Magazine | April 25, 2016, Issue

Misreading Prosperity

The Great Exception: The New Deal and the Limits of American Politics, by Jefferson Cowie (Princeton, 288 pp., $27.50)

‘Democrats want to go back to the 1950s so they can work there. Republicans want to go back to the 1950s so they can live there.”

It’s an old saying, and there’s some truth to it. With his thoughtful new book, scholar Jefferson Cowie seeks to show the cause of such longing. Cowie’s conclusion, in a phrase: “collective economic rights.” In the 1950s, and indeed the 1930s before them, writes Cowie, “the central government used its considerable resources in a systematic, if hardly consistent, fashion on behalf of the economic interest of nonelite Americans in ways that it had not done before or since.” Only understanding the role of such rights in the last century, Cowie argues, can give the divided, unequal Americans of this century the energy to pursue better policies and “strengthen the imagination for the work that lies ahead.”

Cowie pointedly opens his argument in a dark period short on collective economic rights: the early 1930s. One in four men lacked work. The stock market dropped to one-ninth of its former value. That emergency warranted a dramatic and broad response, because, in Cowie’s understanding, “the Great Depression was more than an economic description — it captured the national mood.” Cowie quotes the journalist Eric Sevareid to underscore the urgency: “Tens of thousands of American men, women, and children, white, black, brown, and yellow, . . . eat from blackened tin cans, [and] find warmth at night in the boxcars.”

Enter Franklin Roosevelt of New York. The presidential candidate promised to help “the forgotten at the bottom of the economic pyramid.” Roosevelt swore he would unite “Main Street, Broadway, the mines, the mills” via the New Deal. But Roosevelt’s great social program would be possible only under one condition: the subordination of 19th-century individualism. The country acquiesced. Roosevelt’s collective prevailed. Congress passed, and Roosevelt signed, financial support for senior citizens, Social Security. Farms received aid under the Agricultural Adjustment Act. The Wagner Act, pushed through in 1935, gave heretofore unimagined power to the thuggish John L. Lewis and his Congress of Industrial Organizations. In the time of the New Deal, according to Cowie, we became “the best of what the United States could be as a nation, caring, sharing, secure, and occasionally visionary.”

World War II brought evidence of further satisfaction with government involvement: “The system of central planning grew to become the closest thing to a state-run capitalist enterprise in American history.” Citizens, again according to Cowie, felt “tremendous economic enfranchisement.”

The true splendor of labor liberalism, however, became evident only in the 1950s. Tethered by taxes and tough labor law, Big Business itself in that era was less bull than cow, ready to be milked by the rest of society. A full 35 percent of the labor force belonged to unions. Deficit spending on public projects gave citizens a sense of national wealth. “More equality, more optimism, more leisure, more consumer goods, more travel, more entertainment, more expansive homes, and more education” is how Cowie captures the decade.

Alas — at least for Cowie — that pesky individualism eventually reared its head. Many within the Democratic party sought freedom from the draft or to smoke marijuana, not more boardroom leverage over Ford or General Motors. The 1970s turned out to be not the Big Labor decade but the “Me Decade.” Cowie notes that old New Deal liberals suddenly had “a hard time identifying what they stood for.” What he terms a “messy inflationary economy” also contributed to the degrading of the era of collective rights.

It was around this time that Governor Ronald Reagan traveled to the South and frankly stated his approval of states’ rights. States, after all, provide counterbalance to the federal government and its collective rights. But Cowie chooses to slime Reagan’s use of the phrase “states’ rights” as racist.

“States’ rights” was, Cowie says, “a term that worked like a dog whistle to rally those who had yet to give up formal and informal faith in white supremacy, or the semi-independence of the South and its values.” Thus ended Cowie’s era of collective rights. And we’ve all been bigoted, miserable, and unequal ever since.

To grasp the scope of the misjudgment here, start at Cowie’s beginning, or even before it. The collective rights Cowie rates essential to prosperity were conspicuously absent in the deeply prosperous 1920s as well. The laissez-faire policy of that period was giving citizens the same basics of economic contentment that featured in the 1950s: jobs, cars, and electric gadgets — though, in the 1920s, those gadgets were cathedral radios. As for the Great Depression, it was “great” for a very prosaic reason: the horrifying level of joblessness. The true antidote to it would have been growth that delivered those missing jobs, not the institutionalization or codification of economic rights.

When Cowie insists that the un- or underemployed of the early 1930s required new rights and a tender political culture to extract them from despair, he stretches his case. The author seems to be adapting a phrase from F. Scott Fitzgerald, to be whispering to us that the poor “are very different from you and me.” To which we might well reply, à la Ernest Hemingway, “Yes, they have less money.”

When Cowie gets to the later 1930s — well, he doesn’t, and that’s a problem. For the consequences of the New Deal’s collective economic rights became clear in the second half of the decade. The Wagner Act gave unions so much power that they spent the years 1936, 1937, and 1938 striking. Enervated employers eventually caved and paid already employed workers the higher wages they demanded, but also refused point-blank to rehire the unemployed at those high wage levels. The data for this downturn stand out: In the late 1930s, wages were higher in real terms than at other points in the century. Employment in the “Depression within the Depression” — a second bump downward, in 1937 — fell drastically. A labor law sold as a unifier actually created a great rift among workers, between the employed and the unemployed.

Roosevelt’s anti-business rhetoric makes that of Bernie Sanders look tame: FDR told the country that, following his arrival, the “money changers [had] fled from their high seats in the temple of our civilization.” Therefore yet another new rift emerged, between Wall Street and the rest of the country. All these divisions took their toll on the economy. Indeed, the true measure of economic progress, gross domestic product per capita, did not reach pre-Depression levels until the very end of the 1930s. The Dow Jones Industrial Average would return to its 1929 level only in 1954. And “enfranchisement” seems an odd word to describe what happened economically to Americans between the time the Nazis crossed into Poland and V-J Day: Even for those not inducted into the military, the reality was closer to “economic conscription.”

What Cowie gets wrong about the 1950s is even simpler. The era’s prosperity and especially its high wages were indeed real. But the wages were possible for two reasons. The first was the passage, over President Truman’s veto, of a law to curtail the Wagner Act: the Taft-Hartley Act. Ending as it did the closed shop, and the cost of many battles with unionized employees, Taft-Hartley permitted employers many profitable days, and thus increased both their cash and their inclination to lift wages. The second reason was that the United States lacked economic competition. With Europe flat on its back and Asia in ruins (Japan) or a rice paddy (China), Detroit might pay industrial workers as it pleased. But as soon as assembly lines abroad hummed, that luxury of high wages ended.

You have to wonder what Cowie makes of the second part of the truism at the beginning of this article, that Republicans long to return to the 1950s to live. One cause of 1950s nostalgia is the current concern that we can never give our children a life like the one our parents enjoyed in the 1950s or 1960s. That in turn is because of the debts that resulted from the new programs derived from the assumption that we enjoy collective rights. What, after all, is Social Security but the greatest rights swindle of American history? Cowie dismisses the 1970s economic troubles (that “messy inflation”) as an intrusion whose origins have nothing to do with the federal spending that his philosophy excuses.

In theory, “collective” means everyone. In reality, however, what “collective rights” means is rewards to specific interest groups — in Roosevelt’s case, certain poor, the urban aged, certain merchants (FDR’s “Main Street”), the industrial worker (his “mills”), and so on. In the process of rewarding these specific groups, the great donor, the government, always neglects that group that doesn’t happen to enjoy its own bit of legislation. No one describes the paradox more eloquently than did the actual originator of the phrase “the Forgotten Man,” the 19th-century philosopher William Graham Sumner. Sumner spoke of “the man who pays, the man who prays, the man who is not thought of.” My own interest is obvious here: Sumner features in The Forgotten Man (2007), my history of the 1930s. Cowie — to his credit, and unlike other progressives — at least mentions Sumner. But in the end Cowie dismisses him as the avatar of “ruthless individualism.”

Sumner is the essential omission of the book. The central fallacy is conflating political success, or political longing, with economic success. Yes, Roosevelt did win 46 out of 48 states in 1936. But that does not mean FDR won the U.S. economy. Americans recognized that, which is why, under Reagan, they turned away from collective rights.

What disturbs about Cowie, though, is not his positions so much as a dreadful suspicion that builds as you read. That suspicion is that the professor has never yet encountered someone he could respect who disagrees with him. Nor, one gets the feeling, have his colleagues. Nor do those colleagues necessarily imagine that conservatives can be as respectable as they themselves are. Universities tilt left. Cornell tilts left-er.  A government professor, Andrew Little, recently made the astounding statement in the Cornell Daily Sun that “placing more emphasis on diversity of political beliefs when hiring [would] almost certainly require sacrificing on general quality.”

One can hope that Cornell is at this very moment already racing to hire conservative labor experts to debate Professor Cowie and supply commonsense balance. But alas, if Cornell does manage to overcome its hesitation and somehow to right its own ship, among universities it will merely be the great exception.

– Amity Shlaes, a presidential scholar at the King’s College in New York City, chairs the board of the Calvin Coolidge Foundation.

Amity Shlaes is the author of several New York Times bestsellers, including The Forgotten Man.

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