Guess Which President Many Right-Wingers Revile for Bringing Wealth Distribution to Government—You Might Be Surprised

“This is the architect that destroyed our faith,” Glenn Beck said in 2010. “He destroyed our Constitution and he destroyed our founders, okay?”

Photo Credit: Frank Graham Cootes / Wikimedia Commons

The following is an excerpt from the new book American Amnesia by Jacob B. Hacker & Paul Pierson (Simon & Schuster, 2016): 

Like other advanced democratic nations, the United States has what economic analysts call a “mixed economy.” In this public-private arrangement, markets play the dominant role in producing and allocating goods and innovating to meet consumer demand.

Adam Smith famously celebrated the “invisible hand” of market allocation. Yet he also identified many cases where rational actors pursuing their own self-interest produced bad outcomes: underinvestment in education, financial instability, insufficient infrastructure, unchecked monopolies. Economists have been building on these insights ever since to explain when and why markets may stumble and how the visible hand of government can make the invisible hand more effective.

The visible hand is needed, for example, to:

  • provide key collective goods that markets won’t (education, infrastructure, courts, basic scientific research);
  • reduce negative spillover costs that parties to market exchanges don’t fully bear, such as pollution;
  • to encourage positive spillover benefits that such parties don’t fully take into account, such as valuable shared knowledge;
  • regulate the market to protect consumers and investors—both from corporate predation (collusion, fraud, harm) and from individuals’ own myopic behavior (smoking, failing to save, understating economic risks);
  • provide or require certain insurance protections, notably, against the costs of health care and inadequate retirement income; and
  • soften the business cycle and reduce the risk of financial crises.

The political economist Charles Lindblom once described markets as being like fingers: nimble and dexterous. Governments, with their capacity to exercise authority, are like thumbs: powerful but lacking subtlety and flexibility. The invisible hand is all fingers. The visible hand is all thumbs. Of course, one wouldn’t want to be all thumbs. But one wouldn’t want to be all fingers either. Thumbs provide countervailing power, constraint, and adjustments to get the best out of those nimble fingers.

To achieve this potential requires not just an appropriate division of labor but also a healthy balance of power.

With increasing vigor and volume, some of the most powerful actors in American politics are attacking the mixed economy. The assailants include anti-government politicians and conservative media celebrities, ultra-wealthy activists and influential corporate leaders, idea-warriors bankrolled by the rich and the right and business associations dominated by the extreme and the acquisitive. Some mount the vanguards. Others cheer the assault on. And still others—the silent majority of the American political class—remain quiet amid the carnage, indifferent to or untroubled by the titanic stakes.

The combatants are not simply taking issue with recent departures from their preferred policies. They are taking issue with the entire edifice of modern public authority. They don't think things went wrong in the 1970s. They think things went wrong in the 1930s. Actually, many of them think things went wrong even earlier than that. They conjure up a mythical vision of the Constitution’s authors as free-market fundamentalists and of the country’s early economic rise as a triumph of laissez-faire. They downplay the depredations of the industrial economy that first prompted social reform and celebrate as geniuses and giants the men whom previous generations called “robber barons.” When they tell their stories of declension, they pin the blame on a Democratic president who sought to harness government to address emerging economic and social challenges. But that president is not always FDR. To a surprisingly large number of their intellectual leaders, it is Woodrow Wilson, the Southern-born governor of New Jersey who in 1912 became president of the United States.

Wilson was once viewed with suspicion on the left, mainly because of his racist views and suppression of internal dissent during and after World War I. Yet since the late 2000s, it has been the right—especially the vocal and vehement “Tea Party” wing that emerged in 2009 to become a major activist force within the Republican Party—that has cast its critical lens on Wilson. Or, to be more accurate, directed at Wilson a “virulent, obsessive hatred” (in the words of the historian David Greenberg) that borders on hysteria. The National Review columnist Jonah Goldberg dubs Wilson “the 20th Century’s first fascist dictator.” Conservative talk-show host Glenn Beck manages to go one better. According to a recent article in American History, “Wilson is No. 1 on his ‘Top Ten Bastards of All Time’ lists—ahead of not only both Theodore and Franklin Roosevelt, but also Pontius Pilate, Hitler, and Pol Pot.” “This is the architect that destroyed our faith,” Beck said in 2010. “He destroyed our Constitution and he destroyed our founders, okay?” Even the establishment conservative George Will got into the hate fest. At a banquet held at the libertarian CATO Institute the same year, he declared that Wilson had “ruined the 20th century.”

“Ruined the twentieth century”? That’s a big accusation. What did he do to deserve it? Though the bill of particulars varies from critic to critic, the charges seem to boil down to one great crime: Wilson invested his presidency in building the mixed economy. With the United States becoming for the first time a truly national industrial economy, with huge financial and manufacturing “trusts” wielding enormous power over markets and public officials alike, the nation’s 28th President argued that a capable federal government was necessary to address the festering problems of his time.

Even worse, apparently, Wilson delivered. Working with a supportive Congress, he created the Federal Reserve System, which rescued the United States from almost a century of recurrent bank panics caused by the proliferation of private bank-issued scrip, a hodgepodge of state currencies, and the lack of any agency charged with regulating banking or credit. He backed the nation’s first graduated federal income tax, which allowed the United States to move away from its excessive dependence on tariffs while ensuring that the growing ranks of the super-rich helped finance basic government operations. He championed the Clayton Antitrust Act to try to break up the uncompetitive monopolies fueling many of those great fortunes. His administration established the Federal Trade Commission—“the world’s first independent ‘competition’ agency,” in the words of two of its former leaders—whose appointed commissioners oversaw anti-trust actions without fear of congressional or presidential removal.

More heretical still, Wilson claimed that common understandings of what the Constitution dictated were misaligned with the nation’s expanding industrial society. “The Constitution was not meant to hold the government back to the time of horses and wagons,” Wilson complained as a Princeton professor of government in 1908 (we are professionally obligated to note that Wilson was the first and last political scientist to occupy the Oval Office). To catch up, Wilson supported a stronger executive branch with greater power to regulate the national economy. He saw the strengthening of central authority as the natural evolution of American government in response to the profound transformations taking place around it.

Copyright © 2016 by Jacob S. Hacker and Paul Pierson. Reprinted by permission of Simon & Schuster, Inc, NY.

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