Obama and The Neo-liberals

What actually crashed down upon us last fall when brokerages, car companies, mortgages and house prices all came a cropper was the era of “Neo-liberalism”. And, as our current president would no doubt be the first to tell us, Neo-liberals are not going quietly into that good night.
Oblivious to any sign that their own philosophy might have any flaws, let alone be guilty of unsustainability, our Neo-liberal friends proclaim everyone who disagrees with them to be solely guilty of causing the crash/recession of 2008 and early 2009.
Their point of view seems to that of a person caught standing over a corpse holding a smoking pistol, still busily insisting that his gun was merely a harmless instrument, available for the good of mankind—that guns to not kill people.
Classic American liberalism arises out of two strains in American culture. (It must not be confused with the political philosophy associated with presidents like Barak Obama, Franklin and Teddy Roosevelt, and Woodrow Wilson, which rose out of a fusion of the Progressive Reform impulse and classic Hamiltonian/Republican theory in the late 1800s).
The first strain is the historic American lust for the “free lunch”. We got into a shooting war over this as early as 1775 when we demanded the protection of the British government (from the French and Indians) and vehemently refused to be taxed to pay for it.
Ever since this has been a classic liberal (NOT Obama “liberalism”!) position. We demand more and more government services—loans to businesses, loans to individuals, ever larger Social Security cheques, etc.)—and lower and fewer taxes in support of them.
The liberal is thus somewhat like the older dependent child, absolutely needing parental funds for every necessity of life—yet demanding more and more freedom of action in what he does with those funds. There seems to be a disconnect in our understanding of both parts of the old phrase—who has the geld calls the tune.
We want government benefits; we do not want any government restrictions. We repeal laws that keep banks from ludicrous speculation; we demand that government protect our deposits when these speculations threaten to drag the banks underwater along with them.
The second strain is just pure American cussedness. “Ain’t nobody gonna tell me what to do!” Historically it showed up vividly when headstrong American settlers violated treaties and moved onto Indian lands, incurring violent reaction from the owners.
The settlers demanded two things: one) government must never tell us what land we cannot occupy and, two) it must send the army to protect us from what we caused. This began in the Virginia and Massachusetts settlements of the early 1600s. It went on to the Pacific coast.
Andrew Jackson personified this attitude. He was the ultimate American liberal. He sent the army to drive all Native Americans west of the Mississippi (your tax dollars at work); he destroyed the only agency capable of maintaining a viable American currency, the national bank—because it also imposed restrictions on land speculators.
From 1836 to the Civil War, we had no national currency at all. Nor did we have any real regulation over land speculation. This is true American liberalism. No government regulation or limits; unrestrained personal freedom in business, banking and land speculation.
This was the fundamental position of the Eighteenth Century Democratic Party. (It strongly reinforced the slave owner’s belief that no one had a right to infringe upon his right to enjoy the benefits of his “peculiar institution”.) From Jefferson through Cleveland, the Democrats were basically the party of total business freedom. George W. Bush, Barry Goldwater and Ronald Reagan would have been comfortable in that party.
The fitful impulses toward any sort of cooperation between government and the private sector—few as they were—came from the Whigs and their successors, the Republicans. The Whigs/Republicans had a few Hamiltonian roots among their antecedents.
Admittedly most of this cooperation in America primarily if not exclusively benefitted business—not society in general. By and large, nobody looked out for the “little guy” who labored most of the century for a dollar a day with absolutely no safety net.
That began to change because of appalling corruption among URBAN democrats as new waves of immigrants arrived. The urban Democrats quickly recognized that here—among the unwashed and increasingly Jewish and Catholic immigrants—was a vast pool of votes.
There was no safety net for the injured, the ill, the aged or anyone. The Democratic urban machine provided one. City jobs (some of which you didn’t even have to show up for), a bag of coal, a sack of food, help with a burial bought votes.
The urban poor—who had only one thing of value to his name, his vote—was happy to sell it in return for survival. The Democratic machines soon had a lock on the cities. Republicans may have held power in state capitals; but in city halls, Democrats ruled.
Republicans countered by becoming reformers. No better way to break the death grip the machines had on urban voters than by declaring many of their practices expressly illegal—AND, often just incidentally, by providing a bit of real relief to the voters.
(Ironically, it would be a Democratic president who would break the power of the machines. Franklin Roosevelt would take up the program outlined in Teddy Roosevelt’s last two State of Union addresses [Teddy was a Republican, remember] and launch them as the New Deal.
(With welfare and social security—and legalized unions to force a living wage—available to the urban voter, the machine no longer had any lock on his loyalty. Ten years after FDR”s New Deal, many urban machines were out of business. A few, like New York’s Tammany Hall and Chicago’s Daley Machine held on into the 1960s)
By the first decade of the Twentieth Century, Republican Progressives were into the reform business full time. Woodrow Wilson—a man who, oddly enough, loathed blacks and southern European immigrants got elected as a Democrat in 1912 and stole their thunder.
By 1920, Republicans had essentially stolen the 19th Century Democratic laissez-faire liberalism and, by 1933, Democrats had switched to a view of government as something heavily involved in our individual lives—and become the reformers, pre-empting Teddy Roosevelt for good..
Politically it was the equivalent of the “X” in a model train’s track. Here one train crosses over from right to left and the other train goes from left to right. By winning five presidential elections in a row and by controlling Congress for twenty out of twenty-two years in that time, the New Deal (Teddy Roosevelt) view of an activist government had become entrenched.
Beginning in 1952, Republicans came roaring back as “Neo-liberals”, Andrew Jackson resurrected as a Whig/Republican as it were. Let’s look at that tomorrow.