I assume that most Filipinos are not aware about the significance of the recent bankruptcy of Detroit city. For them, it is purely an American affair.
I personally believe that there are lessons to learn from Detroit's downfall. In this post, I just want to identify three:
The Reason for Detroit's Bankruptcy. I find at least three interpretations as to the cause of Detroit's ruin. The most popular interpretation is the one propagated by the likes of a Nobel Prize Winner, Paul Krugman. For him, it is the fault of the free market and Detroit is simply a victim of free market forces. Yes, he accepted that bad governance contributed to the destruction, but primarily, free market is the one to be blamed.
The owner of a blog, Mont Pelerin World does not see the role of free market in Detroit's failure not unless you equate free market with the automobile industry. To him, three forces caused the bankruptcy. Together with automobile industry, the other two forces are horrible government and labor union.
Another writer, Robert Morley shares a different opinion. For him, the key to understand the situation of Detroit is to grasp first the reason for its previous prosperity. Morley accepts the importance of the dynamics inherent in free market economy, but they don't provide the complete explanation. The role of God and the keeping of his commandments are central in his understanding of Detroit's prosperity. And since God's commandments have been broken in terms of tax increases on businesses and productive individuals and the act of redistributing wealth., bankruptcy is an inescapable result.
Clarity in understanding the cause of Detroit bankruptcy is relevant not only for US economy, but also for other countries as well. This is especially true in our days when mainstream media keeps on feeding the public that capitalism is largely to blame for global economic woes. Not many people are able to distinguish between state "capitalism" and free market capitalism.
The Role of Expanding Power of the Government. The failure to distinguish between two types of capitalism is due to inability to see the role and impact of government interference to the economy. Interventionism is the common term used by free market thinkers to describe this act of economic interference. Interventionism is an essential feature of statism.
Broadly speaking, statism stands for a political ideology that the government has the ultimate source of power and authority when it comes to the formulation of social and economic policy. Daniel Hannan claims that statism is actually responsible for the Detroitification of the USA. I cannot avoid to think that perhaps, behind the smokescreen of poverty and corruption as the two primary problems in the Philippines, statism is its ultimate political source.
The Role of Progressivism. This is the third lesson I think we have to learn from Detroit's downfall, that ideas, particularly bad political and economic ideas lead into ugly results.
Actually, this article is an offshoot of a thread in a Facebook group. I started a thread asking the question, "If there is any, what lessons can we learn from Detroit bankruptcy?" As the interaction grew, one commenter responded, "I think progressives are heading to statism." I affirmed his answer and another commenter asked, "What's your basis for saying that statism is the direction of the progressives and who are these progressives?" The first commenter replied, "You already engaged with them in previous discussions. The progressives are all "'cause-oriented groups' and those identified with the left."
I find the questions of the second commenter difficult and so I read further looking for answers. And I came up with two ways to answer his questions: based on personal observation and based on the history of progressive movement in the US taken from three articles.
First, based on my personal opinion, progressives are usually identified with the political left. However, since the collapse of Russian version of socialism in 1989, socialism took a progressive form and identifying progressives right now is not an easy task. But there are hints to recognize them. Simply pick up a newspaper and look for sentences or phrases advocating government's action to interfere in national economy, I think you can find a progressive promoting a statist solution. Sentences like these are now common place: " I urge the government to institutionalize _________"; "The government can expand the program further to provide capital to poor families", and; "Mr. _______ has asked the Aquino government to create a/an _________."
C. Jay Engel of Reformed Libertarian wrote the first article. He said unlike in the past, it is not easy these days to identify labels whether it be political or theological for there are stories behind those labels.
His understanding of the history of progressive movement started in 19th century. The battle in politics during those times was between leftists (classical liberals advocating limited government, which is also synonymous now with libertarianism) and rightists (conservatives advocating big government, which I call statism). Unfortunately, the liberals neglected their intellectual roots. And due to the influence of Darwin's theory borrowed and applied by Marx in understanding society, the belief in the attainment of an ideal world through socialism became popular. In short, in 1901 to 1914, liberalism was abandoned and replaced by progressivism.
The classical liberals who had been replaced were constitutionalists and since they were thrown out of their political house, in time they found a home among the conservative camp who strongly opposed progressivism. So based on Engel's story, "progressives took over the title of liberalism and the true liberals found a way to call themselves conservatives based on their commitment to the American tradition of life, liberty, and property." So now, in the US, liberalism means progressivism and answering the question of our commenter, we can say that progressives in the Philippines are those who propagate in the country the ideas of US liberalism.
Walter Williams wrote "Liberals, Progressives and Socialists". Following Ludwig von Mises' analysis, Williams thinks that both communism and Nazism are two different forms of socialism. He was surprised why the crime of Nazism received international condemnation and yet the communist form of socialism appeared to be exempted from such despite the high rate of its victims, which was estimated to reach 138 million. He suspects that it is due to high regard given to Mao Zedong among American intellectuals. I suspect the same thing when it comes to Marx's ideas.
Williams added, perhaps contemporary leftists, socialists and progressives would argue that their agenda is far different from that of the Nazi, Soviets and Maoists. But as for him, the test for a tyrannous government is not only confined in the existence of death camps and wars of conquest, but the belief in the "primacy of the state over individual rights."
He left a warning: "The unspeakable horrors of Nazism didn’t happen overnight. They were simply the end result of a long evolution of ideas leading to consolidation of power in central government in the quest for 'social justice.' ” At present, in the US, there is a "massive consolidation of power in Washington in the name of social justice." So for him this is the appropriate question, which I think is also applicable to the Philippines: "Which way are we headed tiny steps at a time — toward greater liberty or toward more government control over our lives?"
This article caused me headache. It is very long and I find it hard to make sense of all the details in it. Murray Rothbard wrote this, "The Progressive Era and the Family" and he gave a complex and more detailed historical background of progressive movement.
For Rothbard, to confine the origin of progressivism during 1900 to 1914 does not provide the complete picture. He mentioned two movements that are not usually associated with progressivism - these are mercantilism and revival movement.
Based on Rothbard's narration, the revival movement during the 1830s played a big role in the birth of progressivism. This movement was opposed to "creedal Calvinist churches that stressed the importance of obeying God's law as expressed in the church creed." For this movement, creeds, rituals and liturgies are not important. Rothbard called this movement new "Pietism" and it has two different forms - "salvationists pietists" of the South and the "evangelical pietists" of the North, the territory of the Yankees.
Since this movement removed the law of God as expressed in church creed from its previous place in society, but considered social sanctification as its mission, the remaining option to accomplish this mission was to use the power of the state. Exactly at this point, Rothbard described "evangelical pietists" as "natural 'cultural imperialists,' people who were wont to impose their values and morality on other groups; as such, they took quite naturally to imposing their form of pietism through whatever means were available, including the use of the coercive power of the state."
Rothbard mentioned some of the important features in the Progressive movement. They are the following:
- Use of both pietistic and scientific arguments to achieve the pietist goals
- Social gospel movement
- Increase of government contracts to business
- Taxpayer-financed welfare state
- Expansion of the power of the public school
- Expansion of the power of the state over the family, and
- Eugenics movement
Rothbard's story is very interesting, but long. I just selected sections in it relevant to the questions of the second commenter:
"Progressivism was, to a great extent, the culmination of the pietist Protestant political impulse, the urge to regulate every aspect of American life, economic and moral—even the most intimate and crucial aspects of family life. But it was also a curious alliance of a technocratic drive for government regulation, the supposed expression of 'value-free science,' and the pietist religious impulse to save America—and the world—by state coercion."
"All these trends reached their apogee in the Progressive party and its national convention of 1912. The assemblage was a gathering of businessmen, intellectuals, academics, technocrats, efficiency experts and social engineers, writers, economists, social scientists, and leading representatives of the new profession of social work."
"In short, the Progressive Era re-created the age-old alliance between Big Government, large business firms, and opinion-molding intellectuals—an alliance that had most recently been embodied in the mercantilist system of the sixteenth through eighteenth centuries."
So I think, if we find it difficult to identify progressives today, it is not because they are few. I think they are everywhere....
A Brief History of Progressivism
A Brief History of Progressivism