The Old Deal
Dear Reader (with a special “aroooo” to the world’s oldest canine),
Okay, who’s been monkeying around with the monkey’s paw?
Maybe it was some panelist at the Aspen Ideas Festival, or maybe a college freshman got so worked up by the brilliance of his term paper he broke the glass and used one of his three sinister simian wishes, I don’t know. But it sure seems like someone wished to revive bipartisan economic policy, and now we can hear the ominous knocking of a reanimated corpse at the door (don’t blame me if you never read the story, this is a great metaphor).
A couple weeks ago, National Security Adviser Jake Sullivan gave one of those Very Serious speeches over at the Brookings Institution. The outlines of his case should be very, very familiar if you’ve paid close attention to these debates for at least the last 75 years.
After the Second World War, the United States led a fragmented world to build a new international economic order. It lifted hundreds of millions of people out of poverty. It sustained thrilling technological revolutions. And it helped the United States and many other nations around the world achieve new levels of prosperity.
But the last few decades revealed cracks in those foundations. A shifting global economy left many working Americans and their communities behind. A financial crisis shook the middle class. A pandemic exposed the fragility of our supply chains. A changing climate threatened lives and livelihoods. Russia’s invasion of Ukraine underscored the risks of overdependence.
So this moment demands that we forge a new consensus.
What should form the meat of that consensus? President Biden’s “modern industrial and innovation strategy.”—i.e. industrial policy. You see, America’s “industrial base has been hollowed out.” “The vision of public investment that had energized the American project in the postwar years—and indeed for much of our history—had faded. It had given way to a set of ideas that championed tax cutting and deregulation, privatization over public action, and trade liberalization as an end in itself.”
I don’t want to stray too far into Scott Lincicome’s lane—or Kevin Williamson’s—but it’s simply not true that America’s industrial base has been hollowed out. Manufacturing output has grown considerably since 1970. Employment in American manufacturing has fallen, however. Now, that sounds bad, particularly if you’re a politician who wants to make that sound bad. But is it? Well, if the decline in manufacturing jobs made people poorer, it would be bad. But Americans haven’t gotten poorer. From The Economist:
America’s outperformance has translated into wealth for its people. Income per person in America was 24% higher than in western Europe in 1990 in [purchasing power parity] terms; today it is about 30% higher. It was 17% higher than in Japan in 1990; today it is 54% higher. In PPP terms the only countries with higher per-person income figures are small petrostates like Qatar and financial hubs such as Luxembourg. A lot of that income growth was at the top end of the scale; the ultra rich have indeed done ultra well. But most other Americans have done pretty well, too. Median wages have grown almost as much as mean wages. A trucker in Oklahoma can earn more than a doctor in Portugal. The consumption gap is even starker. Britons, some of Europe’s best-off inhabitants, spent 80% as much as Americans in 1990. By 2021 that was down to 69%.
In short, America still makes lots of stuff, but fewer Americans make it—because more efficient factories use more robots and fewer workers than they used to. Manufacturing is up, but manufacturing as a share of the GDP and total employment has shrunk. That’s because we’ve gotten richer and we’ve created more jobs that don’t require shovel-feeding a coal furnace or standing over an assembly line.
If the goal is to create more inefficient—or aesthetically pleasing “masculine”—jobs people should make that argument. Let’s replace the digging equipment with shovels—or spoons—and really boost employment. Except, of course, unemployment really isn’t an especially big issue either these days. The truth is, despite all of our problems, we’ve been leaving most of our peers in the dust economically during all of this allegedly neoliberal-fueled “decline.”
If you want to learn more about such things subscribe to Scott’s newsletter, or read this Economist cover story, or read this excellent piece by Fareed Zakaria.
The point I want to make is that by fleshing out Joe Biden’s industrial policy and “buy American” agenda, Sullivan is making the MSNBC-safe version of “Make America Great Again” economics. Indeed, Biden will never say it—nor will Trump—but he’s held on to most of Trump’s “America First” trade policies. Bipartisanship! Hooray!
Biden and Sullivan’s story of American decline—rooted in gauzy memories of the 1950s—is the same story Donald Trump and the natcons tell, at least on economics and trade. Never mind that in the 1950s, America had unique advantages. The industrial base of the rest of the world was flattened by war, while ours was intact and firing on all cylinders. Also never mind that the 1950s were so long ago, even Joe Biden wasn’t old enough to get a driver’s license until they were almost over.
And it doesn’t stop there. The necromantic consensus is all over the place. For instance, Biden thinks it’s outrageous to tamper with Social Security and other entitlements—and so does Donald Trump! Biden declared in his State of the Union that his “economic plan is about investing in places and people that have been forgotten. Amid the economic upheaval of the past four decades, too many people have been left behind or treated like they’re invisible.” On election night in 2016, Trump proclaimed, “The forgotten men and women of our country will be forgotten no longer.” He invoked the “forgotten man” over and over for the next four years. The funny thing is, both Biden and Trump were ripping off FDR.
The New Deal today, tomorrow, and forever.
Now, don’t get me wrong. I do think there are still major differences between the parties (as I explained here). But I also find it alternately hilarious and annoying that Joe Biden’s primary argument for getting reelected is that he’s all that stands between us and the Mephistophelian mobs of MAGA, while he’s embracing many of the most dearly held policy views of the most committed “natcons,” “integralists,” and Trumpists. And I think it’s alternately hilarious and annoying that those guys all despise Biden as a “socialist” for having a very, very similar view of the role of government.
Recall that Steve Bannon’s plan for the Trump administration was a new New Deal. He wanted a “trillion-dollar infrastructure plan.” “It will be as exciting as the 1930s, greater than the Reagan revolution—conservatives, plus populists, in an economic nationalist movement.” When I called the integralists “pro-life New Dealers,” they replied, in effect, “exactly!” Sohrab Ahmari declared helpfully, “I will happily accept the pro-life New Dealer label! Thanks, Jonah.”
You’re welcome, Sohrab. Thank you for admitting I was right.
I mean it’s kind of wild that all of these new righties guffawing about “zombie Reaganism” are clutching their monkey paws and wishing that the scratching at the door is the sound of a zombie FDR who’s returned from his grave, ready to endorse their bold new thinking.
It’s also deeply and richly ironic that the new pro-life New Dealers are constantly parroting left-wing radical talking points about “empire” and the “military industrial complex” while at the same time yearning for a new New Deal with them at the helm. The New Deal was wildly militaristic—philosophically, politically, and rhetorically. From the consciously paramilitary Civilian Conservation Corps to the “industrial armies” that marched in military-style parades under the banner of the Blue Eagle and the watchful eye of General Hugh “Iron Pants” Johnson. And it all stood on the foundation of Woodrow Wilson’s “war socialism” that fueled his “war for democracy” and, ultimately, the American liberal “empire” that the “new right” despises. They’re all gorging themselves on the poisoned fruit of war and liberal empire and they think it’s delicious.
I should back up. There are few topics I’ve written more about than the cargo cult idolatry progressives have for the New Deal. I’ll very briefly summarize my view. During World War I, big business and the federal government got in bed together to mobilize a war economy and enforce compliance to Woodrow Wilson’s political aims. It was a time of outrageous violations of civil liberties and economic command-and-control. When the war ended, Republicans vowed a “return to normalcy,” released the political prisoners, and dismantled the political controls of the economy. And progressives hated it. They spent the 1920s pounding the table that “we planned in war” and we should plan the peacetime economy, too. Seizing the political opportunity of a depression—which was not yet “Great”—FDR, a Wilson administration retread, vowed to use Wilson’s wartime techniques to fight the economic crisis. And he did. Nearly all of the early New Deal/NRA agencies were modeled on WWI precursors. Broadly speaking, the New Deal itself was conceived, framed, and defended as the ultimate expression of William James’ idea of reorienting American politics and life as a “moral equivalent of war” and the fulfillment of John Dewey’s “social possibilities of war.”
Some New Deal policies were good, or at least defensible, and others were outrageously stupid, economically counterproductive, and despotic. That’s in part because there was no ideologically and politically coherent thing called the New Deal. It was a mishmash of policies, some considered entirely ad hoc. All of which were justified by the idea that the government should have a free hand to preempt a free economy. That’s what FDR meant by “bold, persistent, experimentation.”
But one thing is generally agreed-upon by most economic historians—none of these policies actually ended the Great Depression. Even Paul Krugman eventually had to concede that World War II is what did it. In other words, only when FDR abandoned the New Deal did the Depression end (or as FDR put it, when he stopped being “Dr. New Deal” and became “Dr. Win-the-War”). But even here, Krugman’s analysis is … debatable. He argues WWII was just another giant government program and that the deficit spending of the war pulled America out. But the more plausible argument was that the aforementioned conditions in the global economy after the war—combined with the massive pent-up demand of millions of soldiers and families after the war—is what ushered in the long American boom.
Regardless, measured against the intended point of the New Deal—getting us out of the Great Depression—the New Deal was a failure. Indeed, many people—I’m one of them—would argue that the New Deal prolonged the Great Depression. But while the New Deal was a policy failure, it was a huge political success. It made FDR president-for-life (a fact that generated a bipartisan consensus to amend the Constitution to keep that from happening again). It made the Democrats the majority party for generations. And the Democratic Party has been obsessed with getting the New Deal band back together ever since. Liberal intellectuals, likewise, have been convinced that re-creating the New Deal is the best way to achieve the kind of socialist or social democratic system they’ve always dreamed of. “There seems no inherent obstacle,” Arthur Schlesinger wrote in 1947, “to the gradual advance of socialism in the United States through a series of New Deals.”
Now, I don’t for a moment dispute that the desire for economic planning is sincerely held by those who propose such new New Deals. But I can’t help but think that the primary attraction isn’t creating better job-training programs or a richer mix of entitlements or onshoring manufacturing jobs. It’s power. When Trump wanted his infrastructure week, Democrats got in the way. When Biden proposed his, a good number of Republicans did sign on, but the Trump wing of the party was furious at them for agreeing to one of their policy priorities. The natcons have all sorts of elaborate ideas about how to direct the economy and reward certain industries and constituencies, but they routinely condemn Biden’s elaborate ideas about how to direct the economy and reward certain industries and constituencies. Obviously, some of that is just the nature of politics. But I struggle to see what the limiting principle is.
As a small government conservative, I’m against picking winners and losers. The prog and trad New Dealers aren’t, they just disagree over who should do the picking and who should benefit from it. They’re not offended by the use and abuse of state power, they’re offended that they’re not the ones in power. But, in the pursuit of power, both groups tell the same tired fairy tales about American decline. And why not? Running down America and hobbling its economy is a small price to pay for power.
Various & Sundry
Canine update: As longtime readers of this feature know, Zoë and Gracie do not see eye-to-eye on much. They both believe they are the alphas and are outraged by one another’s effrontery. But there’s one thing they both believe in passionately: border security. As a case in point, Kirsten was housesitting and minding the beasts while I was in New York. One afternoon, Zoë suddenly started arooing furiously, but not at the front door. She was screaming, “Title 42!” at the door to the basement. Kirsten went to investigate and thought Zoë was just imagining things (she does have an active imagination, and she believes it’s better to bark first and be wrong than to not bark at all). But when Gracie started very loudly meeeowering and inflating her tail to industrial pipe-cleaner mode, Kirsten started to worry that someone had broken into the house. And she was right! She opened the door and there was Chester demanding tribute. She ushered the interloper out. Pippa productively slept through the whole thing, but she was appalled when informed about all of it later. Other than that outrageous violation of security protocols, the girls are fine. Though Zoë did try to convince me that Pippa was dead. They’re having fun with their buddies on the midday walks and they’re getting a lot of treats. They do miss the Fair Jessica, who is still galavanting around Eastern Europe.
ICYMI
Last Friday’s overcaffeinated G-File
The Remnant with Elizabeth Nolan Brown on the baby bust
The Remnant with Ben Smith on the state of journalism
The Dispatch Podcast on the CNN town hall
And now, the weird stuff
