Topic: Government and Politics

Paul Krugman’s Nostalgia for Teddy Roosevelt’s New Nationalism

Paul Krugman managed to discover “America’s Taxation Tradition” in an unlikely spot – a fiery old political speech by an unsuccessful presidential candidate who called for a “graduated inheritance tax on big fortunes.” Dripping with irony, Krugman asks “Who this left-winger? Theodore Roosevelt, in his famous 1910 New Nationalism Speech.”

Readers are supposed to assume that because Roosevelt had been a Republican, his New Nationalism speech could not possibly have been remotely left of center. Yet the phrase “new nationalism” and the advocacy of an inheritance tax were both borrowed from Herbert Croly’s highly influential 1909 manifesto of the Progressive Era, The Promise of American Life.

As Christopher Lasch noted, “Theodore Roosevelt read The Promise, found it highly flattering to himself, publicly praised it, and used it as an argument for his ‘new nationalism.’ Croly did not so much influence Roosevelt as read into his career an intellectual coherence which Roosevelt then adopted as his own view of things.” Croly, who later launched The New Republic magazine, supported Roosevelt in the 1912 Presidential race and Robert La Follette’s Progressive Party campaign in 1924, before becoming disenchanted and (as Lasch put it) “flirting with socialism.”

In his 1909 book, Croly said, “In economic warfare … it is the business of the state to see that its own friends are victorious. It holds … a hand in the game.” The state, said Croly, must look out for “the national interest,” and help those to win “who are most capable of using their winnings for the benefit of society.” To the properly cynical, that sounds like an open invitation to crony capitalism and corruption, if not kleptocracy.

In the New Nationalism speech Roosevelt said, “We should permit [a fortune] to be gained only so long as the gaining represents benefit to the community. This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country …  No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered — not gambling in stocks, but service rendered” (Roosevelt gambled-away his own inheritance on a ranching venture, not stocks).

Not quite socialist in 1909, Croly tolerated, “preservation of the institution of private property in some form, [but only with] the … radical transformation of its existing nature and influence.” Similarly, Roosevelt allowed that he would prefer to stop short of government ownership of business (socialism), if government control (fascism) would suffice. “I do not wish to see the nation forced into the ownership of the railways,” said Roosevelt, “if it can possibly be avoided.”

In short, the Roosevelt/Croly New Nationalism certainly did lean in a “leftist” (statist and collectivist) direction with respect to state supremacy over private property.

As afterword, here is something I wrote in a 1995 anthology revisiting Croly’s The Promise of American Life:

Herbert Croly’s quaint 1909 vision of the merits of increased centralization was founded on the notion that ‘American state governments have been corrupt and inefficient largely because they have been organized for the benefit of corrupt and inefficient men.’ The federal government, by contrast, was apparently organized for the benefit of saints and angels. Still, Croly’s idea of ‘big government’ in Washington looks like a bargain by today’s standards. He reasoned that a much stronger federal government could be financed out of a graduated inheritance tax: ‘The tax at its highest level,’ Croly wrote, ‘could be placed without danger of evasion at as much as 20 percent.’ Some recent estimates suggest that Croly may have been correct about how high the estate tax could be pushed without losing money. In any case, if a 20 percent inheritance tax were the only federal tax we had to worry about, as Croly proposed, the states would have little difficulty in raising money for the services that are still almost entirely a state or local responsibility, such as police protection, public schools, and roads. (The federal government, by contrast, is almost entirely involved in taking money from some people and giving it to others).

Is Government Debt a Problem?

Based on what’s happened in Greece and other European nations, we know from real-world evidence that even nations from the developed world can spend themselves into debt trouble.

This has led to research that seeks to pinpoint when debt reaches a dangerous level.

Where’s the point where investors stop buying the debt? Where’s the point when interest on the debt becomes too much of a burden?

Most famously, a couple of economists crunched numbers and warned that nations may reach a tipping point when debt is about 90 percent of GDP.

I was not persuaded by this research for two reasons.

First, I think it’s far more important to focus on the underlying disease of too much government, and not get fixated on the symptom of too much borrowing. If I go see a doctor because of headaches and he discovers I have a brain tumor, I want him to address that problem and not get distracted by the fact that head pain is one of the symptoms.

Second, there are big differences between nations, and those differences have a big effect on whether investors are willing to buy government bonds. The burden of debt is about 240 percent of GDP in Japan and the nation’s economy is moribund, for instance, yet there’s no indication that the “bond vigilantes” are about to pounce. On the other hand, investors are understandably leery about buying Argentinian government debt, even though accumulated red ink is less than 40 percent of economic output.

So what about America, where government borrowing from the private sector now accounts for 82 percent of GDP? Have we reached a danger point for government debt?

NSA Spying and a National ID Are Peas in a Pod and You Should Eat Your Peas

That’s the upshot of a column by Froma Harrop appearing in the Seattle Times.

“Arguments leveled against Real ID are being recycled to bash the National Security Agency’s surveillance program,” she writes. “They inevitably lead to the assumption that the government is up to no good.”

Well, … yes.

The argument against creating a U.S. national ID is that its cost in dollars and privacy are greater than the tiny margin of security they might provide. Over years, I’ve pointed out that spending billions of dollars to herd law-abiding Americans into a national ID system might mildly inconvenience any terrorists. It’s not worth doing.

That idea—that security measures should be cost-effective—is wisely ‘recycled’ for use with respect to the NSA’s program to gather data about every call made in the United States. Doing so doesn’t provide a margin of security worth the cost in dollars, privacy, and menace to liberty.

When the government wastes our money, privacy, and liberty on programs that don’t provide a sufficient margin of security, that is bad. That is government “up to no good.”

The states asked to implement our national ID law rejected it because, in the disorganized way our federal republic makes decisions, it was decided that REAL ID does not pass muster. (Some states and national ID advocate groups continue to press forward with it, a subject on which I’ll say more soon.)

In a similarly messy process, the organs of democracy are finding that the NSA’s programs—originally constructed and conducted in secrecy—do not pass muster either. We’re rightly pushing this plate of peas away.

Authoritarian Governments Use Old Smears to Tear Down Their Opponents

Anne Applebaum reports on how old smears are still used to support illiberal ideas and authoritarian government:

Halfway through an otherwise coherent conversation with a Georgian lawyer here — the topics included judges, the court system, the police — I was startled by a comment he made about his country’s former government, led by then-president Mikheil Saakashvili. “They were LGBT,” he said, conspiratorially.

What did that mean, I asked, surprised. Were they for lesbian, gay, bisexual and transgender rights? For gay marriage? Were they actually gay? He couldn’t really define it, though the conversation meandered in that direction for a few more minutes, also touching on the subject of the former president’s alleged marital infidelity, his promotion of female politicians, his lack of respect for the church.

Afterward, I worked it out. The lawyer meant to say that Saakashvili — who drove his country hard in the direction of Europe, pulled Georgia as close to NATO as possible and used rough tactics to fight the ­post-Soviet mafia that dominated his country — was “too Western.” Not conservative enough. Not traditional enough. Too much of a modernizer, a reformer, a European. In the past, such a critic might have called Saakashvili a “rootless cosmopolitan.” But today the insulting code word for that sort of person in the former Soviet space — regardless of what he or she thinks about homosexuals — is LGBT.

None of this is new, as Applebaum notes. We’ve seen it recently in Venezuela. In 2012, as soon as Henrique Capriles won a primary to become the candidate of the democratic opposition against Venezuelan strongman Hugo Chavez, the Wall Street Journal reported that he

was vilified in a campaign in Venezuela’s state-run media, which insinuated he was, among other things, a homosexual and a Zionist agent.

Homosexual and Jewish, I thought. When they attack him for being rich, they’ll have the trifecta of populist prejudices.

And sure enough, they did. Chavez himself declared:

The bourgeoisie have their candidate – the candidate of the anti-fatherland, of capitalism, of the Yankees. We are going to thrash that bourgeoisie.

Chavez, of course, also threw in “the candidate of the Yankees,” that is, the Americans. German democrats used to say that “anti-semitism is the socialism of fools.” Now in many countries we could say that anti-Americanism is the new anti-semitism. They’re often found in tandem.

The authoritarian government of Malaysia calls its chief opponent, Anwar Ibrahim, a homosexual and a gay propagandist, and has even prosecuted and jailed him on trumped-up sodomy charges.

All of these epithets – homosexual, Jewish, bourgeoisie, and more recently, “American” – have been staples of illiberal rhetoric for centuries. Liberals – advocates of democracy, free speech, religious freedom, and market freedoms – have been tarred as “cosmopolitan” and somehow alien to the people, the Volk, the faithful, the fatherland, the heartland.

Authoritarians such as Putin and Chavez’s successor Nicolas Maduro also like to denounce their opponents as “fascists,” even though they themselves fit most of the textbook definition of fascism – nationalism, anti-liberalism, a charismatic leader as the embodiment of the nation, and an economy controlled indirectly by the state, typically through nominally private owners

Liberals should denounce these sorts of vile and illiberal attacks, whether they stem from the American far right or far left, Vladimir Putin, the ruling party in Malaysia, or the Venezuelan socialists. 

Dan Snyder’s Indian Initiative

The owner of the Washington Redskins, Dan Snyder, has launched the Original Americans Foundation to “provide resources that offer genuine opportunities for tribal communities.” Snyder and his staff have recently visited a couple dozen Indian reservations, and they are determined to “work as partners to tackle the troubling realities facing so many tribes across our country.”

This sounds like a very worthwhile initiative. However, Snyder’s efforts so far seem to be focused on providing hand-outs, such as coats, shoes, and a backhoe. Such aid may provide short-term relief, but it will not change the long-term prospects of the many reservations that have deep-seated problems of poverty and economic stagnation.

If Snyder wants to drive fundamental change, I’d suggest that his new foundation focus on the need for institutional reforms in tribal governments and in the relationship between tribes and the federal government. Indian reservations are often lacking individual property rights to land, dependable security of contract, efficient administration, and impartial legal proceedings. As a result, they can be starved of commercial business lending, real estate development, entrepreneurship, and capital investment.

In this essay, I note that American Indians and the federal government have a long, complex, and often sordid relationship. The government has taken many actions depriving Indians of their lands, resources, and freedom. The aims of federal policies have gyrated wildly over two centuries, and most policies have failed, as is evident from the continued high poverty rates on many reservations.

These days, Congress often ignores the serious problems on Indian reservations that it played a large part in creating. Congress hands out subsidies, and it gives special preferences to those tribes that are good at lobbying, but it puts little effort into pursuing fundamental reforms that would benefit all reservations. Meanwhile, the Bureau of Indian Affairs has long been one of the most dysfunctional agencies in government.

In sum, good for Dan Snyder in engaging on these issues. But I hope he uses his funding and influence to draw attention to the need for fundamental policy reforms.  

For more, see Indian Lands, Indian Subsidies, and the Bureau of Indian Affairs.

Is Religious Liberty an “Exception” to Government Rule?

In a free society, employers would be at liberty to offer their employees group health insurance, if they wished, and to offer whatever coverage they wished to offer. In the Supreme Court today, however, so basic a premise barely surfaced during oral argument in Sebelius v. Hobby Lobby, the Obamacare “contraceptive mandate” case. Rather, Justices Sotomayor, Kagan, and Ginsburg, clearly supporting the mandate, pressed Hobby Lobby’s attorney Paul Clement as to whether an “exception” should be provided for religious employers who are otherwise required by regulation to offer contraceptive coverage, and whether such an exception could be limited or instead would have no principled bounds. By contrast, Chief Justice Roberts, Justice Kennedy, and even Justice Breyer were at pains to show how such a religious “accommodation” could in fact be limited.

Thus have we come to a point at which religious liberty is recognized, if it is, as an exception to the general rule that government may require us to act as it dictates—and we have to be careful not to extend that accommodation too far lest it gobble up the rule.

That’s a remarkable inversion of First Principles: government first, liberty second, as a limited exception. True, we don’t allow the religious, in the name of religious liberty, to proselytize by the sword. And we don’t because that “exception” is perfectly consistent with a general rule in favor of liberty and against forced association—as in murder. Here, however, religious employers are asking simply to be free from a rule that would otherwise restrict their liberty or require forced association, a rule that would force them to choose between not offering their employees insurance, and paying the Obamacare penalty for so choosing, and offering their employees coverage that offends the employers’ religious beliefs. And it’s no answer to say that, absent the mandate, the employees’ liberty is restricted. They’re at perfect liberty to obtain contraceptives, but not free to force their employer to provide them.

In other words, if you start with freedom of association, then it’s association that must be justified, by mutual consent, not individual liberty. But if “we’re all in this together”—as President Obama so often says and as Obamacare so clearly manifests—then liberty has to be treated as an “exception,” an “accommodation,” carved out from that general rule. For more on this see here and here.

Peter Schuck at Cato Thursday

On Thursday Cato will welcome Peter Schuck, professor emeritus of law at Yale, to discuss his new book “Why Government Fails So Often, And How It Can Do Better,” with Arnold Kling commenting. (I’ll be moderating). Today Peter Berkowitz reviews the book at Real Clear Politics. An excerpt: 

the belief—which public polls show is shared by a majority of Americans—that the federal government wastes great quantities of taxpayer money and frequently fails to fulfill its promises is confirmed by reams of social science research. … Schuck, professor emeritus of law at Yale University, demonstrates that the problem goes to the core of big government. … Combining an exhaustive review of the scholarly literature in political science and law with detailed case studies, Schuck concludes that government’s failures “are not just random, occasional, or partisan; they are large, recurrent, and systemic.”

They derive from what Schuck—following the writings of political scientists John DiIulio and the late James Q. Wilson—characterizes as the replacement of the Old System of American governance by the New System. …The New System abandoned questions of constitutional limits and legitimacy in favor of the assumption that government possesses unlimited power to do what representatives deem beneficial to society….
 
Schuck shows that the structural sources of our sprawling federal government’s endemic policy failures are numerous—and explainable.  

For more, follow the link. You can register for the lunch here, or watch live at cato.org/live.