This same pattern — of regulatory agencies serving the interests of the regulated — was repeated with the establishment of almost all subsequent regulatory agencies. For this reason, Kolko called the entire Progressive Era the "triumph of conservatism."
The practices Kolko described were elevated to a refined science by Woodrow Wilson’s War Industries Board (WIB) during World War I. Trade associations were allowed to organize along industry lines — controlling output, setting prices and effectively functioning as an industry-by-industry system of cartels. By the time Franklin Roosevelt established the National Recovery Administration (NRA) during the Depression years, planners could draw not only upon the experience of the Wilson-era WIB, but also on the far more extensive experience of Mussolini’s Italian economy — which was organized in the same way. In fact, Roosevelt’s economic vision for America was almost identical to the vision of Italian fascism.
As Jonah Goldberg has pointed out, there are more than a few transatlantic parallels. The symbol of the NRA was the Blue Eagle, which businesses were expected to hang on their doors to show compliance with NRA rules. Newspapers in both America and Germany compared the Blue Eagle to the swastika and the German Reich eagle. A quasi-official army of informants and goon squads helped monitor compliance. Nuremberg-style Blue Eagle rallies were held, including a gathering of 10,000 strong at Madison Square Garden. A New York City Blue Eagle parade was larger than the ticker-tape parade celebrating Charles Lindbergh’s crossing of the Atlantic.
Through the NRA, the federal government — backed by the full force of criminal law — intruded into virtually every economic transaction. An immigrant dry cleaner spent three months in jail for charging 35 cents to press a suit when the code required a minimum charge of 40 cents. Another case — one that went all the way to the Supreme Court — involved immigrant brothers who ran a small poultry business. Among the laws they were accused of violating was a requirement that buyers of chickens not select the chicken they were buying. Instead the buyer needed to reach into the coop and take the first chicken that came to hand. (Amity Shlaes explains the reason: buyers would be tempted to take the best chicken, leaving less desirable options for other buyers.)
In Schechter Poultry Corp. v. United States (the so-called "sick chicken" case), a unanimous Supreme Court declared the NRA unconstitutional. Roosevelt responded by trying to intimidate the justices and by asking Congress to expand the number of justices so that he could pack the court with judges more to his liking. Although he lost the battle, Roosevelt eventually won the war.
The Supreme Court today places very few restrictions on government authority to regulate the marketplace, no matter how indefensible the interventions.
The use of the word "progressive" by modern liberals is appropriate — to the degree that it reminds us of the historical and intellectual roots of much of liberal thinking. But there is another sense in which the word is very misleading. In general, there is nothing truly progressive about modern progressives. That is, nothing in their thinking is forward looking. Invariably, the social model they have in mind is in the distant past. Many explicitly admit they would like to resurrect Roosevelt’s New Deal.
In this sense, most people on the left who use the word "progressive" are actually reactionaries. Many are explicit about their desire to preserve the current allocation of jobs and the incomes that derive from those jobs. Although they tend to focus on opposing globalization and international trade, consistency requires them to oppose virtually all of the "creative destruction" that the economist Joseph Shumpeter said was inevitable in any dynamic, capitalistic economy.
John C. Goodman is President and CEO of the National Center for Policy Analysis, Senior Fellow at The Independent Institute, and author of the acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts." He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system.
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