Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Historical Insanity

Sorry Leftists, the Democrats have never been a Working Class Party

Surprisingly, Joe Biden’s (D-Delaware) deference to corporate elites and adherence to the bankrupt austerity dogma shocks many people.

Leftists become horrified when Biden ignores U.S. Representative Alexandra Ocasio-Cortez’s (D-New York) while returning Goldman Sachs (NYSE: GS) executives’phone calls. Consequently, observers complain that the Democrats are betraying their heritage as a working class or labor party.

This betrayal of the left should shock nobody because the Democrats have never been a working-class party. Instead, Biden is following a long-established historical pattern of Democratic deference to wealth and power. The truth is Joe Biden is the historical norm for Democrats, while leftists such as Ocasio-Cortez are an anomaly.

The Democrats’ Populist Beginning

People think the Democrats are a working-class organization because of the party’s populist roots.

To elaborate, the Democratic Party began as a populist reaction to the Corrupt Bargain after the presidential election of 1824. No candidate received enough popular votes to win the 1824 presidential contest.

Instead, the U.S. House of Representatives chose the president from a list of four candidates. Outrage erupted when the House picked John Quincy Adams (Massachusetts) over Andrew Jackson (Tennessee).

Ordinary people, particularly in the West, got angry because Jackson had won a clear majority of the popular vote; 153,544 for Jackson and 108,740 for Adams. The popular belief was that Adams won by making a backroom deal with U.S. Speaker of the House Henry Clay (Kentucky).

In the Corrupt Bargain, Clay leveraged his influence to get the House to elect Adams. In exchange, Adams agreed to appoint Clay U.S. Secretary of State. Incredibly, in 1824 the Secretary of State was more prestigious than the Speaker’s chair.

The Fake Man of the People

As a result, Jackson supporters organized a new political entity; the Democratic Party, to prevent a repeat of the Corrupt Bargain. In 1828, the Democrats blew up America’s political system by electing Jackson president to the horror of elitists.

The elitists’ fear was that an ignorant mob led by a demagogue was taking over the government. Democratic propaganda drove the elite fears; and attracted votes, by portraying Jackson as a rustic “man of the people.”

In reality, Jackson was a wealthy slave owner and a powerful politically-connected lawyer. Jackson’s running mate; John C. Calhoun (D-South Carolina), was a rich Yale-educated apologist for slavery. Interestingly, many modern scholars consider Calhoun the intellectual father of American conservatism.

Thus Andy Jackson (D-Tennessee) was the first of many “fake men of the people” claiming to represent the popular will while working for the interests of the elite. Jackson’s entire political agenda advanced the power of the Southern Slaveocracy at the expense of ordinary Americans of all races.

Andrew Jackson’s Elitist Economics

For instance, Jackson trampled Americans’ First Amendment rights by banning abolitionist publications from the mails.

 In addition, Jackson deployed the army to remove Native Americans from their ancestral lands so slave owners could seize the property for growing cotton. Moreover, Jackson opposed public works projects; such as canals and highways, that helped ordinary farmers move their crops to market.

Importantly, Jackson tried to restrict land ownership to the upper classes by requiring gold for the purchase of federal lands. To explain, in the 1830s the federal government sold frontier lands seized from indigenous people to settlers and speculators.

Ordinary people could only purchase that land with credit. Jackson tried to prevent ordinary people from buying federal lands by requiring payment in gold. That system favored affluent slave owners; who could borrow gold from British bankers over hardworking dirt farmers.

Finally, Jackson destroyed America’s central bank, the Second Bank of the United States, because that institution favored northern businessmen over Southern Slave owners. Thus, Jackson wrecked the economy to make it easier for slave owners to get cheap credit.

The result of Jackson’s excesses was the rise of rival populist parties pushing different different visions of America’s futures. For instance, the Whigs promoted public improvements and a tariff to encourage industry.

The Americans; or Know Nothings, opposed immigration to protect “real Americans” from Catholic immigrants. The Free Soilers wanted the government to restrict slavery and distribute frontier lands to ordinary people for free. The Liberty Party wanted to ban slavery and grant citizenship to African Americans.

Republican Populism

The Democrats’ rivals coalesced in the Republican Party. The Republicans’ agenda included the restriction of slavery to the South, a high tariff to protect American industry, massive public works projects, the distribution of frontier lands to ordinary people for free, and a powerful federal government.

In 1860, the Republicans won massive victories in the presidential and congressional elections, effectively taking control of the federal government. One result of the Republican Revolution of 1860, was the decision of Southern Democrats to succeed from the Union.

A major reason Southerners left the Union was the fear the Republicans would block their access to cheap European credit and manufactured goods. To explain, without European credit and imports the Southern slave economy collapsed.

The South needed Europe because it had no banking system or industry of its own. Conversely, the North had booming industries and a growing banking system.

Ironically, Confederate President Jefferson Davis (D-Mississippi) proved those fears correct by triggering a Southern Economic collapse with his Cotton Blockade at the beginning of the Civil War. To explain, Davis tried to block all cotton exports in 1861; which left the Confederacy with no money, or weapons, to fight the Civil War.

The Democrats’ Long History of Subservience to the Rich

Three questionable circumstances saved the Democrats from oblivion after the Civil War.

First, Southerners blamed Republicans for the Civil War and Reconstruction. Hence, no White Southerner would vote Republican. That gave Democrats a solid block of voters who were totally loyal to their party. Importantly, that block of voters had control of a large section of the country.

Second, Republicans fought for African Americans. Particularly, ex-slaves in the South who were loyal Republican voters. That circumstance enabled Democrats to position themselves as the party of White Supremacy in an age of unapologetic racism.

Third, many Roman Catholic immigrants; the Irish, in particular, viewed Republicans as the Protestant party. Moreover, most of the wealthy Protestants who dominated state and local economies and governments in the north and West were Republicans. Thus, Democrats positioned themselves as the Catholic Party and got control of cities, such as New York, with emerging Catholic majorities.

Third, many Roman Catholic immigrants; the Irish, in particular, viewed Republicans as the Protestant party. Moreover, most of the wealthy Protestants who dominated state and local economies and governments in the north and West were Republicans. Thus, Democrats positioned themselves as the Catholic Party and got control of cities, such as New York, with emerging Catholic majorities.

Thus, Democrats positioned themselves as the Catholic Party and got control of cities, such as New York, with emerging Catholic majorities.

By 1876, powerful new Democratic political machines; led by New York City’s Tammany Hall, won a majority of the popular vote in the Presidential Election. However, Republicans won a majority of the Electoral College through manipulation.

The result was an electoral crisis that led to a second corrupt bargain. A corrupt Republican Party agreed to withdraw federal troops from the South and end Reconstruction. In exchange, a corrupt Democratic Party agreed not to contest Rutherford B. Hayes’ (R-Ohio) possibly illegal ascension to the presidency.

One result of the Compromise of 1877 was to strip most African-Americans of their rights. Another was to put the South under the control of wealthy Democratic politicians, businessmen, and planters.

Democratic Feudalism in the South 

The result was Jim Crow and a system of debt peonage (sharecropping) in the South. To explain, under debt peonage farmers give most of their crops to a lender or landlord in exchange for unpaid labor.

Debt peonage can only work if the government is willing to always take the side of the creditor against the debtor. In the Pre-World War II South, Democratic politicians remained in office because they always sided with the creditors against the debtors.

For example, corrupt Southern sheriffs often arrested blacks and poor whites who refused to sharecrop. The sheriffs sent those arrested to work camps and chain gangs, where the prisoners provided forced labor for big corporations and rich Southerners. Disgustingly, corrupt Democratic Southern politicians made money by renting prisoners to businesses.

Jim Crow survived because it served the interests of big business. For instance, Jim Crow provided cheap labor for the cotton fields and coal mines that drove northern industry. In addition, Jim Crow enabled corrupt Democratic politicians who were on the payroll of big corporations, particularly railroads, to stay in office forever.

Nor was this system confined to the South. During the late 19th Century, the Big Four; a quartet of millionaires who controlled the Southern and Central Pacific railroads, effectively owned California’s state government.

During the late 19th Century, Big Business often backed Democrats because Democrats were the conservative party. In the late 19th Century, Democrats stood for the gold standard (hard money and austerity), the traditional social order, and white supremacy.

Conservative White Supremacist Democrats

Indeed, Democrats’ role as the conservative white supremacist party endured for a long time. The Democrats drew their support from the most conservative elements of American society Southerners, Midwestern farmers, and Irish Catholics.

Even the radical Democratic populist William Jennings Bryan; who dominated the party between 1896 and 1908, was a conservative figure. To explain, Bryan was a devout Christian and a diehard White Supremacist who championed Jim Crow.

Bryan’s radicalism was a fight against Big Business, Big Cities, corruption, and modernity in general. Bryan waged that fight because he thought Big Business and modernity were threats to traditional rural, white Christian America. Bryan’s political project was to restore Jacksonian Democracy, not build a welfare state.

Labor Avoids the Democrats

Tellingly, the labor movement avoided the Democratic Party for the first three decades of the 20th Century.

In fact, when prominent labor leader and former Democrat Eugene V. Debs (S-Indiana), reentered politics in 1900, he formed his own party the Socialist Party. Debs formed a third party because he viewed the Democrats as too beholden to Big Business to help labor.

In addition, many Democrats; especially in the South, were openly hostile to unions. When Democrats did elect a sort of reformer; Woodrow Wilson (D-New Jersey) president in 1912, he was both an open racist and a social conservative who adopted an agenda of hyper-nationalism during World War I.

Nor did the situation change in the 1920s. The Democratic Party became more conservative during the decade. In fact, Democrats nominated a trio of conservatives for President during the Roaring Twenties. The conservative Democratic presidential nominees were ; newspaper publisher James M. Cox (D-Ohio) in 1920, Wall Street lawyer John W. Davis (D-West Virginia) in 1924, and Tammany Hall politician and super Catholic Alfred E. Smith (D-New York) in 1928.

In addition, in the 1920s, Democrats were the party of the Ku Klux Klan. The press even labeled the convention of 1924 the Klan convention.

Plus, in 1932, as the Great Depression grew worse. Franklin D. Roosevelt (D-New York), Cox’s 1920 running mate, won election as a conservative dedicated to returning America to normalcy by ending a dangerous and radical Republican social experiment (Prohibition), not as a reformer.

FDR, a wealthy lawyer from an old New York family; and a Harvard man, was part of the establishment. When he was elected in 1932, there was no sign that FDR was pro labor or leftwing.

How the Democrats became the Party of Labor

Two developments in the 1930s forced FDR and other Democrats to become pro labor.

First, there was a wave of strikes and labor unrest in the 1930s that threatened to explode into violence. FDR and other party leaders were afraid of a repeat of the labor violence of the 1890s that destroyed Grover Cleveland’s (D-New York) presidency.

To explain, Cleveland won the popular vote in three presidential elections in a row, 1884, 1888, and 1892. However, after the 1890s Depression ignited a wave of violence including the 1894 Pullman Strike, Cleveland’s Gold Democrats lost control of the party. Consequently, Republican William McKinley (R-Ohio) won an impressive presidential victory in 1896.

Congressional Democrats and FDR defused the violence with the National Labor Relations Act of 1935, the Wagner Act. The Wagner Act attempted to prevent violence by institutionalizing collective bargaining. In addition, the Wagner Act gave most workers the right to unionize.

Notably, the Wagner Act did not cover agricultural workers, house servants, government employees, and independent contract. Thus, Democrats deliberately excluded the poorest and most oppressed workers in the United States from the Wagner Act. Black sharecroppers and house servants in the South, for instance.

On the other hand, the Wagner Act prevented labor unrest and violence and brought in votes. Hence, the Wagner Act served FDR’s goals by preventing violence and buying union support, while appeasing rich Southern Democrats.

The strategy worked and FDR easily won the election of 1936. In addition, voters gave Democrats impressive majorities in both houses of Congress.

How Unions Bought the Democratic Party

The next event that wedded Labor to the Democrats was the election of 1936. To explain in 1936, Wall Street, most of Big Business, and the rich lined up with the Republican Party and against the New Deal.

Consequently, many Democratic found themselves short of money in 1936 and 1938. The Democrats ran out of money because most rich donors backed the Grand Old Party (GOP).

Union leaders, who had access to workers’ dues, came to the Democrats rescue. Essentially, Big Labor replaced Big Business as many Democrats’ paymaster.

In the late 1930s, many Democrats became pro-labor because unions were making donations. In fact, a union the Congress of Industrial Organizations (CIO), organized America’s first political action committee (PAC) in 1943. They organized the CIO-PAC after Congress passed the Smith-Connally Act in an effort to limit union campaign spending.

Thus, unions created America’s modern campaign finance system. However, after the 1970, Big Business and wealthy donors, pushed unions out of that system.

The result of the 1930s, was a Democratic Party heavily reliant on labor. The Democrats were a party that needed labor votes and union money, not a labor party.

Indeed, many Democratic leaders; including President Harry S. Truman (D-Missouri) were hostile to unions and labor. As president, Truman tried to nationalize the steel industry to break a strike during the Korean War.

The Decline and Fall of the American Labor Movement

Union power began to collapse in the 1970s with the decline of manufacturing and other unionized industries. Meanwhile, business became more generous with its donations and emerged as the principal funder of both Democratic and Republican political campaigns.

Another change that hurt unions was the growth of a new professional middle class that was disinterested in unions or hostile to organized labor. In contrast to Europe, most American office and retail workers did not unionize; which meant unions did not organize the fastest growing segments of the American workforce.

Ironically, the Wagner Act was partially responsible for this situation. To explain, the Wagner Act specifically excluded management which kept unions out of most offices. All an employer needed to do to prevent unionization was promote workers to “management.” Hence, supermarket cashiers and file clerks became “assistant managers.”  

Another problem was snobbery, historically Americans view unions as a working-class phenomenon. Hence, many middle-class Americans and college-educated professionals refuse to join unions out of pride.

There are notable exceptions to this American professional resistance to unions, however, including actors, Hollywood, airline pilots, educators, nurses, and government employees. However, professional unions have not spread to the fastest-growing segments of the American economy, including tech and finance.

A related problem was the lack of labor leadership. Nobody replaced the great generation of labor leaders that engineered the triumphs of the 1930s and 1940s. Instead, after 1970, bureaucratic hacks led most American unions into obscurity and irrelevance.

Thus, the American labor movement had no leadership when it faced an all-out attack from a well-led, well-financed, and well-organized conservative movement in the 1980s. The Reagan Revolution of the 1980s completely blindsided and disrupted the American labor movement. In hindsight, American unions have never recovered from the defeats of the 1980s.

Consequently, unions lost their influence over the Democratic Party and political power in America. After 1970, a new generation of upper-class professional Democrats whose major interests were cultural issues and foreign policy took over the national party.

In 1992, the anti-union Democratic revolution was complete when President Bill Clinton (D-Arkansas), a “moderate” pro-business Democrat from a right-to-work Southern state, became the party’s leader.

Clinton was not betraying the Party’s heritage as some observers claim. Instead, Clinton took the Democrats back to their historic norm as a conservative anti-union  and pro-business party.

In conclusion, the Democrats are not a labor party and never have been a labor party. However, I think unions could play a pivotal role in American politics with good leadership.

Unfortunately, I see no evidence that there is any effective leadership in today’s labor movement. Thus, labor has no political influence in today’s America. Therefore, Democrats and Republicans have no reason to pay attention to labor.

History shows, there is no labor party in America despite the fantasies of some intellectuals. In fact, historically Democrats have been as hostile to labor as Republicans.