Reviews:

Hell to Pay:  How the Suppression of Wages Is Destroying America
by Michael Lind, published by Penguin Random House, 2023

Rebuilding American Capitalism:  A Handbook for Conservative Policymakers
by Oren Cass, with contributions from several authors, published by American Compass on June 14, 2023

As the debate over economic policy—spurred by Donald Trump’s Agenda 47 postings—escalates, two new offerings have appeared.  The first is Michael Lind’s new book,  Hell to Pay: How the Suppression of Wages Is Destroying America, and the second is the 102 page Rebuilding American Capitalism:  A Handbook for Conservative Policymakers, published on the website of American Compass.  This latter will also be the subject of a forum “Rebuilding American Capitalism,” to be held at the Russell Senate Office Building in Washington, DC on June 21, 2023.

The publication of these two works comes at a moment when the battle over national economic policy is escalating dramatically.  In Washington, DC, the Heritage Foundation has created something called the “2025 Presidential Transition Project,” and on April 21^st that Project published a 900 page Mandate for Leadership: The Conservative Promise.  The Heritage Foundation has long been a bastion of neo-liberal financial, trade and economic policy.  On June 6^th it was announced that David Dewhirst, senior advisor to Florida Gov. Ron DeSantis, has joined Heritage’s 2025 Project, and it is clear that Heritage is attempting to seize control of economic policy debate within the Republican Party.

On the other hand, Michael Lind and Oren Cass are representative of a grouping of economists and policymakers who make up what might be called a “21^st century American System” economic faction.  What is common to all of them is the view that the last 30 years of unbridled “free market” and “free trade” economics—the very policies championed by Heritage—has led to the near obliteration of American economic power.  Despite differences in political backgrounds, all of these individuals have united in their denunciations of “neo-liberal” economics.  This includes universal condemnation of the libertarian views of Ludwig Von Mises and Friedrich Hayek, as well as strident denunciations of the Democratic Party’s abandonment of the policies of Franklin Roosevelt, as the Democrats embrace globalization, financial deregulation and Woke cultural issues.

Lind and Cass have explicitly called for a return to the 19^th century “American System” of economics, and they have been forthright in proclaiming as their champions Alexander Hamilton, Henry Clay, and Abraham Lincoln.  Unfortunately, their emphasis has tended toward the recipes of Clay, without a deeper appreciation of the ideas that motivated Hamilton and Lincoln.  This leads them to serious mistakes, which will be discussed at the end of this review.  Nevertheless, much of what is being promoted is clearly going in the right direction. 

Michael Lind’s Defense of Working Americans

I will say right off the bat that Hell to Pay:  How the Suppression of Wages Is Destroying America is a very useful and valuable book, certainly Lind’s best published work to date.  It covers a lot of ground, yet it is singular—almost laser-like—in focus.  Lind’s subject is the suppression of wages in the United States and the catastrophic effect this has had on American families and the culture of the nation.

Lind begins the book with an 1871 quotation from Abraham Lincoln’s friend Frederick Douglass.  I include a short portion of that quotation here:

“Cheap Labor is a phrase that has no cheering music for the masses. Those who demand it, and seek to acquire it, have but little sympathy with common humanity. It is the cry of the few against the many.”

What Lind proceeds to do, in devastating fashion, is to demonstrate that the increasing impoverishment of the American people has had nothing to do with “supply and demand,” nor have wage levels been a product of the productivity or skills of different portions of the workforce.  Rather, wages have been ruthlessly driven down for the majority of the population as a matter of policy.  As Lind puts it, “The strategy of American business, encouraged by neoliberal Democrats and libertarian conservative Republicans alike since the 1970s, has been to lower labor costs in the United States.”

Throughout 320 pages, Lind examines this subject from many different angles, including de-unionization, offshoring of industry, mass low-wage immigration, the emergence of the “working poor” dependent on government welfare, and the explosive growth of gig workers with lower wages and no benefits.

Lind meticulously documents the decades-long policy of “smashing unions in the private sector, which now have fewer members—a little more than 6 percent of the private sector workforce—than they did under Herbert Hoover,” and he devotes an entire chapter to “How Organized Labor in the Private Sector Was Destroyed.”  To his credit, he also draws out the human and cultural devastation that has resulted from the low wage policy, including the decline in fertility rates and what he calls “a plague of loneliness and lack of friendship, bitter conflicts over racial and gender identity, and a politics of culture wars and moral panics.”

It is impossible to delve deeply into the richness of the individual chapters, but one section which was most interesting to this reviewer was Chapter 6, “The Anti-Worker Welfare State,” wherein Lind discusses how we have gone from the New Deal’s “living-wage/low-welfare system” to the neoliberal “low-wage/high-welfare system,” where wages today are so low that millions of families are forced to rely on government assistance just to be able to put food on the table.  Lind shows that 70 percent of those who receive government assistance work full-time.  Their wages simply don’t pay enough to live on.

Lind explores this subject further in Chapter 12, “Keep Your Government Hands Off My Medicare—Social Insurance and the Work Ethic.”  Here, Lind investigates the “living-wage/social-insurance economy,” and he delineates the difference between “public assistance” and “social insurance.”  Lind explores this subject in depth, including a very interesting history of what he calls the “Bismarckian Model” of Social Insurance.

The clearest statement of Lind’s intention is given in Chapter 10 - “Trade, Immigration, and the Next American System.”  Lind says:

“Between the Civil War and the New Deal, Lincoln's Republican Party, the Hamiltonian heir to the prewar Whigs, presided over the government-sponsored industrialization of the United States, achieving most of the goals of the American System—national banking laws (rather than a single national bank, although the Federal Reserve came to serve as one in some ways), internal improvements (railroads paid for in many cases by federal land grants to railroad companies), and high protective tariffs that sheltered American infant industries from British and European import competition.

“Rather than breaking with the Hamiltonian developmental statism of the Lincoln Republicans, the Roosevelt Democrats of the mid-twentieth-century New Deal era built upon it. Under FDR and his successors, including the Republicans Eisenhower and Nixon, who ratified much of the New Deal, the federal government promoted and diffused the technologies of the second Industrial Revolution, based on the internal combustion engine and electricity, by means of programs including federal subsidies for highway construction and rural electrification.

“The United States should return to the tradition that the economist Robert D. Atkinson and I have described as ‘national developmentalism’.  What is needed is a new American System, in the tradition of Hamilton, Clay, Lincoln, FDR, and Eisenhower, and suited to the challenges and opportunities of the information age.”

Lest one gets the impression that Lind’s book is simply an argument in the realm of economic theory, in the concluding chapters he puts forward numerous specific proposals.  These are far too numerous to describe here, but many of them clearly have merit.  

American Compass’ Handbook

Mr. Lind’s book restricts itself to a single subject, but Oren Cass’s Rebuilding American Capitalism:  A Handbook for Conservative Policymakers is far more comprehensive.  Cass’s Handbook is composed of a long list of specific policy proposals, each accompanied by its own argument.  Like Lind, however, Cass is insistent that what is required today is a return to the American System of Economics.  In the section “The Meaning of Liberty,” he states:

“The economic platform of the new Republican Party [under Abraham Lincoln] pushed these principles to the national stage. The Morrill Land Grant College Act used public lands to build public universities with the express intent of encouraging agricultural research to improve farm productivity. The Pacific Railroads Act subsidized the construction of the first transcontinental railroad, and further acts subsidized the construction of America's mighty rail network. The protective tariff allowed American manufacturing to grow rapidly, bringing power to the nation and wealth to its citizens.

“Viewed against this backdrop, the ‘new’ economics is actually the traditional American understanding renewed for our age: what Henry Clay dubbed "the American System," updated to address the challenges of a globalized and financialized economy in which American families are struggling to form and support themselves. . . .

Cass, a conservative, is particularly blunt in his condemnation of the Bush administration economic policies, and he attacks, by name, the Heritage Foundation’s libertarian notion of “Economic Freedom.”   He goes on to say that the Republican Party must abandon “the traditional Republican playbook of cutting taxes and shrinking government,” and in the section titled “Building a Coalition That Builds,” he insists that the future of the Republican Party is as a working-class party.  At one point, Cass declares, “Families do not exist to support capitalism; capitalism exists to support families.”

Over the course of the Handbook, Cass and other contributing authors discuss a multitude of subjects, including Globalization, eliminating the Trade Deficit, ending access to Cheap Labor, breaking from the control of the World Trade Organization, rescinding China’s “permanent normal trade relations” (PNTR) status, and phasing out the temporary work visa programs (H-1B, H-2A and H-2B).

One of the most important sections of the Handbook is “Part III - Industry.”  In this section Cass and others propose a policy of rapid and large-scale industrial innovation, with a particular focus on R & D.  To accomplish this Cass calls for the creation of a “National Development Bank,” saying:

“The United States should establish a national development bank to finance long-term, capital-intensive projects vital to national economic and security priorities. Its capabilities should include direct debt issuance, credit and completion guarantees, equity lending, syndication authority, and technical assistance. Its policy mandate should focus on attracting private capital to reshore domestic manufacturing, strengthen the defense industrial base, modernize the commercial maritime industry, and secure critical infrastructure. An American development bank with $100 billion in callable capital may be able to mobilize $1.5 trillion in private funds within a few years.”

Cass also proposes direct government funding for key areas of scientific and technological promise, a policy very reminiscent of Alexander Hamilton’s proposal of “Bounties” for young inventors.

Surprisingly, there is no mention of how an aggressive manned space program leading to the near-term exploration and settlement of the Moon and Mars will impact such a technologically progressive agenda.  This is mystifying, given that it was the manned space program that was the primary science and technology driver for the entire U.S. economy from the late 1950s through the 20 years which followed.

In several areas Cass and his associates touch upon key axiomatic issues of trade, monetary policy, and finance.  It is here that serious problems arise.  For example, in a section called “Capital Flows Are the Core Concern,” Cass states that today’s system of global financialization, characterized by enormous trade and financial imbalances, has its origin with the ending of the Bretton Woods System in 1971, and he goes on to posit that the United States “will need to revisit robust capital controls akin to those that defined the Bretton Woods era.”  This falls far short of the urgent need to replace the entire system of “floating exchange rates” with a New Bretton Woods Agreement.

Similarly, in “Part 4 - Financialization,” Cass declares that we must begin to distinguish financial speculation from productive investment.  He puts forward a series of proposals, including a “financial transaction tax” on secondary-market sales of stocks, bonds, and derivatives, the banning of share [stock] buybacks, eliminating the tax deductibility of interest, and other measures.  What he fails to do is to call for shutting down this entire system of speculation.  Hedge funds, derivatives trading, financial options, and other forms of financial gambling don’t need to be regulated or taxed; they should be outlawed.

Going Halfway is not Enough

Many of the proposals put forward by Lind and Cass have merit.  But there is a big problem.  We are not dealing today simply with corrupt politicians, greedy investors, corporations which have lost all sense of their true purpose, or bone-headed economic theories.  We are dealing with a financial oligarchy that has seized control over our nation’s destiny.  The destruction that has been imposed on America has been deliberate.  To win this fight, you must understand where the real evil resides.

The primary enemy of the United States is the imperial Anglo-Dutch financial system.  It is this oligarchical system that Lincoln and Hamilton battled against.  Usury and financial speculation are the mathematical axioms of that system, and human beings are simply expendable. Since the destruction of the Bretton Woods monetary agreements in 1971, economic sovereignty has been surrendered by nations throughout the world, as the private Central Banks now exert near dictatorial control over all monetary and financial policy.  This global financial system of looting and speculation is now hopelessly bankrupt.  There are trillions upon trillions of dollars of debt.  No viable long term economic recovery is possible without putting this system through bankruptcy, writing off most of the speculative debt, and creating something new. 

Abraham Lincoln insisted that ALL human progress flows from “Discoveries and Inventions,” i.e., from the creative output of the individual human mind.  In his Report on Manufactures, Alexander Hamilton proposed the creation of an absolutely sovereign credit system, for the purpose of fostering human creativity.  Real economics lies in creativity, not accounting.  Today, a new economic system must flow from Hamilton’s and Lincoln’s intention. 

Lyndon LaRouche has defined, in detail, the method by which we can begin to restore National Economic Sovereignty to the United States and establish sovereign economic relations with other nations.  This begins with the abolition of the Federal Reserve and the establishment of a National Bank.  The non-negotiable issue is one of Sovereignty, wherein the Republic recognizes no financial power (be it the alleged “free market” or a system of private Central Banking) as superior to the economic sovereignty of the nation.

Ultimately, what Cass and Lind present is too limited, too timid.  They simply refuse to “go there”—to take on the systemic evil that has deliberately destroyed America and most of the rest of the world.  What is required, minimally, if we are to win this fight, is the courage demonstrated by Donald J. Trump.  One must be willing to risk all to win a war.