Car Czars and Other Blasts to the Past

It looks as if we are going to have to relive all of the mistakes of the 20th century one more time—let's hope it is one last time—before we relearn the big lesson of that century: the moral and material superiority of capitalism and the disastrous consequences of socialism in all its forms.

I thought we had learned that lesson well enough already, but it turns out I was wrong. Given a few decades to recover from the collapse of the Soviet Union—and given an opportunity to take advantage of the ideological confusion and muddled pragmatism of the pro-free-market right—the left is making a serious attempt to reconstitute itself.

And it is not just any variant of the left. It is the Old Left, the mid-20th-century left of public-works giantism, ham-fisted labor union protests, and command-and-control central planning.

By the end of the 20th century, the failure of all of these policies had caused the Old Left to splinter into two groups. The New Left hippies rejected industrial socialism in favor of anti-industrial socialism, adopting environmentalism and holding up a neo-primitive lifestyle as the ideal, while the New Democrat centrists sought a "Third Way" compromise between capitalism and socialism.

But now the discredited Old Left seems to be making a roaring comeback. We can see the signs all around us.

Consider Barack Obama's plan for up to $700 billion in New-Deal-style "public works" boondoggles. It is a good old-fashioned Keynesian "stimulus" based on the premise that you can revive the economy by spreading paper money around at random.

Yet it is now widely acknowledged that the original New Deal did not actually revive the Depression-era economy. Even under Keynes's failed theory, the amount of FDR's spending was not enough to stimulate the economy—and neither is the amount proposed by Obama.

But that hasn't fazed the revived Old Left. Alan Brinkley, a professor of history at Columbia University, says of the New Deal that "they didn't spend nearly enough" and laments that "They were constrained by all kinds of traditional ideas about balanced budgets." With Obama set to run a trillion-dollar deficit in his first year in office, it looks like those old-fashioned hang-ups have been overcome.

There is, however, one concession to the New Left in Obama's New New Deal. Obama tries to sell the New Left environmentalist crusade as if it were an Old Left, heavy-industry, make-work program.

When FDR poured enormous sums of government money into projects like rural electrification, he "created jobs" at the expense of the far greater prosperity that would have been achieved if the same money had been left in private hands, to be employed more productively. But at least the Tennessee Valley Authority actually produced electricity on an industrial scale, so the money poured into it was not entirely wasted.

The new "green energy" make-work program, by contrast, will pour billions of dollars into speculative technology that is extremely unlikely to produce power on the industrial scale required to support the American economy. It is a plan for a TVA that fails to generate electricity. But at least it will still fit the essential Old Left criterion. One expert names the main selling point of this proposal: it is "quite labor-intensive"—whether that labor is actually employed productively or not.

And that brings us to an attempt to revive the central institution of the Old Left: the labor union. Recent news has brought us live footage on our flat-screen plasma TVs of a phenomenon many of us have read about in history books but did not expect ever to see again in our lifetimes: an old-fashioned factory sit-in, with union members occupying a factory and seizing its equipment to protest the closing of a door and window manufacturer.

The Washington Post describes this as "a throwback to tactics hardly seen since the 1930s that labor experts and union leaders say may become more common if the economy continues its downturn."

Speaking of tactics not used since the 1930s, Illinois Governor Rod Blagojevich immediately seized on this case in an attempt to bolster his sagging reputation by engaging in a populist, Bonnie-and-Clyde-style raid on the Bank of America, threatening the bank with the loss of millions in state government business if it did not immediately grant a new loan to keep the unprofitable factory open. Blagojevich's blackmail is a blatant abuse of government power, an illegal shakedown for which the governor ought to go to prison. Too bad he's already going to go to prison for something else.

This bank shakedown captures the basic irrationality of the attempt to return to a command-and-control economy. In the middle of a financial crisis caused when banks were encouraged to make too many loans to unsound enterprises, Blagojevich wanted to force a bank to make a loan to an unsound enterprise. How is this supposed to produce any result except disaster? The assumption is that reality will simply bend to orders issued by government officials. It is precisely the kind of brazen arrogance Blagojevich displayed in every aspect of his administration.

Blagojevich may be an extreme and particularly unsavory case, but his attempts at playing economic dictator are tiny compared to the latest initiative out of Washington, the climax to date of the Old Left revival.

The real story of the bailout of the Detroit auto industry is not simply the waste of taxpayers' money on failing enterprises. Rather, the real news is Congress's apparent confidence that the way to revive Detroit is to impose central planning on the auto industry. This would be done by appointing a "car czar" empowered to "act as a kind of trustee with authority to bring together labor, management, creditors and parts suppliers to negotiate a restructuring plan. He or she also would be able to review any transaction or contract valued at more than $25 million."

The term "car czar" is not quite right. As a metaphorical description of the bailout, it evokes the right location—Russia—but the wrong era. "Car commissar" would be much more exact. Perhaps he will begin his work by issuing a five-year plan for the revival of the Big Three.

The Christian Science Monitor describes this as a comeback for "industrial policy." "The notion that government would pick economic winners and losers gained support among Democrats in the early 1980s, when it appeared that Japan, with its well-developed industrial policy, was America's No. 1 economic rival. The approach later lost its luster as the Japanese economy settled into a deep slump." And yet, here we are trying it again.

"Industrial policy" was always just an evasive euphemism used to describe the latest variation on the old theory of central planning. But central planning and nationalization of industries was a dead end when the old Soviet Russians tried it—and it is still a dead end now that Russia is trying it again.

The 20th century experimented with every possible variant of socialism. We had democratic socialism in Western Europe, totalitarian socialism in Eastern Europe, and fascist socialism in South America. We had atheistic socialism and we had "liberation theology." We had the "scientific socialism" of the Soviet central planners and the chaotic jungle socialism of the Khmer Rouge, who executed anyone with an education. We had "socialism with Chinese characteristics" and socialism with African characteristics and socialism with Hindu characteristics.

We tried it all, and every time it led to poverty and oppression.

Those results have been proven with scientific thoroughness. There is no excuse for trying it all again.