Wednesday, July 16, 2014

Curmudgeonocracy 4—What’s In a Name?


Progressivism

“You’d be proud of me, Curmudge; I’ve been studying again.  Instead of a government that protects natural rights through limited decentralized powers, Progressives envision an expansive government and the rule of experts in nationally centralized administrative agencies.  These concepts were originated by Jean-Jacques Rousseau in France, developed by G. F. W. Hegel in Germany, and supported by prominent Americans including Woodrow Wilson, Theodore Roosevelt, and Robert La Follett.  Hegel embraced a new form of freedom where individuals give the government unlimited authority over their lives.”

“They called that freedom, Julie?  It’s hard to believe.  Long ago I had a college roommate who studied Hegel and a professor who called himself a Progressive.  I must have been a stone’s throw from Progressivism, but I dodged the bullet. Here’s more from the article that you read: ‘The progressives favored a much more active role for the government in overseeing civil society, regulating the economy, and redistributing wealth.’  ‘Progressivism forms the roots of modern American Liberalism.’ “

Socialism and Liberalism

“It’s time for some clarification, Professor.  As we mentioned in our Curmudgeonocracy 2 and 3 postings, strict socialism involves government ownership of all means of production, and that occurs now only in totalitarian countries if at all.  An example was China between 1958 and 1962 when the state was the sole employer; ‘36 million Chinese succumbed to famine.’ (1) Currently the practice of socialism in democracies allows private ownership of manufacturing, but it employs government-run cradle-to-grave social welfare programs.”

“Right as usual.  That has been the case in Western Europe and Scandinavia, as we described in Curmudgeonocracy 2, where it has been an obstacle to economic growth as well as an opiate for their young people.  Here are some observations by Arthur C. Brooks (2) in which he compares traditional American exceptionalism and earned success with learned helplessness in social-democratic Spain: ‘The recession, rigid labor markets, and excessive welfare spending have pushed unemployment to 24.4%, with youth joblessness over 50%.  Unable to earn their success, Spaniards fight to keep their unearned government benefits.’  This is an extreme example of an outcome that could result from the contemporary understanding of liberalism; the government grants benefits and advantages in order to give everyone the ability to achieve a certain standard of living and reduce inequalities.  It’s interesting that the Europeans are trying to improve their economies by cutting back on social welfare programs while the U.S. is going in the opposite direction.”

“But what about classical liberalism, Curmudge?”

“Hang in there, Julie.  We’ll get to classical liberalism after we note the current variations of socialism.”

Keynesian Economics

“You told me, Professor, that you earned an ‘A’ in Econ. 101.  I’ll bet it wasn’t Keynesian economics.”

“That’s for sure, Julie.  Keynesian economics is the concept that involves influencing aggregate demand through intervention policies implemented by the government.  A familiar term is the so-called ‘Keynesian multiplier,’ which depicts an increase in economic activity resulting from a government expenditure or ‘stimulus.’  For example, a $100 million government project, whether to build a dam or dig and refill a giant hole, might pay $50 million in pure labor costs. The workers then take that $50 million and, minus the average saving rate, spend it at various businesses. These businesses now have more money to hire more people to make more products, leading to another round of spending. This idea was at the core of the New Deal and the growth of the welfare state.’ “

The New Deal

“And the New Deal was…”

“I’ll get to it, chère etudiante.  The Great Depression began in the United States with the stock market crash on October 29, 1929.  Before that date unemployment was 3%.  On June 17, 1930, when Herbert Hoover was President, Congress enacted the Smoot-Hawley Tariff.  Other nations retaliated, igniting an international trade war that exacerbated what had become a world-wide depression.  By 1933 U.S. unemployment had risen to 24%.  Franklin D. Roosevelt (FDR) was elected President in 1932, and he called his initiative to revive the economy the New Deal.  It was an alphabet-soup of federally funded programs to put people back to work with names like National Industrial Recovery Act (NIRA), Tennessee Valley Authority (TVA), and Works Progress Administration (WPA).  The NIRA gave so much power to the government that it was declared unconstitutional.  Despite all of these stimulus programs (as we would now call them), in 1938 unemployment was still at 19%.”

“I know what happened in 1934, Old Guy; a future curmudgeon was born in Ohio.  And in 1941 World War II came to the U.S., and our country switched from concern about the economy to winning the war.  In 1945 Roosevelt died, Harry Truman became President, and the war ended.  Truman tried to resurrect the New Deal, calling it the Fair Deal, but Congress—recognizing that the war and not the New Deal had ended the Depression—wouldn’t go along.”

“Julie, I hope that you appreciate the commonality among these programs—Progressivism, Socialism, Liberalism, Keynesian Economics, and the New Deal.”

“I’ve got it, Curmudge.  They are all dogs from the same kennel.  They cost a lot, take away people’s freedom and initiative, and don’t work very well.  Obviously they won’t make the cut to be a part of Curmudgeonocracy.”

“Jaded Julie, you sure do have a way with words.”

Kaizen Curmudgeon   arry Trfuman became Presidentg, and the war endedHh 

(1) Yang Jisheng The Wall Street Journal, May 25, 2013.
(2) Brooks, Arthur C. The Wall Street Journal, May 9, 2012.

Link to posting from blog archives: Evidence-Based Medicine 2—9/30/10

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