Rediscovering Americanism: And the Tyranny of Progressivism

by Mark R. Levin

  Hence, governing regulations informed by America’s founding principles and instituted for the limited but significant purpose of nurturing, improving, or promoting private property and economic vibrancy are both prudential and essential to safeguarding individual liberty and the civil society. However, regulations that have as their purpose the institution of plans and schemes to fundamentally transform society in ways that extinguish “the spirit of the nation”—and are motivated by the progressive ideology, special interests, crony capitalism, etc.—are a perversion and abuse of legitimate governing authority. “To create conditions in which competition will be as effective as possible,” wrote Hayek, “to supplement it where it cannot be made effective, to provide the services which, in the words of Adam Smith, ‘though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals’—these tasks provide, indeed, a wide and unquestioned field for state activity. In no system that could be rationally defended would the state just do nothing. An effective competitive system needs an intelligently designed and continuously adjusted legal framework as much as any other. Even the most essential prerequisite of its proper functioning, the prevention of fraud and deception . . . ­provides a great and by no means yet fully accomplished object of legislative activity.”13

  Underscoring Hayek’s point about “promoting the forces of competition,” it is well to remember that the precursor to the Constitutional Convention of 1787 in Philadelphia was the Annapolis Convention in September 1786, the focus of which was the devastating protectionist trade barriers the states were imposing on each other, thereby interfering with interstate trade and competition. Twelve delegates from five states convened. As was later reported, “That, pursuant to their several appointments, they met, at Annapolis in the State of Maryland on the eleventh day of September Instant, and having proceeded to a Communication of their Powers; they found that the States of New York, Pennsylvania, and Virginia, had, in substance, and nearly in the same terms, authorized their respective Commissions ‘to meet such other Commissioners as were, or might be, appointed by the other States in the Union, at such time and place as should be agreed upon by the said Commissions to take into consideration the trade and commerce of the United States, to consider how far a uniform system in their commercial intercourse and regulations might be necessary to their common interest and permanent harmony, and to report to the several States such an Act, relative to this great object, as when unanimously by them would enable the United States in Congress assembled effectually to provide for the same. . . .’ ”14

  Little came of the Annapolis Convention. But the states knew they had to tackle the commerce and trade problem or else the nation would face potential ruin. As Supreme Court associate justice Joseph Story would later write about the nation’s economy: “It is hardly possible to exaggerate the oppressed and degraded state of domestic commerce, manufactures, and agriculture, at the time of the adoption of the Constitution. Our ships were almost driven from the ocean; our work-shops were nearly deserted; our mechanics were in a starving condition; and our agriculture was sunk to the lowest ebb. These were the natural results of the inability of the General Government to regulate commerce, so as to prevent the injurious [state] monopolies and exclusions of foreign nations, and the conflicting, and often ruinous regulations of the different states.”15

  The states agreed to a subsequent convention, this time in Philadelphia—the Constitutional Convention. The matter of interstate commerce would be specifically addressed in Article I, Section 8, Clause 1 of the Constitution. It provides, in part, that Congress shall have power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”16 Obviously, the purpose of the clause was to encourage commerce—that is, property rights and market capitalism. The Commerce Clause was the method by which the Framers balanced, among other things, federalism with economic liberty, particularly property rights. However, the progressives distorted the Commerce Clause, like much of the rest of the Constitution, and have interpreted it to mean the opposite of what was intended. Rather than promoting interstate commerce, the clause has been used to empower the centralized administrative state and its regulatory ambitions, both interstate and intrastate; it has been turned against the object of its protection—private property rights and market capitalism. Thus much of what the administrative does is without constitutional authority, judicial pronouncements and imprimaturs to the contrary.

  In 1996, in a law review article titled “Judicial Manipulation of the Commerce Clause,” eminent Harvard Law Professor and constitutional scholar Raoul Berger (1901–2000) found absolutely no justification for much of the administrative state’s modern-day regulatory activity. “The Founders’ all-but-exclusive concern was with exactions by some states from their neighbors. [James] Madison said, ‘It would be unjust to the States whose produce was exported by their neighbours, to leave it subject to be taxed by the latter.’ [James] Wilson ‘dwelt on the injustice and impolicy of leaving New Jersey[,] Connecticut &c any longer subject to the exactions of their commercial neighbours.’ That the Commerce Clause was meant to remedy this mischief is clear. Madison stated that it was necessary to remove ‘existing & injurious retaliations among the States,’ that ‘the best guard against [this ‘abuse’] was the right in the Genl. Government to regulate trade between State and State.’ [Roger] Sherman stated that ‘the oppression of the uncommercial States was guarded agst. by the power to regulate trade between the States.’ And Oliver Elseworth said that the ‘power of regulating trade between the States will protect them agst each other.’ Given the jealous attachment to state sovereignty, the absence of objection that the Commerce Clause invaded State autonomy indicates that such an intrusion [by the federal government into intrastate economic activity] was simply unimaginable. [Thomas] Jefferson accurately reflected the Founders’ views when he stated in 1791 that ‘the power given to Congress by the Constitution does not extend to the internal regulation of the commerce of a state . . . which remains exclusively with its own legislature; but to its external commerce only, that is to say, its commerce with another state, or with foreign nations. . . .’ That no more was intended was made clear by Madison in a letter to J. C. Cabell: ‘among the several States’ . . . grew out of the abuses of the power by the importing States in taxing the non-importing, and was intended as a negative and preventive provision against injustice among the States themselves, rather than as a power to be used for the positive purposes of the General Government. . . .”17

  In their 2013 treatise “ ‘To Regulate,’ not ‘To Prohibit’: Limiting the Commerce Power,” Professors Barry Friedman and Genevieve Lakier also examined the history of the Commerce Clause and drew the same conclusions as Berger. “The Framers plainly sought to take from the states the power to pass ‘interfering and unneighbourly regulations’ of this kind. They sought to empower Congress to make uniform rules for trade. . . . The ultimate aim was to facilitate what Alexander Hamilton described in Federalist 11 as the ‘unrestrained intercourse between the States’ that he, and other Federalists, believed would promote both economic prosperity and political unity. No one suggested, during the framing or ratification of the Constitution, that in addition to facilitating an unrestrained intercourse between the states, Congress also would be empowered to restrain such intercourse, by restricting what goods could cross state lines or be sold in interstate markets. When delegates referred to Congress’s interstate commerce powers, they referred to them exclusively as a solution to the problem of burdensome or discriminatory state legislation. . . . In short, both positive and negative evidence suggests that the Framers did not intend—and probably did not even imagine—that the Interstate Commerce Clause would be read in such a way as to give Congress the power to restrain interstate intercourse, as well as to promote it.”18

  Again, this is also i
mportant because of the indisputable relationship between political and economic liberty, and the federal government’s excessive and obsessive interference with both. Milton Friedman (1912–2006), a Nobel laureate in economics and perhaps the most prominent free market economist of the twentieth century, explained in his popular book Capitalism and Freedom that “[e]conomic arrangements play a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is also an indispensable means toward the achievement of political ­freedom. . . . Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration and dispersion of power. The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.” “Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions. So also did political freedom in the golden age of Greece and in the early days of the Roman era. History suggests only that capitalism is a necessary condition of political freedom. Clearly it is not a sufficient condition.”19

  Moreover, as progressivism’s grip on society is increasingly tightened through centralized decision making, it not only induces adverse economic consequences but is also destructive of the harmony that exists among a diverse and free people in the civil society, creating balkanization and disruption. While acknowledging that absolute freedom is obviously impossible, Friedman wrote: “The use of political channels, while inevitable, tends to strain the social cohesion essential for a stable society. The strain is least if agreement for joint action need be reached only on a limited range of issues on which people in any event have common views. Every extension of the range of issues for which explicit [political] agreement is sought strains further the delicate threads that hold society together. If it goes so far as to touch an issue on which men feel deeply yet differently, it may well disrupt the society. . . . The widespread use of the market reduces the strain on the social fabric by rendering conformity unnecessary with respect to any activities it encompasses. The wider the range of activities covered by the market, the fewer are the issues on which explicitly political decisions are required and hence on which it is necessary to achieve agreement. In turn, the fewer the issues on which agreement is necessary, the greater is the likelihood of getting agreement while maintaining a free society.”20

  Friedman noted that the early progressives were persuasive because their appeals were anchored in promises of a utopian ideal, unbridled by real-world experience or reality. He wrote: “In the 1920’s and the 1930’s, intellectuals in the United States were overwhelmingly persuaded that capitalism was a defective system inhibiting economic well-being and thereby freedom, and that the hope for the future lay in a greater measure of deliberate control by political authorities over economic affairs. The conversion of the intellectuals was not achieved by the example of any actual collectivist society, though it undoubtedly was much hastened by the establishment of a communist society in Russia and the glowing hopes placed in it. The conversion of the intellectuals was achieved by a comparison between the existing state of affairs, with all its injustices and defects, and a hypothetical state of affairs as it might be. The actual was compared to the ideal. At the time, not much else was possible. True, mankind had experienced many epochs of centralized control, of detailed intervention by the state into economic affairs. But there had been a revolution in politics, in science, and in technology. Surely, it was argued, we can do far better with a democratic political structure, modern tools, and modern science than was possible in earlier ages.”21

  Like Hayek, Friedman acknowledged that there is an appropriate role for government and that there have been certain economic benefits from governmental intrusion—highways, dams, antitrust, public health and safety, access to education, etc. However, Friedman argued that considering the extent of government intervention and the enormous financial costs and economic dislocations, these benefits are more the exception than the rule. Friedman explained: “We now have several decades of experience with governmental intervention. It is no longer necessary to compare the market as it actually operates and government intervention as it ideally might operate. We can compare the actual with the actual. If we do so, it is clear that the difference between the actual operation of the market and its ideal operation—great though it undoubtedly is—is as nothing compared to the difference between the actual effects of government intervention and their intended effects. . . .”22

  As I wrote in Liberty and Tyranny, because of its sweeping break from our founding principles and constitutional limits, the federal government has become a “massive, unaccountable conglomerate: It is the nation’s largest creditor, debtor, lender, employer, consumer, contractor, grantor, property owner, tenant, insurer, health-care provider, pension, and guarantor.”23 Furthermore, in Plunder and Deceit, I provide extensive evidence of the economic calamity that awaits future generations as a result of the federal government’s reckless extravagance and profligacy, including its more than $200 trillion fiscal gap.24

  Conversely, not enough is said about the seismic benefits to individuals and society generally from private property rights, market capitalism, and the industrial revolution of the 1800s. Rather, a long list of myths intended to promote the progressive agenda has been successfully embedded in the public psyche. For example, it is said that capitalism and in particular the industrial revolution gave rise to child labor. In fact, child labor existed long before the industrial revolution—since the beginning of mankind. What of monopolies and oligopolies? Again, concentrations of economic power existed in agrarian and feudal systems and exist today under various forms of collectivism, such as socialist and communist regimes. The New Deal in the 1930s and 1940s instituted the most far-reaching and intrusive centralized management and control of private economic and business activities America had ever known. And it remains the model for government intrusion in the economy today despite its abundant demonstrable failures.

  Despite its significance to the progressive enterprise, it is not possible to comprehensively tackle the New Deal in these pages. However, valuable insight is available in the book FDR’s Folly (2003), by historian and Cato Institute senior fellow Jim Powell, and in The Forgotten Man (2007), by author and columnist Amity Shlaes. They provide compelling evidence of the federal government’s role in exacerbating the economic conditions leading up to the Great Depression and the disastrous effects on farmers, corporations, prices, and employment.25

  In addition, in several of the most thoroughly researched examinations of New Deal economic policies, Professors Harold L. Cole and Lee E. Ohanian supply overwhelming proof of the New Deal’s deleterious effects on the economy, which both deepened and extended the Great Depression. They summarized their findings in 2009:

  The New Deal is widely perceived to have ended the Great Depression . . . But the facts do not support the perception . . . [T]here was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930–32, but were 23% lower on average during the New Deal (1933–39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930–32.

  Cole and Ohanian explained that it was the New Deal that actually prevented a more rapid recovery:

  The economic fundamentals that driv
e all expansions were very favorable during the New Deal. Productivity grew very rapidly after 1933, the price level was stable, real interest rates were low, and liquidity was plentiful. We have calculated on the basis of just productivity growth that employment and investment should have been back to normal levels by 1936 . . .

  Some New Deal policies certainly benefited the economy by establishing a basic social safety net . . . [b]ut others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels . . .

  The most damaging policies were those at the heart of the recovery plan, including The National Industrial Recovery Act (NIRA), which tossed aside the nation’s antitrust acts and permitted industries to collusively raise prices provided that they shared their newfound monopoly rents with workers by substantially raising wages well above underlying productivity growth . . . Each industry created a code of “fair competition” which spelled out what producers could and could not do, and which were designed to eliminate “excessive competition” that FDR believed to be the source of the Depression. . . .26

  Cole and Ohanian concluded that “wholesale government intervention can—and does—deliver the most unintended consequences.”

  Friedman also extensively studied the causes of the Great Depression. He concluded: “The fact is that the Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy. A governmentally established agency—the Federal Reserve System—had been assigned the responsibility for monetary policy. In 1930 and 1931, it exercised this responsibility so ineptly as to convert what otherwise would have been a moderate contraction into a major catastrophe.”27 Friedman found “that the severity of each of the major [post–World War I] contractions—1920–21, 1929–33, and 1937–38—is directly attributable to acts of commission and omission by the Reserve authorities and would not have occurred under earlier monetary and banking arrangements. There might well have been recessions on these or other occasions, but it is highly unlikely that any would have developed into a major contraction.”28 “The Great ­Depression . . . , far from being a sign of the inherent instability of the private enterprise system, is a testament to how much harm can be done by mistakes on the part of a few men when they wield vast power over the monetary system of a country.”29