The Transformation of American from the Revolution to the Present, Part III
the welfare state ideology and interventionism in the 19th century set the stage for the 20th century welfare-warfare state
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Robert Wright’s review of my book captures the essence of my journey in America.
“There is a right way and a wrong way, always choose the right way.” Abraham Sabrin (1914-2001)
The transformation of America from a relatively limited government republic to our current welfare-warfare state (WWS) did not happen overnight. The roots of the WWS can be traced to the ideology of the welfare state based on the religious fervor that unfolded in the Northeast and spread to Middle America in the 1820s and beyond. Murray Rothbard’s comprehensive social history of the period informs us how theology’s impact on public policy was one of the dominant forces in American politics throughout the 19th century. In addition, the academic world had a major influence on promoting the welfare when American graduate students who studied in Europe in the late 19th century brought back the ideology of Bismarck’s Prussian social welfare model. These young economists began to proselytize the virtues of welfarism such as a government—taxpayer—funded retirement program.
In addition, the Spanish American War was America’s great leap forward in becoming a global empire. As historian Joseph Stromberg explains:
The Spanish-American War launched the United States on just such a path: that of a modern nonaristocratic empire founded on state power but oriented towards commercial gain for well-connected friends and associates. By expanding the horizons of U.S. foreign policy in the pursuit of export markets through formal empire (the Philippines) and informal empire (Latin America and, eventually, everywhere), the Spanish-American War enhanced the role of government in American life and the role of the presidency in American government. The classical liberal sociologist William Graham Sumner, a strong anti-imperialist, had this to say, not long after the war:
We were told that we needed Hawaii in order to secure California. What shall we now take in order to secure the Philippines? No wonder that some expansionists do not want to ‘scuttle out of China.’ We shall need to take China, Japan, and the East Indies, according to the doctrine, in order to ‘secure’ what we have. Of course this means that, on the doctrine, we must take the whole earth in order to be safe on any part of it, and the fallacy stands exposed. If, then, safety and prosperity do not lie in this direction, the place to look for them is in the other direction: in domestic development, peace, industry, free trade with everybody, low taxes, industrial power.”
Sumner’s intended reductio ad absurdum explains actual U.S. foreign policy in the 20th century far better than a stack of books and pamphlets from the Council on Foreign Relations.
Four years after the Spanish American War British geographer Halford Mackinder (1904) posited the Heartland Theory. The theory hypothesizes that “the geopolitical subject (actor) that dominated the Heartland would possess the necessary geopolitical and economic potential to ultimately control the World Island and the planet. This helps explain America’s foreign policy since the end of World War II—intervening in Korea, Vietnam, the Middle East and now Ukraine to hold China and Russia in check otherwise they will dominate the world. (The countries are in an arc connecting the countries where the US and its allies intervened in the Rimland to stop the Heartland nations from expanding.)
Critics of American foreign policy have pointed out that the foreign policy establishment is all about using the political means to acquire money and wealth and to exercise power overseas—in other words imperialism, the antithesis of libertarianism.
In 1893 a deep depression began and lasted until 1896, which cost President Cleveland the nomination for another term that year. In his place the Democrats nominated the young William Jennings Bryan, the “Great Orator” and populist who transformed his party into a vehicle to implement welfarism and eventually an interventionist foreign policy beginning with President Woodrow Wilson.
In 1907 another bank panic struck the country and America’s financial elites wasted no time in plotting to create a central bank modeled after one of the central banks that had been created during the past two hundred years in Europe. At the infamous secret meeting at the time (Jekyll Island) the blueprint for the Federal Reserve was hatched with representatives from Wall Street, the Congress, and academia. In short, the creation of the Federal Reserve was a “conspiracy” (two or more people meeting—many times in secret for nefarious reasons--to achieve their goals).
In Part IV, we shall see why 1913 was one of the most important years in the transformation of America. In February the 16th amendment was added to the Constitution creating a federal income tax. On December 13, 1913, President Wilson signed the Federal Reserve Act and America’s experiment with a decentralized central bank began in 1914 to provide financial and economic stability—a mission in which it has failed miserably. In other words, the “counterrevolution” of 1913 overturned the spirit of 1776. For the remainder of the 20thcentury and into the 21st century both sides of the aisle in Congress have continued to expand America’s WWS.
My latest piece on the economy was published in Fortune, https://fortune.com/2023/03/27/recession-2023-layoffs-tech-finance-unemployment-outlook-fed-rates-murray-sabrin/ This is an update of my 2021 forecast, https://fortune.com/2021/12/09/next-recession-heres-everything-bubble-markets-2021-2022-covid-murray-sabrin/
Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.