Page 3 of
3 THE SHAPE OF
US POPULISM, Part 3 The progressive era By
Henry C K Liu
Wilson won a large majority
of electoral votes with only 42% of the popular
vote and became the only Democrat in the White
House over a period of four decades from 1892 to
1932, and only the third Democrat to be elected
president since 1856.
Progressive Party
candidate Roosevelt won 27.4% of the popular vote
with 88 electoral votes, drawing votes mostly from
Taft, thus spoiling the conservative Republican
plans to stay in the White House for another term.
After Roosevelt in 1912, no other third-party
candidate again came in second in the Electoral
College, though several had become spoilers to
derail major party plans to gain the White House.
In 1916, Roosevelt won as the Republican
candidate. In 1924, Robert M. La Follette ran as
candidate for the
Progressive Party and won 16.6%
of the popular vote with 13 electoral votes.
Since 1924, only three third-party
candidates have managed to get more than the
average 5.6% of the popular vote received by
third-party candidates: George Wallace in 1968,
winning 13.5% of the popular vote with 46
electoral votes; John B Anderson in 1980, winning
6.6% of the popular vote with no electoral votes;
and H Ross Perot, winning 18.9% of the popular
vote with no electoral votes and Perot again in
1996 winning 8.4% of the popular vote with no
electoral votes.
The populism of the
1912 Democratic platform The 1912
Democratic platform, heavily influenced by
Southern populists, and repeating the demands of
the 1908 platform, declared:
... it to be a fundamental principle
of the Democratic Party that the Federal
government, under the Constitution, has no right
or power to impose or collect tariff duties,
except for the purpose of revenue, and we demand
that the collection of such taxes shall be
limited to the necessities of government
honestly and economically administered.
The high Republican tariff is the
principal cause of the unequal distribution of
wealth; it is a system of taxation which makes
the rich richer and the poor poorer; under its
operations the American farmer and laboring man
are the chief sufferers; it raises the cost of
the necessaries of life to them, but does not
protect their product or wages. The farmer sells
largely in free markets and buys almost entirely
in the protected markets. In the most highly
protected industries, such as cotton and wool,
steel and iron, the wages of the laborers are
the lowest paid in any of our industries. We
denounce the Republican pretence on that subject
and assert that American wages are established
by competitive conditions, and not by the
tariff.
Free trade and
populism A century later, on the issue of
free trade, US populism in 2008 takes the opposite
from the anti-tariff position of populism in 1908
that crystallized in the 1912 Democratic platform.
This is because US farmers in 1908 were
disadvantaged by having to sell their produce in a
free market and to buy their needs in protected
markets, as agricultural land by nature could not
be moved overseas.
In contrast, US workers
in 2008 find domestic markets for their labor
declining as corporations move their factories
overseas to capture low wage advantages. As the US
became a global industrial and financial
superpower after the Cold War, big business no
longer needed protected markets at home, but
instead wanted to keep the home market open in
order to convince other nations to reciprocate
with open markets promoted by neoliberal
globalization propaganda; meanwhile US workers
finally woke up to the need for protective tariffs
to prevent cross-border wage arbitrage by US-based
transnational corporations.
The fact
remains that weak economies around the world now
are not acting in their national interest by
adopting US-promoted globalized free trade,
anymore than the US in 1908 would be if it had
adopted British-promoted globalized free trade.
The high tariff advocates of 1908 served the US
national interest in their effort to protect
underdeveloped US industries, while populist
opposition to high tariffs was based on narrow
sectional interest. What made high tariffs a
target of the populists was the unwillingness of
the Northern financiers and big-business leaders
to share equitably the benefits of protectionism
with the agricultural South.
Populism
today remains a power struggle between the
financial elite and the common people; only the
battle ground has shifted 180 degrees between 1908
and 2008 due to the rise of the US as the world’s
sole economic superpower. Populists in 2008 do not
oppose free trade as such; they oppose the unfair
terms of so-called free trade that unjustly
exploit the working poor of not just the US but of
the whole world.
Such unfair terms of
trade cannot be corrected by re-imposing high
tariffs. They can only be corrected by the
adoption of a new international finance
architecture to eliminate dollar hegemony which
forces weak economies to seek export-led growth at
the expense of domestic development; and to adopt
global labor standards that aim at equalizing
wages to make cross-border wage arbitrage
unprofitable, not by pushing down wages
everywhere, but by pushing wages up in the new
exporting economies. Further, free international
movement of capital must be accompanied by free
international movement of labor. Until then, free
trade is just another name for economic
imperialism that exploits working people
everywhere for high corporate profits.
The
1912 Democratic platform also decried the high
cost of living as a serious problem in every
American home caused by the Republican protective
tariff and "from trusts and commercial
conspiracies fostered and encouraged by such laws"
and asserted that "no substantial relief can be
secured for the people until import duties on the
necessaries of life are materially reduced and
these criminal conspiracies broken up." The rise
of cost of living in 2009 comes not from high
tariffs, but from high corporate profits derived
from low wages that failed to keep pace with
inflation.
Against
monopolies The 1912 Democratic platform
asserted that "a private monopoly is indefensible
and intolerable" and called for "vigorous
enforcement of the criminal as well as the civil
law against trusts and trust officials" and
demanded "the enactment of such additional
legislation as may be necessary to make it
impossible for a private monopoly to exist in the
United States." Until the collapse of the debt
market in August 2007, easy and low-cost credit
was the force behind the mergers and acquisition
mania in the corporate world that inevitably led
to layoffs of thousands of workers to produce the
needed profit margin to repay the leveraged buyout
loans.
The 1912 Democratic platform
declared its support for the declaration by
anti-trust laws "upon which corporations shall be
permitted to engage in interstate trade,
including, among others, the prevention of holding
companies, of interlocking directors, of stock
watering, of discrimination in price, and of the
control by any one corporation of so large a
proportion of any industry as to make it a menace
to competitive conditions." In 2008, anti-trust is
in a sham. Every sector of the economy is now
dominated by less than five, frequently only
three, major corporate players.
The 1912
Democratic platform condemned "the action of the
Republican administration in compromising with the
Standard Oil Company and the tobacco trust and its
failure to invoke the criminal provisions of the
anti-trust law against the officers of those
corporations after the court had declared that
from the undisputed facts in the record they had
violated the criminal provisions of the law." In
1980, oil companies started to re-merge into giant
corporations to "improve efficiency."
The
1912 Democratic platform expressed "regret that
the Sherman anti-trust law has received a judicial
construction depriving it of much of its
efficiency and we favor the enactment of
legislation which will restore to the statute the
strength of which it has been deprived by such
interpretation."
The current Supreme Court
cannot be described as a liberal court by any
stretch of imagination. On the issue of
anti-trust, there is little progress between 1908
and 2008. The progress made during the Progressive
Era and the New Deal Era has been erased by
neoliberal market fundamentalism of the past two
decades. Corporate monopolistic gigantism is now
controlling the US economy to an extent comparable
to the age of robber barons.
Government
protection of the people from injustice
The 1912 Democratic platform insisted
"upon the full exercise of all the powers of the
Government, both State and national, to protect
the people from injustice at the hands of those
who seek to make the government a private asset in
business." The populist tone of the 2008
presidential campaign seems to echo the 1812
Democratic platform.
The 1912 Democratic
platform called for authorizing an income tax, and
a Constitution amendment providing for the popular
election of senators, legislation in each State
which would permit the expression of the
preference of the electors for national candidates
at presidential primaries, the enactment of a law
prohibiting any corporation from contributing to a
campaign fund and any individual from contributing
any amount above a reasonable maximum. These
demands were later realized by the Wilson
administration. Yet the progressivity of the
income tax has been diluted by all Republican
administrations since.
Railroads to
telephone lines The 1912 Democratic
platform called for "the efficient supervision and
rate regulation of railroads, express companies,
telegraph and telephone lines engaged in
interstate commerce. To this end we recommend the
valuation of railroads, express companies,
telegraph and telephone lines by the Interstate
Commerce Commission, such valuation to take into
consideration the physical value of the property,
the original cost, the cost of reproduction, and
any element of value that will render the
valuation fair and just."
The 1912
Democratic platform called for "such legislation
as will effectually prohibit the railroads,
express, telegraph and telephone companies from
engaging in business which brings them into
competition with their shippers or patrons; also
legislation preventing the overissue of stocks and
bonds by interstate railroads, express companies,
telegraph and telephone lines, and legislation
which will assure such reduction in transportation
rates as conditions will permit, care being taken
to avoid reduction that would compel a reduction
of wages, prevent adequate service, or do
injustice to legitimate investments."
The
1912 Democratic platform also opposed "the
so-called Aldrich bill or the establishment of a
central bank; and we believe our country will be
largely freed from panics and consequent
unemployment and business depression by such a
systematic revision of our banking laws as will
render temporary relief in localities where such
relief is needed, with protection from control of
dominion by what is known as the money trust."
The platform further stated that "Banks
exist for the accommodation of the public, and not
for the control of business. All legislation on
the subject of banking and currency should have
for its purpose the securing of these
accommodations on terms of absolute security to
the public and of complete protection from the
misuse of the power that wealth gives to those who
possess it."
The 1912 Democratic platform
condemned "the present methods of depositing
government funds in a few favored banks, largely
situated in or controlled by Wall Street, in
return for political favors, and we pledge our
party to provide by law for their deposit by
competitive bidding in the banking institutions of
the country, national and State, without
discrimination as to locality, upon approved
securities and subject to call by the Government."
Progressive opposition to central banking
has been vindicated by the recurrence of financial
crises over the 85 years of Fed history. The 1912
Democratic platform was prescient in that central
banks can be counted on to fund debt bubbles but
cannot be counted on to deliver price stability.
The debt bubble of the 1990’s and the subsequent
collapse of the debt market in 2007 can be traced
directly to the door of Federal Reserve under the
19-year-long chairmanship of Alan Greenspan.
Next: Panic-stricken Federal
Reserve
Henry C K Liu is
chairman of a New York-based private investment
group. His website is at
http://www.henryckliu.com.
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