Letter, Leftist, Leftissimo
Llewellyn H. Rockwell, Jr.
Clinton's policy experts include welfarists, taxoholics, racial
victimologists, central planners, tree huggers, bug worshipers,
and admitted socialists. In this space, I've already discussed Laura
Tyson, chairman of the Council of Economic Advisers, an apologist
for Ceaucescu's Romania and a critic of Tito's Yugoslavia as too
picture becomes clearer with the appointment of the Clinton Four,
strategically positioned at the Department of Commerce, the Office
of Management and Budget (OMB), the Treasury, and the White House.
Tyson represents the hard left of the administration, Isabel V.
Sawhill, associate director for human resources at OMB, represents
its right: mixed-economy welfarism.
many years, Sawhill has been a senior fellow at the Urban Institute,
a government-funded promoter of inner-city welfare. Her Income
Transfers and Family Structure (1975) noted that the number
of female-headed welfare households was zooming. Little wonder,
you might say, given government subsidies to single motherhood.
But her answer was to give "more money" to "husband-wife families."
such a proposal does nothing to diminish the incentives for illegitimacy.
It only increases the incentives for families not on welfare to
go on the dole. The net result would be more welfare recipients.
1982, when political trends seemed to be changing, she got a little
panicky. "A counterrevolution is underway," she wrote in Perspectives
on the Reagan Experiment, and the target is "a half century
of growing federal efforts to stabilize the economy, insure individuals
against misfortune, redistribute income and opportunity, and respond
to other perceived national needs."
feared that Reagan would cut welfare benefits, which would "increase
vulnerability of these groups to economic dependency." That's the
Urban Institute in a nutshell: unlike welfare, a private job makes
you dependent and vulnerable. (She also worried that grants to non-profits
like the Urban Institute would be cut.)
like many Americans, believed the Reagan administration was serious
about cutting government. Instead, by 1984, she could tell relieved
liberals in Economic
Policy in the Reagan Years that Reaganomics posed no threat.
She had only one worry: there might be a "shift in expectations
about what government should or will do," thanks to the administration's
in her Challenge
to Leadership (1988), she advocated that liberals disarm
conservatives with rhetoric, while expanding redistribution to new
and unchartered territory. For example, Sawhill said that many Americans
blame urban squalor on the welfare state. So she urged that liberals
concede the failures of present welfare policy, while advocating
more spending on such programs as a new job corps, new affirmative
action strategies, and more free college degrees. Her proposals
were repeated, nearly word for word, in Clinton's campaign book.
Thus we should "end welfare as we know it," as Clinton said during
the campaign, and replace it with the provider state.
the Urban Institute miss Isabel Sawhill while she helps socialize
America? Undoubtedly, although the organization will be comforted
by its $10,635,584 in HUD grants approved by Jack Kemp.
ON PENSION TAXATION
Sawhill's left is the Treasury Department's new assistant secretary
for economic affairs, Alicia H. Munnell, former vice president at
the Boston Federal Reserve.
many years, Munnell's favorite subject was pension economics. Created
in the 19th century as a way of helping disabled workers, pension
funds were at first concentrated in the railroad industry. Labor
unions later began to agitate for them as a way of attracting new
Americans, however, still assumed responsibility for their later
years. By the end of the 1920s, only 10% of workers would get deferred
income in the form of pensions. Then as now, pension monies were
put aside out of present wages, and workers who did not have to
worry about the income tax saw no reason to put off part of their
this changed with the New Deal. The government-caused Great Depression
led to the collapse of the railroad pension fund, and the government
bailed out the fund, establishing a too-big-to-fail doctrine in
didn't expand, however, until Roosevelt's war-time wage controls
prevented corporations from attracting new workers or keeping good
ones through higher pay. So firms paid higher salaries in the form
of tax-free fringe benefits as well as tax-deferred pensions.
In response, private pensions ballooned nearly five fold between
1940 and 1945. Union privilege and wage controls during the Korean
War further boosted pension participation. Then in 1975, at the
urging of Ralph Nader, the government passed the Employee Retirement
Income Security Act, which forced corporations to provide bigger
and more comprehensive pensions. The law also established the Pension
Benefit Guaranty Corporation, which was empowered to seize 30% of
corporate assets if a pension fund failed.
the New Deal, there was little "retirement." People worked according
to their means. Wealthy heirs worked not at all. Some people stopped
working as soon as they were able to. Most Americans worked until
they couldn't, for psychic as well as financial reasons. But it
was always a calculation based on individual circumstance, not government
mandate. But with Social Security, a long-time socialist goal, all
workers were wedded to the government's arbitrary retirement age
and a state paycheck until death.
therefore tend to save and plan less for their older years, and
grown children tend not to contribute to their aged parents' financial
that doesn't bother Munnell. She wants to further lower the incentive
to save by taxing as personal income the accumulated value of the
$2.3 trillion in private pension funds. Not only will workers have
to pay high taxes on money they receive today, they will also be
taxed on money they won't get until perhaps 40 years from now.
it's not just taxation she has in mind, as her book The Economics
of Private Pensions (1982) shows. She wants an expanded Social Security
program to replace private pensions altogether. She calls this "integration."
By creating the most enormous conglomeration of old-age "insurance"
in the world, she would bail out Social Security and socialize private
"integration" only puts off and therefore worsens the day when the
racket of government insurance finally goes belly up. In the meantime,
it could injure the private stock and bond markets. That is, Americans
will be forced to fund the deficit with their retirement funds,
and the government will become the big player in the stock market.
Through its regulations, government already controls much of private
business. But control and ownership are still separate. Pension
socialism could change this.
is also the author of the Boston Fed study that purported to show
that bank lending is racist. Clinton wants to further nationalize
credit, and racial demagoguery will be a key tool. (Forbes senior
editor Peter Brimelow pointed out that she failed to look at default
rates, which prove credit markets are rational, and got her to admit
that she had no proof of racial discrimination in lending.)
still further to the Left, we come to White House special adviser
Ira G. Magaziner, formerly a Boston consultant. This is the man
in charge of socializing medicine, who has advanced the fantastically
stupid idea of imposing price controls on the medical industry.
Magaziner is not a medical economist. He's a corporate consultant
who has spent the last decade flying around the world showing governments
how to control business more tightly.
most recent book The Secret War (1990) glorifies statism.
He's never seen an industrial intervention he didn't like, from
research and development consortia to outright ownership and control.
still hear the argument that it's not government's place to get
so involved in business," he writes. But "it has already begun to
happen." That doesn't follow, of course. If we are doing something
wrong, and we are, we should stop, not use it as a precedent.
first book (co-authored with Clinton Labor Secretary Robert Reich)
was the ominously titled Minding
America's Business (1982). In it, he vents four complaints
about the American economy.
we lack a "centralized government agency that is responsible
for devising a rational industrial policy." (I could point to
virtually every building in Washington, D.C., but let's go on.)
is currently no agency in the U.S. that has the responsibility
for sophisticated analytic or predictive work on a business or
industry level." (Every agency already performs this methodological
there is no agency "to evaluate the international competitive
consequences of government programs and policies." (In fact, every
agency does this, and surprise finds that its programs
do not "have a vision of the overall structural development of
the international economy" or "a thorough knowledge of the products,
markets, and competitive dynamics of individual businesses." That's
true; only God has it.
says his opponents are "haunted by the specter of centralized bureaucrats
in capital cities who engage in picking winners and losers from
among various industries, or oligarchies of industrial barons who
systematically exchange campaign contributions for selective government
largess." (That's right, Ira.)
further Left, we come to Derek Shearer, former professor of public
policy at Occidental College, who has devoted his fife to advancing
the theory and practice of socialism.
the 1960s, he went to England and met Bill Clinton and Strobe Talbott,
who were rooming together on a Rhodes scholarship. Today his sister
Brooke is in charge of the White House fellows program. She is married
to Talbott, who heads programs for the former Soviet Union for the
State Department. And Derek? He is deputy undersecretary for economic
affairs at the Department of Commerce. He is in charge of the chief
economist and the Bureau of the Census.
the 1970s, Shearer was a founding member of the National Conference
on Alternative State and Local Public Policies, which promoted changing
to "a democratic, de-centralized socialism from a corporate, monopolistic
state." Since then, he has stopped using the word socialism on grounds
that it tends to scare people. At a 1981 conference organized by
Ralph Nader, as reported by Barron's, Shearer said he now used "economic
democracy" as the "great euphemism" for socialism.
"can't use the 'S' word" in American politics, Shearer said, but
"'economic democracy"' sells. "You can take it door to door like
Fuller brushes, and the doors will not be slammed in your face."
most publicized implementation of "economic democracy" in the U.S.
was Santa Monica in the 1980s. As the city's planning commissioner,
Shearer and his wife Ruth Goldway, the mayor, sought as he
told In These Times to use "the power of the city to control
the wealth of the city." Under Shearer-Goldway, the city earned
the nickname of "People's Republic of Santa Monica." It's known
for its government-created housing shortage, general dilapidation,
and bureaucratic oppression.
is as well known on the Left as a political strategist as much as
an economic theoretician. In the introduction to The
American Left: Failures and Fortunes (1982) by Mark E. Kann,
Shearer argued that "the Democratic Party is not a coherent Left.
It has been, since the New Deal, the party of regulated capitalism."
Democracy (1980, co-authored with Martin Carnoy), presents
the alternative. Economic democracy "must start by dismantling,
or at least restructuring, the power of these corporations." First
should come a "shift of investment control from corporate domination
to the public."
will "transfer capital from the corporations to the public' through
the "logical vehicle..the government." As a beginning, he thinks,
government should own 10-20% of "at least one major firm in each
major industy" including "the automobile, drug, chemical, and computer
these efforts assume that there is enough political space in American
society to make change, to restrict control of capital by large
private firms, and to shift that control to the public sector and
to workers in individual plants and industries-or at least move
in that direction."
economists reject these ideas, says Shearer, because "consciously
or unconsciously, they accept a set of ideological assumptions about
the 'naturalness' and 'perfectibility' of capitalism as an economic
order." Is this Marxist polylogism? It wouldn't be surprising, since
Shearer calls Marxism "an attempt to humanize economic and social
life" (his italics). He says this has worked in practice: "American
visitors to China and Cuba, for example, will attest to the austerity
of life in those countries; yet, they also comment on the spirit
of cooperativeness and well-being that pervades Chinese and Cuban
a free society, people tend to get paid different wages. This must
not stand. "An intrasalary adjustment is required. If low wages
are to be increased, they must be raised at the expense of high
to labor markets, he advocates "worker control of production and
the accompanying alternative organizations of work (such as a greatly
reduced division of labor)." This is better "than the present hierarchical
arrangement." Why? No more of Marx's alienation: workers would "enjoy
their work more if they had greater say about how it is organized
and what they produce."
Professor Shearer, isn't this communism? Sure: "The Yugoslav version
of worker self- management is the most highly developed in Eastern
European socialist economies ..... Various versions of worker self-management
are also found in China, Cuba, and Israel." In China, "workers participate
directly in shop floor decisions as part of the general emphasis
in China on worker control" (although "Mao's death may mean much
greater hierarchy and specialization in Chinese industry). "The
Yugoslav, Chinese, and Cuban cases can teach us about the possibilities
and problems of worker control."
doesn't mean that "workers simply buy the firm," for that would
preserve the firm's "essentially capitalist nature." We are talking
about real collective ownership. Shearer admits that "participation
itself is not easy to achieve.' The "most important" ingredient
is "the ideology and attitude toward participation of leaders in
the factories, and worker ideology regarding worker control."
how does one turn the working class into a communist vanguard? "The
centrality of ideology in participation," Shearer admits, "suggests
the difficulty of establishing successful producer cooperatives
within a capitalist society, particularly the United States." "Increased
awareness must go hand in hand with the organization and articulation
of a physical challenge to capitalist domination." Translation:
reeducation camps and possibly violence.
all this has been said," writes this old friend of Bill Clinton's,
"we can still see that there is one integrating factor in national
politics the presidency an office that a movement
for economic democracy should attempt to win." "Such a critical
election period focused around the issue of economic democracy could
occur in the late 1980s or the 1990s."
his official biography, Shearer says he helped write Clinton's economic
plan in Putting
People First. Yet he also claims now to be a "proponent
of democratic capitalism," he told the Orange County Register.
That might be reassuring, if "democratic capitalism" were not another
he calls himself, however, Shearer will use his powerful post at
the Commerce Department to impose more government control over the
economy. He will seek, however, to "control the wealth" not of the
city, but of the nation.
them all altogether Tyson, Sawhill, Munnell, Magaziner, and
Shearer and you've got a bunch of dizzy leftists. Put them
in their new roles at the Council of Economic Advisers, the
Office of Management and Budget, the Treasury Department, the White
House, and the Commerce Department and we have trouble.