Bush using his constitutionally valid war powers in a time of war (as is Obama), when FDR explicitly usurped those powers in peace time, greatly expanding the powers of the executive and the size and intrusiveness of the federal government. And once the left gains power -- which necessarily involves diminishing your freedom -- they never give it back. Rather, we must take it back.

Of course the feces have changed, but 75 years later we're still having to deal with the same crappy ideas and policies put into place by FDR and his "brain trust." Naturally, not all of the ideas were bad, but that is purely accidental, since no one gave a thought to the long term consequences of FDR's radical experimentation with the economy.

Speaking of which, this was also the first time professional "intellectuals" played a dominant role in a president's policy making, to the detriment of us all. In science or business, bad ideas are quickly eliminated, but in government and academia, the beloved abstraction of some tenured pinhead can live on forever -- for example, price supports for farmers, i.e., paying them to grow fewer crops in order to keep prices artificially high, or giviing grants to self-styled artists to produce pro-statist propaganda. Those are just two of hundreds of leftist ideas that seem impossible to eradicate. Or even discuss.

Instead of dealing in reality, the left habitually deals in myth and image, and there is no bigger myth than the idea that FDR rescued the economy from the Great Depression. To the contrary, it is now well understood by mainstream economists that his economic acumen was essentially nil, and that he aggravated the Depression at every turn, causing it to last many years longer than it otherwise would have.

Five years after FDR took office, we were in the midst of a "depression within a depression," with unemployment at 17.4%. The Dow didn't return to pre-Depression levels until the mid-1950s. "Washington had already made thousands of efforts to help the economy," writes Shlaes, "yet those efforts had not brought prosperity."

I remember learning in school that the Wall Street crash of 1929 was central to the length and depth of the Depression, but this isn't true at all, and simply plays into leftist mythology. I remember even learning about it in the moralizing terms with which the left approves -- that the crash was caused by "greed," i.e., buying stocks on margin, and speculating on the market with no understanding of the underlying economic fundamentals. That part is true enough, just as it was true with the tech bubble of the 1990s and the real estate bubble of 2008. And when this happens, economic reality returns in the form of a market "correction."

But the correction was not the disaster it is made out to be. Much worse was what came after, in the government's repeated attempts to cure the problems created by the economy's own auto-regulation. In hindsight, it's perhaps easy to unfairly apportion too much blame to FDR for the disastrous economic policies he put into place, since we know so much more about economics today than anyone did back then, just as it's hard to blame medical doctors in the 1930s for knowing so much less about medicine than we do today.

True, there's usually no need to assign malevolent motives for something that is more easily explained by stupidity or ignorance. But while FDR displayed plenty of economic ignorance, I was actually surprised at how much sheer malevolence he engaged in as well -- or at best, transparent power politics. So much of what he did was about power and political advantage, which is one of the reasons his policies were so incoherent and at times contradictory. Mainly, he wanted to create the perception that he was doing something, which is an advantage that leftists have had ever since FDR, since doing nothing is always preferable to doing the wrong something, but it's a much tougher sell. It's one of the main reasons it's difficult for a real conservative to get elected, since a gargantuan state capable of bestowing favors creates an intrinsically corrupt system of incentives.

At the time FDR took office, the federal government was so small -- smaller than many state and local goverments -- that it couldn't do what it does today, which is to essentially bribe this or that constituency in order to maintain and expand its power. But in his second inaugural address, Roosevelt said that he was seeking "unimagined power" -- ironically, the kind of real power that the paranoid left fantasized President Bush was seeking! The word "fascist" is routinely thrown out by the left, but one thing a fascist cannot be is a small-government liberal (which, of course, President Bush was not).

This has been the leftist strategy ever since FDR, and is the reason why the left does not consist of ideas but merely interest groups and emotional appeals. It's difficult for a true conservative to compete in such a climate, since his only promises are his ideas and ideals, including the idea that he will stop giving interest groups free stuff if they vote for him, and the ideal that people should be more self-reliant and not expect government to bail them out.

"Roosevelt systematized interest-group politics more generally to include many constituencies -- labor, senior citizens, farmers, union workers [and, one might add, southern racists]. The president made groups where only individual citizens or isolated cranks had stood before, ministered to those groups, and was rewarded for it with votes." Roosevelt "believed in a future of scarcity.... Growth would not provide for the poor; only redistribution could." It is no coincidence that 1936 was the first peace-time year that federal spending surpassed that of local governments. That's a lot of bribes to pay out. The recent Porkulus monstrosity proves that nothing's changed.

Roosevelt also vilified the wealthy and blamed the Depression on them, using the type of demagogic language one might hear from moveon.org or Air America. "The Depression, FDR said, was the result of 'lack of honor of men in high places' and 'crooks.' More generally he assigned blame to a moral fault: national greed." Jimmy Carter, anyone?

Shlaes explains that the "annihilating event" that kept the depression going was deflation, and that FDR repeatedly acted in such a way as to make the deflation worse -- by contracting the money supply, by raising taxes, and by engaging in an economic jihad against those with capital to invest in the economy. Plus, by acting in such an arbitrary, dictatorial, and essentially lawless manner, investment capital naturally flowed away from the economy, since investors always want predictability. Why invest today if you have no idea what new radical experiment FDR is going to try tomorrow, say, raising corporate taxes to 90%? Many investors hoped to simply "wait out" Roosevelt until a more favorable business climate existed.

Roosevelt fundamentally distrusted the stock market and underestimated the ability of the economy to right itself, in the manner of every leftist since: he "cared little for constitutional niceties and believed they blocked progress. His remedies were on a greater scale and often inspired by socialist or fascist models abroad." He believed that recovery "could be achieved only through a large, military-style effort." Many factors contributed to the Depression, but "the deepest problem was the intervention, the lack of faith in the marketplace." Remarkably, his favorable view of the Soviet Union was validated "nearly daily in the New York Times by the paper's Walter Duranty." The more things change...

Massive new institutions such as the National Recovery Administration "frightened away capital, and they discouraged employers from hiring workers." The laws he signed were so broad that no one knew how he would interpret them. Ironically, for someone who said "the only thing we have to fear is fear itself," his "commitment to experimentation itself created fear" -- "not merely the new policies that were implemented but also the threat of additional, unknown, policies. Fear froze the economy..."

Again, one of Roosevelt's most profound changes had to do with the redefinition of liberalism: "Before the 1930s, the word 'liberal' stood for individual; afterward, the phrase increasingly stood for groups."

Leftism will always be with us, because it is not so much an ideology as a sort of pathological seed planted in the heart of man. In my opinion, it truly is a genetic condition, as it is a reflection of the primitive economic system that prevailed in the archaic environment in which man's genome was selected. That primitive zero-sum worldview is based upon group solidarity, scarcity, stasis, and envy, whereas the non-genetic ideals of classical liberalism are based upon enlightened self-interest, economic progress, unlimited wealth, and ignoring the primitive envy of our most childish citizens, since it can never be appeased anyway.