Keith In Tampa
As is typical by far left extremists, this article is
carefully manipulated and taken way out of context.
What is surprising is that a purported libertarian,
Michael Johnson posted it.
MJ
Sadly, Keith in Tampa is reduced to hurling fallacies in
hopes that no one notices his failure to actually address
the words, concepts or ideas presented.
Regard$,
--MJ
"In fact, modern Republicans are almost a mirror image
of the original party."
The Awful Truth about Republicans
By Robert B. Ekelund, Jr., and Mark Thornton
[Posted March 25, 2004]
Anyone who wants cuts in the size and scope of
government should be concerned and frustrated
with the policies of President George Bush and
the Republican-controlled Congress. Government
spending has increased enormously and the
federal budget has plunged ever more into
deficit.
Protectionism, regulation and government power
are on the rise, and we are at war or in conflict
with a record number of countries around the
world. The Republican-controlled Federal Reserve
has pushed interest rates to below 1% while it
frantically tries to flood the economy with
money and credit.
Even mainstream economist Jeffrey Frankel has
recently noted (in the Milken Institute Review)
that the "Republicans have become the party of
fiscal irresponsibility, trade restriction, big
government, and failing-grade microeconomics."
However, there has not been a sudden sea change
in party platforms and the rampant fiscal
irresponsibility of the Republicans is not a
mystery; they are merely returning to their
historical roots. The Republican Party was
established as a party of big government and
economic intervention. Their reputation as a
party of limited government is of more recent
vintage and stands on a flimsy foundation.
The Republican Party that emerged in the 1850s
was an amalgamation of historical influences,
third parties, and interest groups. One group
that entered the Republican Party was the
Free Soil Party, whose primary platform was
free land and subsidies for farmers. In
contrast, most Democrats favored selling off
the public lands to finance government
expenditures, keep tariff rates low, and
prevent deficit spending.
Also joining the Republican Party in the 1850s
were supporters of the Know Nothing Party.
The Know Nothings were most concerned about
immigrants coming into the country, competing
against labor, and suppressing wages. They
favored restrictive immigration and protective
tariffs to keep wages high, while Democrats
supported both immigration and free trade.
The Whig Party formed the core of the Republican
Party with its economic platform consisting of
protectionism for industry, a national bank and
currency, a large national debt, and a larger
federal government engaged in extensive public
works.
Also joining the Republican ranks were the
Prohibitionists and the Abolitionists. Members
of the Republican Party generally shared an
opposition to slavery and advocated policies
of containment and colonization.
The ambitious economic agenda of the Republican
Party had its roots in the economic platforms
of Federalist icon Alexander Hamilton and Whig
leader Henry Clay. They advocated protective
tariffs for industry, a national bank, and
plenty of public works and patronage. The
flurry of new laws, regulations, and bureaucracies
created by Lincoln and the Republican Party
during the early 1860s foreshadowed Franklin
Roosevelt's "New Deal" for the volume, scope
and questionable constitutionality of its
legislative output.
In fact, the term "New Deal" was actually coined
in March of 1865 by a newspaper editor in Raleigh,
North Carolina, to characterize Lincoln and the
Republican Party platform. Lincoln’s massive
expansion of the federal government into the
economy led Daniel Elazar to claim, " . . . one
could easily call Lincoln's presidency the ‘New
Deal’ of the 1860s."[1] Republicans established
a much larger, more powerful, and more destructive
federal government in the 1860s, just as Bush and
the Republican Congress are doing today.
In fact, modern Republicans are almost a mirror
image of the original party. Protectionism was
a high priority of the early Republican Party.
They quickly enacted the Morrill Tariff, which
raised tariff rates to extremely high levels,
and their extreme protectionism continued
throughout the era of Republican dominance.
There is really little debate that these
Republicans were the primary proponents of
protectionism, particularly in the areas of
steel and textiles. Modern Republicans, from
Reagan to Bush II, have given us protectionism
for a variety of favored industries, including
steel, as well as the "managed trade" of
NAFTA and the WTO.
In the area of deficit spending and the
national debt, the early Republicans, like
their present-day counterparts, produced
large deficits and national debt. Pre-Civil
war Democrats had worked effectively to
eliminate the National Debt and to close
the national banks.
Modern Republicans have built an unprecedented
pile of debt. The growth in the national debt
really started to take off when Reagan was
elected in 1980 and continued to skyrocket
through his second term and that of George
Bush, Sr. When Clinton was elected in 1992
the growth rate in the national debt began
to decline and almost stopped growing when
George Bush, Jr. was elected in 2000. Since
then the national debt has skyrocketed.
In recent years Republicans have been awful
in the area of monetary policy, but that is
also a long tradition in the Republican
Party. In their early years they nationalized
money and banking, a policy that helped
big-city banks at the expense of the common
citizen, particularly in the South and West.
As Robert Sharkey noted:
As the National Banking System took
shape after the War, it was apparent
that human ingenuity would have had
difficulty contriving a more perfect
engine for class and sectional
exploitation: Creditors finally
obtaining the upper hand as opposed
to debtors, and the developed East
holding the whip over the undeveloped
West and South. This tipping of the
class and sectional balance of power
was, in my opinion, the momentous
change over the twenty-three-year
period, 1850-1873.[2]
Looking at the consequences of this legislation,
leading monetary economists concluded:
The provision of the Acts of 1863 and
1865 that established the national
banking system were designed to remedy
two perceived defects of the antebellum
state banking system. One was the
circulation of a wide variety of state
bank notes, often at a discount, which
made for an inefficient payments system.
The second defect was instability of
the note issue; marked by over issue,
bank runs and failures, and periodic
suspensions of convertibility into
specie. To remedy the first defect,
national bank issues of U.S. bond-secured
currency replaced state bank notes. To
remedy the second defect, stringent
reserve and capital requirements,
oversight, and regulation by the
Comptroller of the Currency were
conditions for national bank charters.
Unfortunately, the remedies did not work
as intended by the architects of the national
banking system. Instead, the system was
characterized by monetary and cyclical
instability, four banking panics,
frequent stock market crashes, and
other financial disturbances."[3]
Favoritism for big business has always been a
hallmark of the Republican Party. As a consequence
they tend to favor subsidies, public works
projects, and regulations that are favorable
to incumbent businesses. The biggest public
works project in the nation’s history was the
building the intercontinental railroads, a
policy that truly galvanized the membership
of the Republican Party.
Republicans also sponsored the Sherman
(Anti-Trust) Act of 1890 and the Act to
Regulate Commerce of 1887, which had the
stated purpose of protecting the general
public but the effect of protecting big
business, particularly railroads, from
competition. Modern Republicans seem even
more in love with public works projects,
even in far-away Iraq, and for that matter
the moon and Mars.
In the area of regulation, Bush and the
Republicans have regulated the Internet in
the name of Spam and telephone calls to put
telemarketing out of business. Were those
temporary annoyances so terrible that they
required sweeping and permanent federal
regulations? Their malevolent Patriot Act
and the nationalization of airport security
are policies of power and repression, not
security and safety. And of course the
Republicans still support states’ rights as
long as all fifty voluntarily obey.
The reality is that the Republicans started out
as a party that pursued a mercantilist policy
agenda, or what today would be called
rent-seeking, where interest groups lobby
government for special privileges such as
monopolies, protectionism from international
trade, and government contracts.[4] The massive
amount of corruption that occurred after the
Civil War supports the contention that the
Republicans are the mercantilist or
rent-seeking party. The same can be said of
the modern Republicans, who are dominant in
campaign fundraising.
How did the Republican Party gain the reputation
as a free-market, limited-government party?
Part of the reason is simply that the Democratic
Party adopted even bigger government policies,
particularly with the election of Franklin
Roosevelt and the subsequent New Deal.
Another reason is that the Republicans of the
19th century were labeled the party of "laissez
faire" by historians for their policies that
supported big business and led to the emergence
of the so-called Robber Barons, but these were
hardly the types of policies that would be
advocated today as laissez faire by free-market
economists or libertarians.
Another murky area of American history in the
19th century was the Greenback and Free Silver
movements, which saw an influx of populism into
the Democratic Party. Populists like William
Jennings Bryan were protesting the severe
scarcity of money and credit and the power of
big city banks, but these problems were caused
by federal control of money and banking, which
made currency extremely scarce and loans
difficult to procure. The Democrats were
protesting against the effects of the federal
regulation of money and banking that had been
passed by the Republicans.[5]
Again history has been blurred into conformity
with modern images. However, from the perspective
of historical fact, the Republicans have not
mysteriously switched positions with modern
Democrats, but are simply switching fully back
to their historical roots.
Robert Ekelund is Eminent Scholar emeritus at
Auburn University and Mark Thornton is senior
fellow at the Mises Institute. This essay is
based on an article from the Milken Review.
They are the authors of Tariffs, Blockades,
and Inflation: The Economics of the Civil War
(Scholarly Resources, 2004)
[1] Elazar, Daniel J. 1965. "Comment" in
Gilchrist and Lewis edited Economic
Change in the Civil War Era, Edited
by David T. Gilchrist and W. David Lewis
(Greenville, DE: Eleutherian Mills-Hagley
Foundation, 1965 pp. 94-108.
[2] Sharkey, Robert P. "Commercial Banking,"
in Economic Change in the Civil War Era:
Proceedings of a Conference on American
Economic Institutional Change, 1850-1873,
and the Impact of the Civil War, p. 27.
[3] Emphasis added. Michael D. Bordo, Peter
Rappoport, and Anna J. Schwartz, "Money
versus Credit Rationing: Evidence for the
National Banking Era, 1880-1914," in
Strategic Factors in Nineteenth Century
American Economic Growth, edited by Claudia
Goldin and Hugh Rockoff (Chicago: University
of Chicago Press, 1992), pp. 189-223.
[4] Ekelund, Robert B. Jr., and Robert Tollison.
1997. Politicized Economies: Monarchy,
Monopoly, and Mercantilism (College
Station: Texas A&M University Press.
[5] Gramm, Marshall, and Phil Gramm. 2002.
"The Free Silver Movement in America:
A Reinterpretation," presented in New
Orleans, Louisiana at the Southern
Economic Association, November.
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