Wednesday, May 2, 2007 17 Comments

The genius of the New Deal design

The people mutter ominously for shorter, more controversial posts!

The genius of New Deal "liberal democracy" is that while it's somewhat liberal, it's not at all democratic. It is in fact designed specifically to resist democracy. The combination of this design with a civic creed that assigns unlimited positive connotations to the word "democracy" is simply brilliant. We may despise it, but we have to admire it.

The word we use for any actual outbreak of democratic government is "politics," which we justly fear and despise, much as the Founders did. We are no less aware of the destructive nature of arbitrary rule by elected politicians.

The Progressive civil-service state, of which the New Deal was the culmination, saved the US from political violence by erasing the last vestiges of the Old Republic the Founders had designed, which turned out to be far more vulnerable to democracy than they had anticipated. By retaining the symbolic forms of republican government, the New Deal preempted the civil wars that inevitably would have resulted from efforts to restore the Old Republic had it been formally abolished. Augustus followed the same formula in the Roman Principate, and with the same success.

The last genuinely political institution in the US is the White House, whose influence on domestic policy is negligible (and generally counterproductive). 98% reelection rates and the committee system have transformed Congress, which was apparently supposed to be some sort of debating society, into the apex of our real system of government, the iron triangle. The iron triangle is actually more of a hexagon: its unrecognized vertices are the foundations, the press and the universities, all of which are immune to democracy.

It follows that attempts to replace the Progressive regime through democracy, that is, politics, are about as likely to succeed as the Animal House band in marching through that brick wall.

The fundamental problem is that today's voters are right in their aversion to politics, in their apathy toward moderate candidates and their fear of immoderate ones. What they really fear is democracy, and they are right to fear it. And when righteousness and power agree, you can't beat 'em.


Anonymous SFG said...

Mmm-hmm. I recall in your post on formalism you were in favor of this sort of thing (keep the rabble under control). So why don't you like the New Deal? I assume if you list Austrian economics under your interests you're not too fond of the thing...

May 3, 2007 at 3:13 AM  
Blogger Mencius Moldbug said...

I don't like the New Deal, I admire it. One can admire Napoleon's military talents without being a Bonapartist.

For me, the problem is that what the New Deal, and the Progressive era in general, replaced democracy with, is a system in which the massive profits of a state now fully committed to maximizing revenue are distributed informally as the outcome of continuous political conflict.

In other words, the trouble is that the interests of the New Deal civil service are not aligned with the interests of either their customers (the residents of the giant tax farm that is North America) or their beneficiaries (the people who receive payments, or services in kind, from the giant tax farm that is North America).

But the achievement of destroying democracy shouldn't be understated. The US could easily have had a Hitler instead of a Roosevelt. Actual democracy in the era of radio and TV is a spectacularly dangerous device.

May 3, 2007 at 11:04 AM  
Anonymous George Weinberg said...

In other words, the trouble is that the interests of the New Deal civil service are not aligned with the interests of either their customers (the residents of the giant tax farm that is North America) or their beneficiaries (the people who receive payments, or services in kind, from the giant tax farm that is North America).

I don't think so. I haven't figured out yet whether you whole "formalism" concept is a serious proposal or a "modest" one, I suppose it can be enjoyed either way. But here's how I see it: You have a lot of people, especially in the government but in private business also, who theoretically are acting as agents on behalf of other people or groups but who in fact are largely acting for autonomous reasons. You are proposing, I take it, to accept that these agents can get away with this shit (if you'll forgive the vulgarism), and to bring it above ground by declaring they have the right to do what they defacto can do anyway. But the fact that they are "getting away with it" is essential to the whole situation.

For example, let's say that a person entrusted with spending money (private industry, government, it doesn't matter) is surreptiously syphoning 10% off for himself. This person would (rightly) be fired and prosecuted if this could be proven. If instead the absurd step of saying he were were entitled to this 10% (but no more), there would be no reason to assume he would not increase his depredations, and every reason to assume the contrary.

But the achievement of destroying democracy shouldn't be understated.

Except the USA was never a democracy. In particular, the people have never had the authority to arbitrarily take from Peter and give to Paul, nor to condemn an individual to drink hemlock. Not by direct vote, not through the actions of their elected representatives. Not that nothing like this ever happens, of course, but again there's the distinction between what one is authorized to do and what what one can get away with.

May 3, 2007 at 12:59 PM  
Blogger The Lock said...

I find this interesting and informative. I believe it is true that democracy as a category of human behavior has long been without any meaning. If democracy were a person, it would be getting Social Security and expensive Alzheimer's drugs through Medicare.

It had meaning, at one time, only insofar as it was not a monarchy etc. But it turned out that humans continued to be prone to greed, illness, and stupidity. This was bad news for democracy.

Because of my peculiar constitution I am susceptible to caring about policy and it's direct affects on actual humans. I tried for many years to resist this. If you have any advice in this area or perhaps know of some drug, please let me know.

In lieu of a cure or spontaneous remission I wonder if you could elucidate on how formalism would address those human conditions that the New Deal Progressive civil-service state currently does. And to be sure, it does. Imperfectly, yes. But, this is what we got.

You said, "It follows that attempts to replace the Progressive regime through democracy, that is, politics, are about as likely to succeed as the Animal House band in marching through that brick wall."

From where I stand, this is vastly understated. And so I also wonder how formalism would address this unmovable mountain (large scale disaster, military invasion, and aliens do not count).

May 3, 2007 at 9:39 PM  
Blogger Mencius Moldbug said...


The best definition of a "serious proposal" in this day and age is one made by anyone with serious credentials or connections to power. I've never worked for the government and my only degree is a BS in computer science, so I don't make serious proposals. But my father was in the Foreign Service, my mother worked at DOE and my stepfather on the Hill, so I'm not entirely oblivious of how these people think.

I am a programmer and I have worked for a lot of Silicon Valley companies, both big and small. So to some extent I can compare how these very different kinds of institutions work.

As you say, the kind of outright corruption you describe doesn't really exist in the US, whether in the public or private sectors. But what does exist, in both sectors, is inefficiency - most notably, a tendency for the responsibility and size of any organizational unit to increase without limit.

If we can combine both public and private sectors into a single perspective, what's happening here is one thing. It is that the employees are diverting resources that should be going to the beneficiaries of the enterprise. In a private company these are the shareholders, in a public the citizens (or the needy of the earth, depending on whether you're a nationalist or a transnationalist).

Where this differs from your example (outright skimming) is that the diversion is not criminal, because there is no mens rea. Everyone, or almost everyone, in the organization sincerely believes that it should be bigger and better. The effect on everyone outside the organizational unit, however, is the same.

The difference is that, since private companies are responsible to Wall Street (or their VCs, etc) - ie, to their owners - this essentially Byzantine tendency is reined in. Often, no, it is not reined in fast or hard enough. But the force exists. In the public sector, it is more or less nonexistent.

The main idea of "formalism" is that this organizational difference has no reason to, and in fact does not, correlate with whether the organization is sovereign (responsible for its own security) or not. It is solely a matter of having a clear definition of your customers, employees, and owners.

(This is very straightforward "public choice theory." You've probably read or at least heard of the public choice economists, people like James Buchanan, Mancur Olson, etc. Jonathan Rauch's Demosclerosis is a good non-academic overview.)

May 4, 2007 at 12:11 AM  
Blogger Mencius Moldbug said...


Also, the US was never "a democracy" in the sense of Athens, but between 1828 and 1932 it was certainly a lot more like Athens than anyone in the founding generation wanted it to be.

The US before the Progressive reforms was not utterly politicized, and the US since the New Deal is not utterly depoliticized. But the difference remains enormous. Except among a small left-wing elite, who are either aristos or wannabes who are aping their views, mass political organization in the US today is nonexistent. Tocqueville might as well have visited another planet.

May 4, 2007 at 12:16 AM  
Blogger Mencius Moldbug said...


In terms of beneficial work by the government you have two things.

You have "benefits" that are really best regarded as debts, such as Social Security. These should be valued actuarially and converted to definite monetary obligations, like T-bills. The same can be done with Medicare, etc.

Then you have genuine paternalism - the actual safety net. If you convert Social Security into a bond, some people will just sell it and buy crack. Keeping these people safe from themselves costs, as you know, money.

But this problem can be solved as well, because instead of issuing bonds (representing a formalized future revenue stream) and giving them directly to citizens, you can issue bonds and give them to independent charities.

Both these solutions separate the actual business that the government is actually engaged in - which is, as previous societies used to call it, "tax farming" - and the problem of what is done with the revenues from this enterprise.

Which are impressive, and which would be even more impressive if it was run more efficiently. I have been talking strictly about debt, but equity (stock, which is only the least senior tranche of debt) is also a possibility. And worth enough to endow one heck of a lot of good works.

Moreover, Americans have already conceded the property. They believe that (a) they should be paying taxes, (b) the levels they pay now are not too far from right, and (c) the purpose of these payments is primarily to benefit the needy, not themselves. That they were to some extent tricked into these concessions is irrelevant, just as it's irrelevant whether or not the Algonquin were tricked into selling Manhattan.

So it is just a matter of operating the tax farm so that it creates the maximum benefit, and defining this benefit financially - ie, as profit - is well known to be the easiest and most effective way to do this. The same goes for allocating the payments that the farm generates, which again have no need to remain a permanent political football.

As for your latter question: I have no idea. PR is not in my natural skill set. Fortunately, as a mere blogger, I feel no sense of social responsibility at all, as I would if I was writing in a forum which conferred some kind of implicit credibility.

Perhaps the greatest thing about the Web is that at least so far, it has developed no lever of power which gives bad ideas a way to outcompete good ones. If my ideas are sensible and productive, I'm sure someone else will think of them even if they don't read my blog. If they're ridiculous or even dangerous, they join a cast of zillions. Either way I don't worry.

May 4, 2007 at 12:45 AM  
Blogger "Cassandra" said...

Dear Moldy,
You said (amongst other things):
"It follows that attempts to replace the Progressive regime through democracy, that is, politics, are about as likely to succeed as the Animal House band in marching through that brick wall."

1. Why do you conjoin "New Deal" with "Liberal Democracy"?

2. I think it contentious that the New Deal, in any event, is terribly progressive, at least on any international scale of progressivity. Of course if one compares to Pyongyang or a Mullah-ocracy...

3. Save for Carter's attempts at greater Democracy, the system, its structures and regime have indeed (almost uninterruptedly) become less progressive and more politically contentious, in almost all policy aspects (at least in the USA).

But here is a point for pondering: A man is, at once, an individual citizen, ethnic group-member, a carreeist or such similar entailing organizational membership & contractual relationships, allegiances, and other sets of interests, as well as a father, and perhaps a son , in addition to a host of minor components that periodically claim his allegiance and intensity interest, be it gun-owner, klansman, or PETA activist. With such a complex
(and fluidly-shifting) sense of identity, how can democracy in modernity possibly cater to the increasingly fractured needs, wants and interests of the citizenry and its affiliations with other low- and high-level interest aggregations, let alone do it through the homogenization of two political parties that, for all practical purposes ideologically adjacent to each other, and only ever-so-slightly more morally removed??

YET, the liberal social democracies of Europe DO manage it somehow, and manage it better (though theirs is, by no means, perfect). Why and how?

Democracy itself faces the same problem shoppers confront when visiting the Hypermarche and deluged with too-much choice. They can't decide and all-too-often refrain from purchase.

We can quibbble with what one does not like about Europe, but it is interesting that in respect of the fundamental nature of liberal social democracy (that which the New Deal attempted to emulate), there is almost unanimous agreement of The People upon the most basic of principles. This holds for BOTH capital and labour, the former who may see the bargain as Faustian, yet cannot fathom or conjure anything else acceptable to the broadly and more or less unanimously-defined fundamentals of The Public Interest. This definition was accomplished more or less peacably, through the political process, outside Germany & Japan where it was imposed, albeit out of the ashes of great tragedy.

As a result, I do not agree that The People are correct in eschewing the political process for reasons nihilistic or hopeless. AIPAC (sadly) has shown what a highly skilled and organized group can accomplish with an appropriately intense interest. But perhaps, it is that, culturally, Americans have placed parochial self-interest (so difficult to aggregate with sufficient intensity to counter, for example, the API) at such a level of primacy, and denigrated collective definitions of interests, to such a degree, that few people, especially amongst the best and brightest, consider forgoing private gain in favor of something miniscule in their own definition and sense of identity. Yet we can see that it IS supremely possible, that new deal and liberal democracy can co-exist happily, - in America too - and the ideals are not incongruent, though perhaps, like Europe, it will take a "Team America" scale-of-a-vomit-scene for people to recognize the fundamental values that they share and that are worth fighting to define against the obstacle forces of The Iron Triangle.

Your friend,


May 4, 2007 at 1:29 PM  
Anonymous tggp said...

"We could easily have had a Hitler"

The dark night of fascism is always said to be hovering over America, but only descends on Europe (unless of course you are one of those who thinks F.D.R himself was fascist). I don't believe we were ever close to electing a third party, even a relatively moderate socialist one. Even at his least popular Hoover clobbered all the third parties in the polls. When the Democrats lost popularity, it was Republicans that gained rather than any other parties.

I would also quibble over the unprecedented nature of the New Deal. Rexford Tugwell claimed it was pretty much just an extension of what Hoover had already been doing, and Hoover had already had previous experience of such planning under Wilson.

May 4, 2007 at 5:47 PM  
Blogger Mencius Moldbug said...


(I owe you an email! Think of it as tossed by waves, somewhere out in the vast, inhuman Atlantic. But on the net all ships come in. I also promise more economics, soon.)

1. All I mean is the system we call "liberal democracy," which (I would argue) is anything but. But so was the Holy Roman Empire, and people still had to call it by its name.

2. Again all I mean is the historical Progressive movement, which was arguably (perhaps you've read Gabriel Kolko) not small-p progressive at all. The confusion between word-as-label and word-as-ideal persists as always.

3. The definition of "democracy" gets exceedingly diffuse, even metaphysical, in these discussions. What I mean by the word is just a system of government in which elected politicians, who earn their jobs by matching their opinions to those of the electorate, make significant policy decisions.

In other words, by "democracy" I mean "representative democracy." There is also "direct democracy," whose definition is reasonably well agreed.

The word "democracy" has such strong positive associations these days, that the temptation is often felt to simply equate it with good, and shift the battle to whether X or Y is truly "democratic" or not. This strikes me as an essentially medieval form of nominalism.

My impression is that compared to the US or to the Third World, there is much less democracy of either the representative or direct forms in Europe, except perhaps Switzerland. The EU, especially, strikes me as almost entirely free from democratic politics. And more and more of the substance of government in Europe happens at the EU level these days. See Richard North's invaluable blog.

Furthermore, cultural diversity in today's Europe is also much lower, because institutions of the old European right were much more comprehensively erased. There is little trace of anti-Dreyfusard, Action Francaise, Petainist culture in France, for example. I think of postwar Western Europe as more or less a military colony of the New Deal, in which the complete cultural transformation of society that the New England elite always dreamed of could actually be achieved. To put it another way, Europe is like an alternate America in which Henry Wallace won in '48.

This is my explanation of why the EU in many ways seems to work better. It works better because it has no Republicans. Ie, no political opposition. And therefore no real politics. And therefore no real democracy. I suspect this is more or less the same conclusion as yours - it's just derived in a different way.

May 4, 2007 at 7:38 PM  
Blogger Mencius Moldbug said...


The danger of Huey Long and Father Coughlin was certainly overstated, but they were serious contenders. Ham n' Eggs, EPIC... there was a lot of very serious weirdness in the air back then.

FDR was not a fascist. At least his regime lacked the paramilitary youth movement which most people seem to include as a necessary part of their definition of "fascism." I see him more as a Putin or Suharto kind of figure. But considering how unscrupulous and nonsensical FDR's actions were, it's fairly clear that there was nothing keeping an even more unscrupulous and nonsensical ruler from exploiting the same opportunities FDR did.

The New Deal was certainly an extension of the Progressive political tradition. The holy book of this movement was certainly Bellamy's Looking Backward, which is very interesting reading today. Before 1932 the party primarily identified with the Progressive movement was the Republicans - the Democrats had moved back, after the disaster of Wilson, to their traditional place as the party of small government. Many if not most of the people who voted for FDR in '32 thought they were voting against a continuation of Hoover's failed interventionism. The 1932 Democratic platform, especially, is a good read.

But ultimately I think the main reason to consider the New Deal as a structural discontinuity is that FDR assumed emergency powers in peacetime, ruled by decree, and abolished what had previously been considered the main feature of the Constitution (limited government).

(I think of the US as a series of four republics in the French style, with a Congressional period from 1774 to 1789, a Constitutional period from 1789 to 1861, a Union period from 1861 to 1933, and a New Deal period from 1933 to now. This is by no means a scientific division, but there is general legal continuity in each of these periods and a major discontinuity on each boundary.)

May 4, 2007 at 7:54 PM  
Anonymous bbroadside said...

Before 1932 the party primarily identified with the Progressive movement was the Republicans - the Democrats had moved back, after the disaster of Wilson, to their traditional place as the party of small government.

Do you think of Wilson as being more of a disaster than Theodore Roosevelt? I don't know much about the domestic policies of either ... Roosevelt is identified with paternalist Progressivism and Wilson with individualist Progressivism. I don't remember where I heard that or what it means, mea culpa. Assuming Wilson was a disaster because of his expansion of the state, what were the big elements of this? The Fed? The League of Nations? Some anti-trust thing? (His approach to trusts I gather was a little different from TR's.) I'm just not sure why (or if) your ideology finds Wilson a more destructive person than TR. Neither of them were big income redistributors, although perhaps that's only in true in comparison with later people.

Your reading of partisanship in the 1920s is a little different from my own, which is not to say I think you're wrong. I had gathered that in 1928, the Democrats looked a little more interventionist than Hoover. Al Smith was an early advocate of unemployment assistance ... I see that policy as a sort of unconscious Keynesian strategy: stop the layoff->falling demand->layoff spiral by supporting demand in times of unemployment. It may have been too small to make a difference (or maybe Keynesian policies always do more harm than good ... I wouldn't know). Then again, Smith was a pretty vociferous opponent of the New Deal a few years later.

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