Raiding Progress

American progressivism is in trouble. Notwithstanding the two-term presidencies of Bill Clinton and Barack Obama, the Democratic Party has become the minority party in the House, the Senate, and among state legislatures. Since the 1960s, Democrats have lost most of the white working class while alienating much of the business community, making it harder to create and maintain an enduring majority.

The story that progressives tell themselves about their decline, pointing to a toxic mix of white racist backlash, academic anti-Keynesianism, and rising corporate power, may be comforting, but it isn’t true. The major legacies of the New Deal and Great Society, including Social Security, Medicare, and federal aid to infrastructure, remain popular with voters of both parties. Even by the 1970s, big business had largely made its peace with New Deal regulatory structures, which were designed to promote and rationalize the industries they regulated.

Rather, the rupture between the Democrats and the business- and working-class constituencies that have abandoned the party is chiefly the result of the rising power of the public interest movements of the late 20th century and the new regulatory paradigm, focused on consumer and environmental protection, to which those movements gave birth. The result has been a deep incoherence in center-Left thinking about the economy, with many on the center-Left calling for industrial policy to promote growth and create jobs while simultaneously demonizing the corporations and industries that those policies would benefit.

As contemporary American progressivism has come to be defined by the public interest movements associated with Ralph Nader, both the white working class and the business community have abandoned the Democratic Party. For working-class whites, the regulatory assault upon manufacturing, resource-extractive industries, and agriculture threatened both their employment and the local economies in which they lived and worked. With the postwar New Deal compact between business, labor, and government fractured, business groups and industries mobilized themselves as a countervailing force to the increasing power and organization of the public interest movements on the Left. For these reasons, the decline of New Deal liberalism in the last half-century owes as much to assaults by the public interest Left as it does to attacks by a resurgent Right.

1.

The crisis of today’s center-Left has its origins in the crack-up of the New Deal coalition, which combined two very different traditions: interest group liberalism and public interest progressivism. Interest group liberalism united the two constituencies of the Jefferson-Jackson tradition –– old-stock, white Protestant farmers in the South and West, and disproportionately immigrant industrial workers from the North and Midwest — with business interests in the Southern and Western periphery who sought Hamiltonian state capitalism to develop their regions by means of federal public investment and federal programs.

This coalition of interest groups was joined by Northern progressives, mostly native-born, upper-middle-class white Protestants (many of them former progressive Republicans), who were convinced that politics should be a matter of principle, not negotiation among organized interest groups like farmers, labor, and industry.

While they shared common enemies and support for certain reforms, progressives and populists had different understandings of the goals of political reform. Progressives tended to view politics itself as a threat to sound policy. Legislatures in particular were considered to be vulnerable to corruption and capture by special interests. Most progressive political reforms — civil service reform, city manager government, initiative, and referendum — sought to insulate policy-making from the give-and-take of legislative politics.

Early 20th century American progressives combined their contempt for legislators with idealization of unelected public servants. In the progressive utopia, altruistic, nonpartisan civil servants, protected from political interference, would apply expertise and reason to the making of policy in the public interest. Like some other aspects of progressivism, the ideal of the all-wise, unselfish civil servant was an import from Wilhelmine Germany, and may be traced to Hegel’s idea of the bureaucracy as the “universal class”; that is, the only class in society that is free from factionalism and devoted to the welfare of the state as a whole.

In America, this Teutonic academic influence was blended with a secularized version of the culture of New England Puritanism, with its ideal of the virtuous community freed from worldly corruption. In the political culture of the increasingly secularized Social Gospel, the apolitical expert who combined intellect with action — the administrator or professor — would inherit the role of leader of the community from the Protestant pastor, while the then-new social sciences came to replace Scripture as a source of intellectual authority. A striking number of early Progressive leaders, including Woodrow Wilson, were in fact the sons of Protestant pastors, as Dorothy Ross notes in The Origins of American Social Science.¹

The populist approach to politics and reform could not be more different. While agrarian populists and urban labor activists differed in many ways, they opposed assigning discretionary power to bureaucrats who were protected from legislative oversight. Among other things, this reflected the ethnic, class, and regional positions of populists in American society. Policy-making positions in an American high civil service were unlikely to be filled by working-class white “ethnics” in the American industrial states or by rural Southern and Western whites. Instead, college-educated members of the Northeastern elite would dominate any powerful Hegelian bureaucracy. Congress in general, and the House of Representatives, would be more likely than the executive branch to reflect the concerns of farmer-labor coalitions.

In Roots of Reform: Farmers, Workers, and the American State 1877–1917, Elizabeth Sanders describes the goal of what she calls the “agrarian statist” approach to political reform as the “party-legislative” state. Unlike elite progressives, agrarian populists, sometimes allied with organized labor, sought to expand the capacities of the federal government in key areas, without creating a European-style high civil service with substantial independent policy-making authority — to expand the statutory state without expanding the bureaucratic state. This was achieved by a combination of detailed legislation and the creation of agencies that were subject to strict congressional oversight and the influence of farmers and labor unions.² A necessary corollary of this approach was judicial deference to the decisions of Congress and federal agencies.

The progressive dream of a rationalized, centralized administrative state with a corps of powerful, tenured civil servants survived the Progressive Era of Woodrow Wilson but died by the middle of the 20th century. Congress, dominated from the New Deal to the 1970s by Southern Democrats, killed the dream. Whether they were supporters or opponents of New Deal liberal policies, Southern Democrats had no intention of increasing the discretionary power of elite federal bureaucrats who were recruited disproportionately from the educated upper middle class of the North. Successive plans for executive reorganization, which would have put the president in charge of a rationalized European-style administrative state, never made it through Congress.

The system that emerged instead by the 1940s came to be known as “interest group liberalism” — a kind of corporatism in which public policy emerged from negotiations among economic interest groups, rather than from all-wise, altruistic progressive experts. Vilified by technocratic progressives and libertarians alike, interest group liberalism was celebrated by some New Deal liberals. Economist John Kenneth Galbraith coined the term “countervailing power” to describe the ability of labor unions, small producer cooperatives, and powerful government agencies to balance, and bargain with, large corporations. In the words of Galbraith, “It takes a large public bureaucracy to police a powerful private bureaucracy.”³ In his 1940 book The American Stakes, John Chamberlain (who later became a leading conservative) celebrated what he described as the New Deal’s “broker state”:

The labor union, the consumers’ or producers’ cooperative, the “institute,” the syndicate — these are the important things in a democracy. If their power is evenly spread, if there are economic checks and balances to parallel the political checks and balances, then society will be democratic. For democracy is what results when you have a state of tension in society that permits no one group to dare bid for the total power.⁴

Rather than a strong civil service staffed by impartial elite generalists pursuing the abstract public interest, the United States got sector-specific agencies with narrow mandates that worked closely with a sector’s stakeholders. From the late 19th century to the New Deal era, federal regulatory agencies were intended to help regulated industries flourish. Many railroad executives, for example, welcomed federal regulation as a cure for the duplication and “ruinous competition” that had plagued the industry for decades. The US Department of Agriculture was intended to be a promoter and sponsor and mentor of the American farming industry, not an adversary. The same was true of the Civil Aeronautics Board, public utility commissions, and other agencies. Even when representatives of labor and consumer interests were added to regulatory agency commissions, it was assumed that the public interest and the health of the regulated industry could be aligned.

2.

All of this changed with the rise of public interest progressivism in the 1960s and 1990s. Led by Ralph Nader, who won fame by exposing safety failings of the US automobile industry in his book Unsafe at Any Speed (1965), the public interest movement took a much more adversarial approach to American business than New Deal regulators had. Indeed, public interest progressives were as hostile to the regulators as to the regulated. What had been seen as a benefit of traditional regulation, the cooperation of government and industry, came to be viewed as corruption. The older regulatory framework, inherited from the Progressive and New Deal eras, was denounced as a system of “iron triangles” uniting industries, regulatory agencies, and members of Congress. Concern about the health of a regulated industry on the part of regulators or legislators was denounced as “regulatory capture.”

“Rather than being innovative, in a number of critical respects, the public interest movement represents a throwback to the pre-New Deal tradition of American reform,” writes David Vogel in Kindred Strangers: The Uneasy Relationship Between Politics and Business in America. Social movements in favor of civil rights, feminism, environmentalism, and consumerism, often backed by foundations, existed continuously from the early 1900s. This tradition found a new mass constituency among the growing number of college-educated Americans after World War II, even as farmer-labor-industry corporatism declined in response to factors like the dwindling number of farmers and industrial workers. The emergence of public interest progressivism between the 1950s and the 1970s represented the resurgence of an old tradition, not a response to new events.

Among other things, the “public citizen” of the public interest movement — a public-spirited individual like Nader, beholden to no faction and combining immense altruism with nonpartisan, technical expertise — is a reincarnation of the ideal of early 1900s Progressivism. But the public interest movement of the late 20th century, unlike its early 20th-century predecessor, had no faith that altruistic experts in government could prevent the corruption of the commonwealth by special interests. If the public interest were to be defended at all, it would have to be defended by altruistic experts who were outsiders to both business and government but knowledgeable about both.

Enter the lawyers, a group that includes Nader. The hopes that an older generation of progressives had invested in disinterested expert government administrators were transferred to disinterested outside experts, many of them lawyers, in the 1960s and 1970s. The cult of the crusading lawyer was encouraged by the success of the civil rights movement in persuading federal courts to use judicial rulings to overcome the veto imposed on civil rights laws in Congress and the states.

Although most of the causes sponsored by public interest progressives — like consumerism and wildlife protection — had nothing to do with civil rights, the civil rights model of activist groups working with dedicated lawyers to obtain favorable judicial rulings promised a way to avoid the messy compromises of politics to adherents of the strain of progressivism that had always disdained legislative logrolling and appeals to mass electorates. Litigation has been a central reform tool of the Public Interest Research Groups (PIRGs), whose establishment followed proposals in a book by Ralph Nader and Donald Ross, Action for a Change (1971).⁵ And Public Citizen, another Nader-founded organization, has its own Public Citizen Litigation Group.

3.

To perform their function, however, public interest lawyers and other noble, self-appointed outsiders would need to have access to both information and resources. Unlike legislators or bureaucrats, public interest crusaders lacked the legal authority to subpoena private information from corporations. Thus they supported the enactment of enhanced rights for public access to corporate information, combined with enhanced protection for whistleblowers.

Then there was the question of resources. Public interest activists could rely on private philanthropy for some of their funding, and the nonprofit status of public interest foundations and law firms is itself a form of subsidy from the taxpayer. In addition, according to the logic of public interest progressivism, it was fitting and proper that government and business fund at least part of the salaries and operating expenses of the watchdog groups who policed public and private corruption alike.

According to Vogel, “The most common form of indirect public subsidy of the public interest movement’s legal fees has taken place through the private attorney general concept.” Beginning in the 1970s, public interest groups encouraged the passage of laws that granted standing to “private attorneys general” — that is, individuals or groups who had standing to sue to enforce a federal regulation, even if they themselves were not directly affected. A nonprofit environmental foundation, for example, could sue to enforce an environmental regulation against a company, and, if successful, could be reimbursed by an award of attorneys’ fees.

“Especially after 1968, when the executive branch was controlled by Republicans, a Democratic Congress willingly gave citizen watchdog groups and courts more leverage over administrative policy-making and enforcement,” notes Robert A. Kagan in Adversarial Legalism: The American Way of Law.⁶ Since the 1970s, according to Kagan, “The environmental regulatory strategy has been to empower neighborhood groups and environmental advocacy groups to file lawsuits that challenge local land use decisions or development projects pushed by the state or federal government (such as new highways), alleging that they fail to meet legally mandated environmental assessment criteria embodied in law.”⁷ Private attorney general clauses in new laws represented a radical break with the common-law tradition, in which only affected parties had the standing to sue, and the New Deal model of industry-specific regulation. In 1986, Michael McCann observed in Taking Reform Seriously: Public Interest Liberalism, “Liberal judicial interpretations of standing as well as of statutory rights to direct participation have enabled the reformers to initiate litigation challenging agency actions on the vague provisions of the National Environmental Policy Act (NEPA), Freedom of Information Act (FOIA), Occupational Safety and Health Administration (OSHA), Clean Air Act, Water Pollution Control Act, and other statutory programs to a degree never before paralleled.”⁸

Beginning in the 1970s, private attorney general laws gave public interest groups financial incentives to engage in a wave of litigation against both businesses and government agencies. Jeremy A. Rabkin describes these incentives:

If firms must pay all fines to the federal Treasury, both the firm and the plaintiff advocacy group have an incentive to reach an out-of-court settlement so long as the cost of the settlement is less than the full cost of paying the fine. Thus, a widespread practice arose in the 1980s of negotiating settlements in which firms agreed to devote funds to environmental improvements, while the plaintiff agreed not to pursue the suit toward final judgment (and the ensuing payment of a full fine to the Treasury). The firms then make the payments not directly to the particular litigating organization but to some environmental project in the area — often one conducted by a sympathetic local or allied advocacy group.⁹

The result was burdensome on business — and paralyzing for government. By the early 1980s, litigation temporarily blocked at least 50 percent of all new Environmental Protection Agency (EPA) regulations.¹⁰ Lawsuits, particularly lawsuits by environmentalist groups, have afflicted much economic development and infrastructure construction with delays and controversies.

A notorious example is the Oakland Harbor dredging project. The issuance of an Environmental Impact Statement (EIS) by the Army Corps of Engineers in 1986 was followed by a decade of delays, thanks to lawsuits by fishermen and environmentalists. First, environmental activists insisted that dredged sediments be dumped beyond the Continental Shelf, 50 miles to the west. Eventually, the environmentalists reached a compromise with Port of Oakland officials, the Army Corps of Engineers, and the EPA. But then the project ground to a halt because of concern about the effect on salmon populations. Only in 1994 was it possible to move forward, after environmental activists had been appeased by the creation of a new wetlands project, which cost federal and California taxpayers around $20 per cubic yard of dredged soil.¹¹

Public interest litigation has not been a monopoly of environmentalists. A striking example of how public interest activists wrote themselves into regulatory legislation is provided by the Community Reinvestment Act (CRA), which was enacted in 1997 but only gained public notoriety in recent years, when it was blamed for contributing to the housing bubble that produced the Great Recession. The problem that the CRA was intended to solve was alleged discrimination by banks against low-income borrowers in inner-city neighborhoods.

The act became important following bank deregulation in the 1990s, because banks that sought to grow by mergers and acquisitions needed a good CRA rating. A bank could obtain a CRA rating of “outstanding” or “satisfactory” (as opposed to “needs to improve” or “substantial noncompliance”) in one of two ways: it could develop its own internal CRA lending program, or it could partner with activist groups.

Community activist groups naturally preferred the latter option. Activist groups mobilized against banks that preferred direct CRA lending to partnership, as Charles W. Calomiris and Stephen H. Haber note in Fragile by Design: The Political Origins of Banking Crises and Scarce Credit. In the case of a proposed 1999 merger of Fleet Financial and BankBoston, “a coalition of Massachusetts activist groups testified against the merger because Fleet-BankBoston had committed $14.6 billion to CRA lending but refused to continue Fleet’s CRA partnership with ACORN. Fleet-BankBoston, anticipating this opposition, actually paid the travel expenses of out-of-state activist groups to enable them to testify on the bank’s behalf.”¹²

The CRA-induced partnerships were quite profitable for activist groups. According to Calomiris and Haber, “Between 1997 and 2007 there were no fewer than 376 such agreements, involving scores of groups. These agreements included a $760 million commitment from the Bank of New York to ACORN, an $8 billion agreement between Wachovia Bank and New Jersey Citizen Action, and a $70 billion agreement between the Bank of America and the California Reinvestment Coalition. In return, the activist groups agreed not to oppose those banks’ pending mergers and acquisitions.”¹³

4.

During the New Deal era, firms may have had too cozy a relationship with regulators, but they knew what to expect and were confident that the regulators had the health of the particular industry in mind. But in the new era that began in the 1970s, any firm in any industry at any time could find itself the subject of a bureaucratic injunction or private lawsuit based on the protection of nature, consumer welfare, or access for the handicapped. And unlike the old sector-specific regulators, these new quality-of-life regulators had no incentives to treat a particular industry’s health as a major factor in their decisions.

The spotted owl, added to the endangered species list in 1990, symbolized the uncertainty that the new regulation introduced into business-government relations. If a spotted owl landed on your property, business executives and homeowners joked, you’d better shoot it before it was discovered and your plans for developing the property came to an abrupt halt. (Experts now believe that the decline of the spotted owl has chiefly resulted not from logging and other human activities that disrupt the habitat, but from the invasion of another species, the barred owl, from the east.)¹⁴

Anti-statist conservatives had tried, but failed, to persuade middle-class and working-class Americans that the federal government was arbitrary and tyrannical during the New Deal era. The Right’s campaign failed when the federal government was symbolized by the Army Corps of Engineers and the Social Security Administration. But the Right found a growing populist constituency for its denunciation of obstructionist bureaucrats and “red tape” when the federal government came to be symbolized by the new kind of agencies like the EPA and OSHA.

Nowhere was the gap between the old liberalism and the new progressivism more visible than in the realm of the environment. Franklin Roosevelt and his New Deal allies believed that the goals of economic development, natural resource conservation, and wilderness preservation could be aligned. Beginning in the 1970s, environmental activists tried to thwart economic development or, in some cases, to delay it in order to wring concessions from governments and corporations. Hydropower dams, the proud symbol of New Deal economic development, were denounced by environmental activists as threats to fish and other wildlife. Stopping the construction of new dams, and destroying existing dams, became a cause among environmentalists late in the 20th century — even when their growing concern about climate change should have led them to favor a source of energy that did not emit greenhouse gases.

The famous “Powell memo” underlined the alienation of business from the new public interest liberalism. In a confidential memo to the Chamber of Commerce leadership shortly before his confirmation as an Associate Justice of the Supreme Court in 1971, Lewis F. Powell, Jr., called on business to mobilize scholarship and propaganda in defense of the free enterprise system. Among the supposed threats to capitalism, Powell identified not only leftist academics like Herbert Marcuse, but also public interest lawyers like Ralph Nader and the new environmental and consumer regulation.

“Current examples of the impotency of business, and of the near-contempt with which business’ views are held, are the stampedes by politicians to support almost any legislation related to ‘consumerism’ or to the ‘environment,’” he wrote. According to Powell, “Labor unions, civil rights groups, and now the public interest law firms are extremely active in the judicial arena. Their success, often at business’ expense, has not been inconsequential.” Furthermore: “Perhaps the single most effective antagonist of American business is Ralph Nader, who — thanks largely to the media — has become a legend in his own time and an idol of millions of Americans.” While New Left radicalism did not outlive the Age of Aquarius, the then-novel public interest movement arguably has become more powerful on the center-Left than the civil rights groups and the fading labor unions.

5.

The extreme positions to which the anti-politics of public interest progressivism can lead are illustrated by the career of Ralph Nader. Nader has insisted over decades that not only are government officials too corrupt to be entrusted with the public interest, but also, so are elected officials of both parties.

His logic has led him to mount quixotic third-party campaigns for the presidency, like the 2000 campaign in which he might have cost Al Gore enough votes to lose the White House to George W. Bush. (This is debated.) But Naderite logic can also lead to a naïve and dangerous search for enlightened saviors from outside the political system.

In 2009, Nader published a novel entitled Only the Super-Rich Can Save Us. In the novel, 17 billionaires and millionaires — all of them real people, including Warren Buffett, George Soros, Ross Perot, Barry Diller, Yoko Ono, and Bill Cosby — unite to save America from control by special interests through, among other things, ending corporate influence in politics, promoting energy-efficient light bulbs, and making Warren Beatty governor of California. “There’s so many billionaires, and a few of them are quite enlightened,” Nader explained to TIME.¹⁵

The idea that an elite person with a guaranteed status and income can be trusted with public responsibility, precisely because members of the elite are assumed to be satisfied and free from personal ambition, has a long and reactionary pedigree. Noblesse oblige was invoked to justify the privileged role of aristocrats in premodern “mixed constitutions”; and even in modern constitutional monarchies, the monarch has a residual role as a pouvoir neutre, independent of social factions.

Almost a century before Nader published his novel, in 1911, Edward Mandell “Colonel” House, the progressive Texan politician who became a close advisor to President Woodrow Wilson, published a similar work of utopian fiction, entitled Philip Dru: Administrator: A Story of Tomorrow, 1920-1935. Philip Dru is a public-spirited West Point graduate who brings about the elimination of the tariff, a corporate income tax, and reform of the trusts — not by conventional politics, but by waging an actual war, in which thousands are killed, against the plutocrats who control the US government. Colonel Dru carries about progressive reform during a 15-year military dictatorship, following which, like Cincinnatus or George Washington, he retires to private life.

In the fictional fantasies of House and Dru, frustration with conventional politics leads to fantasies of salvation by a traditional man on horseback, in the case of House, or, in the case of Nader, by men and women in private jets descending from on high to sort things out below.

6.

For two generations, public interest progressivism, with its vision of the crusading public citizen backed by one or more single-issue social movements, has replaced the old farmer-labor liberal vision of a balance of power in American society among economic interests. The result has been a backlash by both industries and electorates that supported, or acquiesced in, the preceding New Deal system of industrial and economic regulation.

The evils of interest group liberalism that Nader and early public interest progressives attacked were genuine enough. Nader deserves credit for exposing the shoddiness and recklessness of the midcentury US automobile industry. The problems addressed by pro-consumer, pro-environment, and pro-disability access legislation in the 1960s and 1970s were real. And “regulatory capture” can indeed degenerate into political corruption, as we have seen in recent years in the case of the Affordable Care Act, written partly by lobbyists for industry, and the revolving door between Wall Street and financial regulators.

But these maladies could have been treated without grafting onto the iron triangles of interest group liberalism a new system of iron triangles uniting public interest lawyers and foundations with their allies in the executive branch and Congress. The goals of greater environmental quality, consumer safety, and access for the disabled might have been pursued, beginning in the 1960s and 1970s, by methods more sensitive to the legitimate interests of industries and the rights of property owners than the chosen method of creating single-issue agencies with universal jurisdiction, often staffed by veterans of public interest nonprofits with a sense of missionary zeal.

The older regulatory era enshrined political compromise and government-industry collaboration, which public interest progressivism treats as appeasement and corruption. Turning a blind eye to blatant corruption is not necessary. What is necessary is defining politics not in terms of crusades that ignore costs, but in terms of approaches that balance different but equally legitimate social and economic interests and weigh trade-offs among competing goods.

“Surtout, pas trop de zèle” — “above all, not too much zeal.” Talleyrand’s words of warning to his contemporaries can serve as a guide for Americans in the 21st century who try to reconcile legitimate private interests with the public interest, without calling on the aid of philosopher kings, be they administrators, activists, or benevolent billionaires. Whether the center-Left can aspire to repair its relations with productive industry and much of working-class and middle-class America depends on whether it can renounce the dream of the crusade and rediscover the lost art of the deal.