Posted on: Monday, December 20, 2004

COMMENTARY

By Robert M. Rees

Cliff Slater's most recent column in The Honolulu Advertiser, "A new light on some economic myths," creates more misunderstanding than it dispels. In once again rewriting history for the sake of his ideological cheerleading, Mr. Slater displays the fundamental weakness of Social Darwinism: its blind faith that an unregulated economy and the survival of the fittest is good for all of us.

Slater begins with the "myth" that America's robber barons did any harm. He maintains, on the contrary, that the general public benefited from the monopolistic activities of the day and that the antitrust legislation of the 1890s was superfluous because competition was about to break up the trusts.

This defense of a type of capitalism that even Adam Smith execrated sounds remarkably like the one from a leading Social Darwinist of the early 20th century, Yale University's professor William Graham Sumner: "(T)he millionaires are a product of natural selection. ... They get high wages and live in luxury, but the bargain is a good one for society."

Closer to the truth was Upton Sinclair's novel of 1906, "The Jungle," which concluded that the laissez-faire theory of the day had "consigned the unfit to destruction." It was "The Jungle," about the meatpacking industry, that led to government imposition, now apparently opposed by Slater, of health standards for our food industries.

Another who got it right was President Woodrow Wilson. In his presidential inaugural address of 1917, he noted that the very system Slater now praises had come at a terrible cost: "the cost of lives snuffed out, the fearful physical and spiritual cost to the men and women and children upon whom the dead weight and burden of it all has fallen pitilessly the years through."

The second "myth" deconstructed by Slater is that President Franklin Roosevelt achieved any economic success. Instead, according to Slater, FDR turned "what could have been a normal recession ... into the Great Depression."

The fact here is that when FDR took office on March 4, 1933, the legacy of President Herbert Hoover was a broken economy, with one of four unemployed. This legacy was accompanied by Hoover's blithe assurance, "We in America are nearer the final triumph over poverty than ever before in the history of any land."

Slater is correct that unemployment in 1938 was 19 percent, but he doesn't mention that the Roosevelt administration started with 25 percent. Slater also dismisses as "business-stifling" the Miller-Tydings Fair Trade Act of 1937. This law, along with the Robinson-Patman Act, was an attempt to ensure that manufacturers didn't wipe out mom and pop stores by offering discounts only to the large chain stores. At the time, the Robinson-Patman Act was known as the "Magna Carta" of small business.

Slater is right about the National Industrial Recovery Act of 1933. It was a failure. What Slater doesn't say is that the law was in effect for only two years before the U.S. Supreme Court overturned it and that one of the law's failings was its suspension of the antitrust legislation Slater now cites as unnecessary.

For his third myth, Slater offers up that some foolishly believe that President Reagan's tax cuts generated budget deficits. What really caused those irritating deficits, argues Slater, is that "Reagan had to work with a Democrat-controlled Congress."

The fact here is that Reagan's victory in 1980 was accompanied by Republican control of the Senate. The Democrats retained technical control of the House, but 30 "Boll Weevils" from the South joined the Republicans to give them practical control. In 1984, the Republicans lost two Senate seats but retained control.

In any case, the Gini Ratio, a measurement of the disparity between rich and poor, widened as a result of Reaganomics. As Sen. Ted Kennedy said of Reagan's polarizing tax cuts and of the increasing gap between the haves and have-nots, "A rising tide raises all yachts."

Apparently there's a method to Slater's mythomania. He seeks to persuade Hawai'i's lawmakers that supply side or trickle-down economics — characterized by presidential candidate George H.W. Bush as "voodoo economics" and by economist John Kenneth Galbraith as the theory that the rich don't work hard because they get too little money due to taxes and the poor don't work hard because they get too much money due to welfare — is the one right answer. Other ideas, says Slater, should be "debunked."

The only bunk here, to paraphrase Henry Ford who famously said all history is bunk, is Slater's black and white version of history. The truth is in the grays.

Robert M. Rees is moderator of 'Olelo Community Television's "Counterpoint" and Hawaii Public Radio's "Talk of the Islands."