Putting the Democratic Party on the Couch

Bernie Sanders is beside himself. How can Hillary Clinton take $15 million in contributions from Wall Street and at the same time claim to represent working families? How can she take millions in contributions from the oil and gas industry and claim to be for the environment? How can she take $675,000 in speaking fees from Goldman Sachs and claim that she will be tough on the big banks?

One thing is clear. Bernie Sanders doesn’t understand the Democratic Party. That’s not surprising. He doesn’t even call himself a Democrat.

Hillary Clinton’s behavior as a candidate is really no different than candidate Barack Obama or candidate Bill Clinton or every other successful Democratic candidate going back to Franklin Roosevelt. If she reaches the Oval Office, President Hillary Clinton will govern in a way that isn’t all that different from her predecessors (with the possible exception of Jimmy Carter).

There are three things you need to understand about Democratic politics:

1. The typical Democratic voter is different from the typical Republican voter.

2. The typical Democratic candidate campaigns in a way that is different from the typical Republican.

3. Democrats rarely ever govern the way they campaign.

A new study by Matt Grossmann (Michigan State University) and David Hopkins (Boston College), based on five years of polling data, comes to this interesting conclusion: Democrats and Republicans are not the same. Republicans, the scholars say, are “chiefly defined by a common ideological commitment,” while Democrats are a “coalition of social groups.”

This difference is evident on TV talk shows, where Republican guests tend to talk about principles and Democrats tend to refer to specific groups they want to help. Why do the guest always seem to be talking past each other? Because they are. They are talking about different subjects for the benefit of different audiences.

It is also evident in elections. When Democratic candidates campaign, they tend to be the party of division, despite what they may say about “unity.” They seek the votes of people who see themselves as victims. Wherever people envision themselves as oppressed, they are likely to envision others as oppressors. During the Roosevelt years, Democrats went out of their way to pit labor against business, Main Street against Wall Street, everyday Americans against the rich. Roosevelt himself made class warfare the cornerstone of his election campaigns, despite the fact that he was very rich himself.

These days, Democratic candidates have added more victim groups—pitting blacks against whites, Hispanics against non-Hispanics, women against men, etc. As I noted in a previous column, in the last four presidential campaigns, Democrats have engaged in shameless race baiting – for no other apparent purpose than to increase black voter turnout. Barack Obama has been the worst practitioner of that in our presidential history.

What happens when Democrats govern? You might think that after all the class baiting, race baiting, gender baiting, etc., that Democrats in office would actually do things that help the “victims” against their “oppressors.” But this is not what mainly happens.

What has Barack Obama done for African Americans? Almost nothing. In fact when you consider how his economic policies have affected the back community, you might be inclined to call him the most anti-black president since Woodrow Wilson. Inequality has gotten worse, not better. Regulation at the state and local level has priced low-income Americans out of the market for housing, transportation, education, medical care and other essential services. And surprising as it may seem, there is no statistical evidence that civil rights laws have had any effect on the wages of women or blacks or other minorities.

This brings us back to Hillary’s campaign contributions. If she makes it to the Oval Office, she is not going to be anti-Wall Street or anti-oil or anti-New York bank. Nor were any of her predecessors.

Given his rhetoric, you might suppose that Franklin Roosevelt was an anti-business president. In fact, he was the most pro-business president ever – but in a bad sense of the word. Roosevelt tried to give businesses what every company in the world would most like—the ability to combine with their rivals, form a cartel and gouge consumers with monopoly prices. (There are very few businesses that enjoy dog-eat-dog competition; most would much rather have monopoly.) Except unlike OPEC, which has to rely on voluntary compliance among the member countries and is often undermined by cheating, Roosevelt tried to enforce these cartel agreements with the force of criminal law!

Why was that? What Roosevelt discovered and what every politician today understands very well is that most people are producers and consumers. They produce things and they buy things. But they are far more focused and better informed about the effects of public policy in their role as producers than in their role as consumers.

So the Roosevelt approach to public policy followed the Italian fascist model: let every industry and every trade form a cartel – setting wages and prices and controlling output. All of this helped people in their role as producers (seeming to give them more income), but it hurt them in their role as consumers (since everything cost more). The average voter could be counted on to overestimate his gains and underestimate his losses.

The Roosevelt plan for the entire economy, encapsulated in the National Industrial Recovery Act, was declared unconstitutional by the Supreme Court. We can be thankful for that. Every significant Roosevelt policy that tried to increase wages (including the NIRA), prolonged the Great Depression and extended the suffering that people at the time had to endure. (See Scott Sumner’s book on the subject.)

But much of the Roosevelt approach to public policy survived in the form of regulatory agencies. In agriculture, transportation, communication, oil and gas, electric power generation and dozens of other fields, the Democratic Party came to be seen as the party of regulation and the main job of the regulators was to protect the interests of the regulated.

Of course, Republicans did these things too. But Democrats seemed to do them with more regularity and more enthusiasm, in a manner completely inconsistent with their campaign rhetoric.

For many decades, the CAB functioned as a cartel agent for the airlines. The ICC functioned as a cartel agent for the railroads and the trucking companies. The FCC functioned as a cartel agent for the communications industry. To this day, agriculture policy artificially raises the price of food at the expense of consumers – and poor families are the worst victims.

Economists are convinced that these attempts to get monopoly rents for the producers are bad policy overall. The losses to consumers far exceed the gains for the producers. Despite that fact, these polices tend to work politically.

None of that will be lost on Secretary Clinton.