The History Wars Continue, Part VI

Today we move on to the economy and the role of government. Sparks are sure to fly.

6. “A few government and U.S. history textbooks suffer from an uncritical celebration of the free enterprise system, both by ignoring legitimate problems created by capitalism and failing to include coverage of government’s role in U.S. economic system.”

(a) Here, according to the Texas Freedom Network, are the kinds of outrageous remarks the textbooks under consideration make about free enterprise:

The atmosphere of a free market, as well as a free society that encourages the exchange of ideas, can and often does lead to innovation and scientific and technological discoveries. All these conditions promote growth in the economy and often improve the quality of everyday life.

The proper role of government in economic affairs should be restricted to functions intended to promote and protect the free play of competition and the operation of the laws of supply and demand. True laissez-faire capitalism has never in fact operated in this country, yet it has a profound effect on the structure of the nation’s economic system, which can be described as laissez-faire capitalism with limited government involvement.

The Network admits that the free enterprise system has led to great material and intellectual progress. But they want some discussion of its disadvantages and limitations.

… the text’s treatment of the free enterprise system is unbalanced and asymmetrical because the text provides little mention of the possible limits and disadvantages of a free enterprise and laissez- faire system. Students are given little awareness that critics of a laissez-faire system, both in the U.S. today and the past, have argued that an unfettered market can and has occasionally led to economic insecurity and inequality, unfair pay and unsafe labor conditions for many employees.

Identifying free enterprise and laissez-faire, as the Network and arguably the latter text do, is a mistake. The American market has not been “unfettered” anytime in the past century, and probably since the nation’s founding. In any case, it’s hard to evaluate this complaint without seeing the larger context in the texts in question. I’m inclined to count the complaint against the first text as bogus. A free market and free exchange of ideas do bring great benefits, and there’s no need for a “however.” The quote from the second text sounds as if it’s an endorsement of a libertarian approach to economic affairs, but I’m guessing that in context it’s clear that this is the proper role of government according to advocates of laissez-faire capitalism. I’ll hesitantly call this debatable.

(b) Another text mentions complaints about the Gilded Age, but responds,

The dizzying array of things to do and buy convinced the growing middle class that modern America was in a true golden age.”[…] [sic] The application of scientific discoveries and technological innovations by the free enterprise system improved the standard of living in the United States. Driven by entrepreneurs, American businesses were able to create products and services that made daily life easier and more fun for many people. Mass produced materials and products lowered the prices of many goods, enabling ordinary Americans to purchase items that previously had been out of reach.

The Network denounces this treatment, saying,

nineteenth-century free- market capitalism went hand in hand with governmental suppression of Native ownership over vast swaths of fertile land, leading to that land’s transformation (first) into public property and (second) into private property protected by law. Without governmental action, that transformation would not have happened. Second, nobody during the age of early industrialization disputed the importance of active governmental support for “internal improvements” that were beyond private means. And finally, any comprehensive discussion of the history of free-market capitalism in this country should note that the great driving commodity of the pre-Civil War economy was cotton, produced by slave labor on an enormous scale.

To call this complaint bogus is kind; it is ridiculous. The Gilded Age is the period, roughly, 1870-1900, in which the fruits of the Second Industrial Revolution spread to a growing middle class. It was the era in which department stores, music halls, theaters, large consumer products companies, mass circulation newspapers and magazines, team sports, and other accoutrements of an urbane middle-class lifestyle were born. The wealth that had concentrated earlier in the century as a result of the First Industrial Revolution began to spread throughout a substantial portion of society.

During this era, yes, the government fought wars against tribes in the West, swindled them out of large areas of land, confined them to reservations, etc. But this had little to do with the key developments of the Second Industrial Revolution or the rise of the middle-class. So, it’s hard to see how it’s relevant to the topic at hand. The closing decades of the nineteenth century were NOT “the age of early industrialization,” so it’s hard to see how the building of roads and canals earlier in the century is particularly relevant either. The Network wants the book to make a “They didn’t build that!” point. But it’s the Network, not the textbook, that’s pushing a political agenda here. Finally, why is the role of cotton before 1861 relevant to events in the Gilded Age? It’s not. The Network wants the text to say that the Gilded Age’s improvements in the quality of life were due, not to free enterprise, but due to earlier government involvement and to OPPRESSION, of slaves and of Native Americans. That’s preposterous. Bogus, bogus, bogus.

(c) One text contains praise of capitalism:

The capitalist economic system of the United States helped spur industrial growth. In capitalism, individuals and businesses own property and decide how to use it. The people—not the government—control capital, which includes the buildings, land, machines, money, and other items used to create wealth.

Again, the Network insists on a “You didn’t build that” approach:

This passage ignores a very important dimension of American economic development after the Revolution: the argument, developed by Alexander Hamilton, that government power is needed to foster development in an active way, including projects that are beyond private capital’s reach. The declarative statement that “people – not the government – control capital” seems to dismiss even the possibility of this more complicated relationship between individuals, the government and capital. In addition, the debate over public regulation of both individual and corporate enterprise remains an active subject of contention in American economic and legal life to the present day. Students should have a context for understanding that debate.

Let’s look carefully at what the text is saying. Capitalism “helped spur industrial growth.” It doesn’t say that capitalism was solely responsible for growth. Second, it says that our economic system allows people and businesses to own property and decide how to use it. Is the Network denying that? Finally, the text says that the people rather than the government control capital. Again, isn’t that true? The contrast is with socialism, which puts government in control of property and centralizes decision-making. I don’t read the passage as denying the possibility of regulation or of public projects. This, moreover, is a middle-school U.S. history textbook that ends its coverage in 1877. There were important public works projects within its time frame, and important issues about the proper role of government—the Hamilton/Jefferson debate, Andrew Jackson’s assault on the Bank of the United States, Henry Clay’s “American system”—all of which receive coverage in the book. But the main expansion of the government’s role occurs after 1877, outside the frame of coverage of the book. Asking it to do more than it already does on this score is bogus.

(d) One government text says, to introduce its discussion of taxation,

In the words of Oliver Wendell Holmes, Jr., taxes are ‘what we pay for civilized society.’ Society does not appear to be much more civilized today than it was when Justice Holmes made that observation in 1927. However, ‘what we pay’ has certainly gone up.

Ah! But society is much more civiilzed today, says the Network:

The text neglects to mention that defenders of increased taxation for an expanded safety net would respond that programs adopted since 1927 such as Social Security, Medicare, Medicaid, and the Affordable Care Act have produced such ‘civilized’ benefits as a drastic reduction of poverty and economic insecurity among the elderly, children, and the population at large, and improved and more equal access to health care.

The text should be insisting on the benefits of the welfare state, and trumpeting Obamacare! (I thought Obamacare was going to lower costs, by the way, not justify increased taxation in the decades since 1927. But, whatever.) Again, it’s the Network that’s trying to politicize things. The points they raise are in any event irrelevant to the point the book is introducing, which is that income tax rates have skyrocketed from a top rate of 7% when the tax was introduced. Social Security, Medicare, and Medicaid are financed separately; in theory, at least, they have no bearing on income tax rates. Obamacare hasn’t even been fully implemented yet; it’s no explanation for the increase in the tax burden that’s taken place over the past century. The Network’s objection is completely bogus.

(e) The Network complains about a cartoon—a cartoon!—implying that taxes are high and that people don’t like paying them:

The text also includes an ideologically slanted cartoon. [“Gibbs, I subtracted your federal, state and social security taxes and medical from your paycheck, and you owe the firm $50.” The caption for the cartoon reads: “Taxes fund public programs and services, but some question the need for that spending and criticize the burden those taxes place on taxpayers. What comment does this cartoon make?”]

What’s Wrong? The text gives students the impression that Americans are very heavily taxed without placing this information in historical or cross-national context. For instance, the text could have mentioned that according to the Congressional Budget Office in 2011, federal taxes as a percentage of the GDP were at their lowest rate since 1950. The text might also have mentioned that the United States has the lowest corporate tax burden of any member nation of the Organization for Economic Cooperation and Development (OECD). The use of this cartoon is also unbalanced because the text provides no counterbalancing illustration suggesting that excessively low taxes might lead to economic insecurity and poverty, or critical of the lack of an adequate safety net for low-income Americans.

The Network evidently has no sense of humor. Instead of including a cartoon that’s making a joke, the text should have told students that taxes in the United States are low by historic and international standards. The Network’s “facts” are incorrect; federal taxes as a percentage of GDP sank in the aftermath of the economic crisis, but have rebounded, and are nearly as high as they were in 1942! And, we have the highest corporate tax rate in the OECD; we collect less revenue from it than the other members because (a) Congress enacts loopholes to benefit campaign contributors and (b) our high rate encourages firms to structure their earning to avoid taxation—and even to shift operations and ownership overseas. I’m inclined to count this complaint trivial, but it shows how far the Network is willing to go to insist that textbooks ought to reflect Democratic talking points. Bogus.


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