What America’s Jacobins Would like to Do

The picture above  epitomizes what the American Left would like to do to American society. Their antipathy to President Trump and the Republicans was generated by their overweening desire to completely remake American society. Pretenses to impeach Trump and his Attorney General Bill Barr, together with their accusations that the U.S. is a racist and proto-fascist country, are inspired by their need to totally tear down American society and rebuild it anew. What do America’s Jacobins want?

Causes for Progressive Despair

It is quite possible we are giving the American Left too much credit for ideological coherence. The classicist Victor Davis Hanson has suggested the following: After Democrats succeeded in enacting an equality-of-opportunity agenda (Social Security, Medicare, 40-hour workweek, civil rights are some of his prime examples), they have mostly failed in a new agenda to ensure equality-of-results. As a result, they have fallen back to identity politics and “assorted dead-end green movements” to inspire the electorate to give them more power.  Conservation of the environment, which everyone supports, has devolved to radical environmentalism.  The goal of achieving fairness under the law has degenerated to “unapologetic redistributionism.” Hanson asserts,

The 2016 campaign and the frenzied reaction to the result are reminders that the Left is no longer serious about formulating and advancing a practical agenda. In sum, for now it is reduced to a party of teeth-gnashers.

A Party of Teeth-Gnashers by Victor Davis Hanson

How did the Democratic Party get this way? Coherent or not, the progressives of the Democratic Party have a definite history that displays how they would like to remake society. From the very beginning of the American progressive movement in the late nineteenth century, progressives have hated corporations and been at odds with free-market capitalism. This bias prejudiced them toward increased government regulation of private businesses, particularly large corporations.

Just this proclivity toward government control of corporations gave progressives an authoritarian bent. They bent even further in this direction a century ago with the administration of the progressive president Woodrow Wilson. Wilson believed the average American citizen lacked the knowledge and temperament to govern himself, much less to influence the governing of the country. Instead, he was convinced the country should be governed by knowledgable technocrats. Indeed, not even elected officials could be entirely trusted. They themselves were infected by electoral influences from the common people. In addition, they were also not knowledgable in everything needed for governing.

This meant the parts of government that would do most of the governing had to be insulated from the political branches. Most especially, they needed to be insulated from Congress. Those ruling parts, independent government agencies, came to be collectively called the administrative state (aka the regulatory state). Technically, they are a part of the executive branch, but the President has only limited control over them.

These agencies are typically governed by boards or commissions, whose members are appointed by the President subject to Senate confirmation. Usually, the President can only remove a board or commission member for cause; that is, when the board or commission member has done something illegal, neglects his duties, or is not able to continue his duties. For a few agencies, such as for the head of the Environmental Protection Agency, members serve at “the pleasure of the President” and can be removed without cause.

Unfortunately for the progressives, the administrative state only occasionally ameliorates social and economic problems. More often than not, government regulations merely increase companies’ cost of doing business. This burden, in turn, reduces the ability of companies to produce additional wealth, i.e. it reduces potential GDP growth. This economic drag reduces the value of skilled labor, meaning wage increases stagnate and economic inequality increases.

In fact, the biggest economic and social problems have more often than not been caused by government regulations. Major examples include the 1930’s Great Depression, caused by a change in Federal Reserve monetary policy; and the Great Recession of 2008-2009, caused by a misguided federal housing policy.

Time after time, progressives’ attempts to legislate or regulate equality-of-results have met with abject failure. Throughout the last forty years, their efforts have caused economic inefficiencies — created by increased taxes, government expenditures, and regulations — that reduced economic growth. This economic stagnation throughout the West brought long-term secular growth rates very close to zero. This can be shown by the ten-year moving average of GDP growth rates for major North European countries and the U.S. between 1970 and 2016, as displayed below.

In the U.S. in particular, this economic stagnation (called secular stagnation by Keynesian economists) was exacerbated by something not present in Western Europe: Hauser’s Law. What this law dictates is that no matter what the tax rates are, government revenues are always 19.5% of GDP, plus or minus one to two percent.

This law has existed in the U.S. since the middle 1940s. As I have shown elsewhere, the law exists because of the highly progressive structure of U.S. taxes. It does not exist in Western Europe because the top marginal tax rates in Europe take effect with their lower middle class.

In the U.S., Hauser’s Law interacts with another, more universal economic law to make government intrusions into the private economy even more destructive. This more universal law is illustrated by Rahn’s curve. As an economic model, Rahn’s curve postulates an optimal level of government spending as a fraction of GDP. Below that level, economic growth increases as government expenditures increase; beyond that level, economic growth shrinks with increasing government expenditures. I have discussed the reasons for this in the post The Rahn Curve: What Makes Economies Grow?.

However, the model shown above is far more than than a mere idea. Using empirical data, one can show every economically developed country in the world is on the declining branch of that curve. It appears the governments of most (if not all) developed countries are spending far more than the optimal level. Using data from the World Bank and the Organization for Economic Cooperation and Development (OECD), one can generate the declining branch of Rahn’s curve for OECD countries in 2013.

Of course, many factors other than the level of government expenditures help determine GDP growth rates. This fact explains the scatter of individual countries’ data points about the blue trend line. However, the very existence of such a trend line with non-zero negative slope testifies to how strong a negative effect government expenditures have on economic growth.

The reasons why progressives are generally wrong in their judgments about social and economic reality is not the main theme of this post. I have discussed these reasons more fundamentally in the post Failures in Progressive Thinking. However, finding the motivations for their judgments and actions is my purpose here. The empirical data shown above shows the causes of progressive frustration and despair.

What we are seeing in progressives’ lawless and desperate behavior today is the same social mechanism that brought about the collapse of the German Weimar Republic. This post World War I government was a de facto democracy. However, past authoritarian traditions led the German electorate to trust the government to solve their immense social and economic problems. The onerous demands of the Treaty of Versailles ending World War I contributed greatly to those problems. The treaty required Germany to pay huge reparations for the damage they caused during the war.

The burdens of the Versailles treaty and high post-war unemployment motivated the Weimar Republic to adopt an expansive monetary policy. This, in turn, created hyperinflation, leading to even more unemployment. The German hyperinflation lasted from 1921 to 1923. In 1923 the Reichsmark, backed by nothing, was replaced with the Rettenmark, backed by real estate. The replacement of a worthless currency with a currency backed by something of economic value brought the hyperinflation to a quick end.

However, the hyperinflation of 1921-1923 had lasting consequences. German corporations could not find investments from over-seas to increase their productive capacity and to finance larger numbers of good jobs. When the Great Depression of the 1930s hit Europe, it was the coup de grâce for the Weimar Republic. One governmental bad judgment after another distorted the country’s economy and social fabric. An electorate educated to see government as the primary means to solve problems demanded the government take ever more steps to relieve the pain. Finally, in desperation, they handed all of the government’s power to the Nationalsozialistische Deutsche Arbeiterpartei, the party of Adolf Hitler. That was the death of the Weimar Republic.

What we are seeing today in the United States appears very similar to the collapse of the Weimar Republic. The Democratic Party and other members of the American Left would have us believe that Donald Trump is playing the role of Adolf Hitler, and the Republican Party is the analogue of the Nazis. Yet, progressives are the ones cheering on a destructive revolution.

The Ideological Goals of the American Left

It is sometimes said that history never repeats itself, but it often rhymes. In 1944, an Austrian economist by the name of Friedrich A. Hayek published an iconic book with the title The Road to Serfdom. Among many other seminal observations, Hayek discerned in Western democracies, including the United States and the United Kingdom, a rhyming echo from the fall of the Weimar Republic. 

His primary purpose was to dispute the common belief at the time that fascism was the dying last gasp of capitalism. The popular belief was that fascism was the end state of capitalism. However, Hayek pointed out the really important difference between the polar platonic ideals of capitalism and socialism was not about the ownership of the means of production. The most fundamental difference was about who controlled the economy. Cosmetically, fascism allowed what appeared to be private ownership of companies. Nevertheless, just as in the Soviet Union, companies were totally controlled by the state.

If one took control of the economy as the touchstone of whether an economy was more socialist or capitalist, then there was not a dime’s worth of difference between the Soviet Union and fascist Germany.

Hayek drew inspiration from the writings of the nineteenth century Frenchman Alexis de Tocqueville. A classical liberal, Tocqueville nevertheless believed the demands of a tyrannical electoral majority could lead to a reemergence of dictatorship. Tocqueville called this dynamic “the road to servitude.” Hayek renamed it “the road to serfdom.”

In Hayek’s view centralized economic control by the government is intrinsically undemocratic, as both elected and unelected government appointees begin to work their will and impose it upon the people. Slowly, little by little, increasing amounts of economic power are centralized in the state. In chapter 7 of The Road to Serfdom, Hayek immediately reminds us with a quote from Hilare Belloc that, “The control of the production of wealth is the control of human life itself.” Then he declares,

Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another. But if we face a monopolist we are at his mercy. And an authority directing the whole economic system would be the most powerful monopolist conceivable.

Later, he writes,

The power conferred by the control of production and prices is almost unlimited. In a competitive society the prices we have to pay for a thing, the rate at which we can get one thing for another, depend on the quantities of other things of which by taking one, we deprive the other members of society. This price is not determined by the conscious will of anybody. And if one way of achieving our ends proves too expensive for us, we are free to try other ways. … In a directed economy, where the authority watches over the ends pursued, it is certain that it would use its powers to assist some ends and to prevent the realization of others. Not our own view, but somebody else’s, of what we ought to like or dislike would determine what we should get. And since the authority would have the power to thwart any efforts to elude its guidance, it would control what we consume almost as effectively as if it directly told us how to spend our income.

Later on, Hayek observes that as economic power is increasingly centralized in the government, the worst people tend to get on top to control society. He recalls Lord Acton’s famous remark that: “Power tends to corrupt, and absolute power corrupts absolutely.”

The American Left is convinced that if they could get just enough power through government control, they could remake the United States into a heaven on Earth. That heaven must necessarily be a socialist one. Yet, every time they succeed in giving government new powers, social and economic conditions become ever worse. The facts about social reality discussed in the previous section insure progressives will always be completely frustrated. Somehow, progressives are totally oblivious about such realities as Hauser’s Law, Rahn’s curve, and the implications of chaotic social systems.

Of course, that is not the way most progressives see it. In their view, they are being thwarted by their evil ideological adversaries. They see President Trump and his Republican Party as oppressing the people for their own political and economic gain. Republicans and their supporters, misconceived as being fascists and racists, are beyond the pale. They are not to be tolerated. Their existence is to be “canceled.” Progressive hatred and intolerance for “conservatives” have become so intense, I halfway expect them to propose reeducation camps for all Republicans. Or maybe they will bring back the guillotine.

These are the motivations that drove the anti-Trump attempt at a coup d’état. They are the inspirations for the widespread riots, which are now political riots, not riots protesting the brutal death of George Floyd. The American Jacobins’ need to tear down America in order to rebuild it in their own image is behind the drives to defund police departments. This is also the motivation for the 1619 Project, and for the movement to erase American history from our memory. This is why so many monuments to George Washington, Thomas Jefferson, Abraham Lincoln, Ulysses S. Grant, and (unbelievably!) Frederick Douglass have been defaced or toppled. The Jacobins aim at nothing less than a Great Cultural Revolution.

May God save these not so United States.

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