Archive for the ‘ruling class’ Tag

Spying and the Administrative State   1 comment

History can teach us a lot if we study it. For example, the current administration’s spying on American citizens is not new.

I honestly had planned to end my series on the administrative state with my last post, but this came up and it’s timely. The National Security Agency (NSA) has a long history … a Woodrow Wilson history. That’s right. The Great Administrator was responsible for creating the predecessor of the NSA, the Cipher Bureau in 1917 as part of the First World War effort. It was part of Military Intelligence – an executive branch. However, and this is the salient part, the Department of State partially funded it.

Remember what I said about the administrative state’s hallmark features? Whenever you see a department that doesn’t quite fit under one department, you’re looking at the administrative state.

At least as far back as Franklin Roosevelt, the United States presidency has used national security and law enforcement offices to spy on their domestic enemies. Following the close of World War II, President Truman’s administration became concerned that there might be Soviet sympathizers in the United States, and so he extended the purview of military intelligence organizations that had previously operated only in wartime and entangled them with law enforcement agencies like the FBI. At one point, in 1946, the Federal Bureau of Investigation actually joined the NSA for a brief time. Around the same time, the Joint Chiefs of Staff – previously only convened during wartime – because a permanent fixture. Before Truman’s administration was done, there were proposals for a centralized security agency under the control of the Central Intelligence Agency. The idea was that military and non-military intelligence would be comingled and given even weight. Truman’s plan isn’t completely a reality now, but agencies like Homeland Security, the NSA, the FBI and the CIA often blur the lines between protecting the homeland from outside enemies and investigating domestic concerns that can and do sometimes dig up dirt on American citizens for political rather than law-enforcement or national security reasons. In other words, whatever the official delineation might be, the reality is that there’s a multi-armed kracken of intelligence agencies operating more or less autonomously and remaining in place from one administration to the next.

The Kennedy administration FBI wire-tapped Martin Luther King Jr.’s phone, Lyndon Johnson spied on Barry Goldwater’s president campaign, and Nixon had Watergate as the tip of his iceberg. Iran-Contra reflected badly both on Ronald Reagan and the first President Bush, who was former CIA, let us remember. The Clintons were famous for the dirt they collected. Bush 43’s administration conceived of the current spying system, so they bear equal responsibility for it even if it was the Obama administration that started keeping data on all of us.

At the risk of sounding like I have a one-track mind, it’s not about politics. It’s about the administrative state. Operating largely independent of the elective branches of government, bureaucrats in organizations like the FBI, the NSA, and ATF continue with their primary goal of consolidating their own power regardless of the goals of the politicians in power at the moment or the people who elected them to represent us. If these organizations didn’t exist or at least were called to account by our elected representatives, when a president wanted to dig dirt on political enemies, he’d quickly find himself being told – uh, we don’t do that and if we did, we’d all lose our jobs after the next Congressional review. And 200 million Americans would cheer robustly, I’m sure.

Washington has tried to deal with this penchant for constitutional violations in the past – most notably after the Watergate mess – but – from a non-partisan perspective – these efforts have been hindered by their partisan nature. It’s usually the party not in the White House that objects to the misuse of government authority and that lasts until their party gets into the White House and then it stops until their guy does something that gets the other party to investigate, which lasts until ….

It’s no wonder the American people are cynical. I can’t help thinking that the reason we’re confused is that the ones calling the steps aren’t elected officials at all, but career bureaucrats who operate just outside of our field of vision.

The current anti-corruption effort in Congress might be a little different because it is championed by the “civil liberties caucus” of Republican libertarians such as Sen. Rand Paul and Rep. Justin Amash and ACLU-type Democrats like Sen. Ron Wyden and Rep. Jared Polis, raising hopes for a transpartisan challenge to the national security state and its defenders in both major parties. By scrambling the usual partisan lines, the current effort may be more than just a red/blue food fight. Whether that small alliance can overcome the entrenched DC apparatus allied with a president who acts as if he has a voter mandate is still questionable. The reforms that were put in place after the Watergate mess are proof that reform is a tough show that has historically only had short-term effects.

“[Public scandals are] ritual moments in which the sacrifice of the reputation of one or more individuals allows many more to continue their scandalous ways, if perhaps with minimal safeguards and protocols that are meant to ensure that the terrible excess of the past will not occur again”. Nicholas Dirks (anthropologist)

The greatest challenge to transforming the system is to assure that we accomplish more than a political blood sacrifice. The Patriot Act was passed with a general consensus about what it meant or what it allowed. Twelve years later, we learn that the law Congress passed has been interpreted by the executive branch into something very different from that intention.

So what do we the people plan to do about it?

In the Pipeline   Leave a comment

Hundreds of costly new regulations are also in the planning stages, many of which derive from the Dodd–Frank statute, Obamacare, and the EPA’s global warming crusade.

The most recent Unified Agenda—a semi-annual compendium of planned regulatory actions by agencies—lists 2,305 rules (proposed and final) in the pipeline. Of these, 131 are classified as “economically significant.” This is two less than the number pending in the previous agenda (fall 2011), and still high by historical standards. This year’s 131 “economically significant” rules represent an increase of 133% from the 56 identified in 2001.

An unusually large number of rules are pending at the Office of Information and Regulatory Affairs (OIRA), the Administration’s regulatory review office. According to the latest OIRA data, 81 of the 150 regulations awaiting review have been pending for more than 90 days, exceeding the maximum time allotted under Executive Order 12866. Another seven were pending for more than 60 days (but fewer than 90 days).

Action on some of the Administration’s most ambitious regulations was postponed last year, including more stringent requirements for controlling ozone emissions. As proposed by the EPA, the rule would cost $90 billion or more annually and, potentially, millions of jobs. However, the President reportedly instructed then-EPA Administrator Lisa Jackson to hold off on the new standards until 2013, which means these items are due to come up any day now.

Also on hold were various regulations to control power plant emissions of so-called greenhouse gases that would dramatically increase energy costs, as well as the designation of coal ash as a “hazardous substance”—estimated to cost $79 billion to $110 billion and thousands of jobs.

If the delays in rulemaking were the result of more thorough analyses or consideration of regulatory alternatives, that would be good news for the economy and consumers. But there is no indication that the Administration has embraced a newfound skepticism toward red tape. In fact, the regulations are expected to emerge again this year, evidently regarded by the Administration as more advantageous timing — as in post-election.

Now that Obama has a second term, expect more and bigger regulation and far more red-tape.

Regulations Just for 2012   Leave a comment

Financial regulation dominated rulemaking in 2012, a direct result of the Dodd–Frank financial regulation act. In total, financial services regulators were responsible for 13 of the 25 new major rules issued during President Obama’s fourth year; led by the Commodity Futures Trading Commission (CFTC), with nine; followed by the Securities and Exchange Commission (SEC), with six (two rules were issued jointly by the two agencies).

The newly created Consumer Financial Protection Bureau (CFPB) chipped in its first major rule, imposing restrictions on money transferred electronically from U.S. residents to relatives and friends abroad. Although outside the scope of this report, the CFPB also issued four more major regulations in January and February 2013. Seven other proposed regulations by the CFPB are pending.

The most costly regulation were issued by the Environmental Protection Agency (EPA). Topping the list were new automotive fuel-economy standards, issued jointly by the EPA and the Department of Transportation, which the EPA calculated will cost $10.8 billion annually. The bulk of this cost will fall on drivers, who will pay an estimated $1,800 more for a new vehicle.

Coming in a close second was the EPA’s so-called Utility MACT regulation at more than $10 billion annually. This 210-page regulation requires utilities and other electricity generators that use fossil fuels to install the “maximum achievable control technology” (MACT) to limit emissions. So stringent are the standards that potentially dozens of coal-fired power plants will close, thereby undermining the reliability of the power grid and substantially raising the costs of electricity for consumers. The EPA is currently reconsidering the portion of this rule pertaining to new power plants, and has stayed its implementation of the rule for such facilities.

Obamacare is also imposing enormous costs on the private sector. For example, businesses with more than 50 employees must either provide health care or pay a fine to offset an insurance tax credit for workers who purchase their own coverage. Some insurers will be effectively forced to subsidize others at an aggregate cost of $18 billion annually by 2016. Although the law does not take full effect until 2014, there is already ample evidence of its grave economic consequences. According to the Federal Reserve Board: “Employers in several districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.” Because many of the new rules are structured as administrative requirements for states or the federal government, rather than prescriptive regulation, they are not fully reflected in our regulatory totals. But that does not mean that their impact is insignificant.

Excessive regulation, of course, cannot be blamed on this Administration alone, although the accelerated rate of regulatory expansion in President Obama’s first term appears unequaled. Congress ultimately authorizes all rulemaking, either through specific requirements, or through broad authorizations, leaving agencies great discretion to impose requirements. Moreover, a majority of rules adopted in the fourth year were promulgated by so-called independent agencies not subject to direct White House control (although they are managed by presidential appointees). Regardless of responsibility, however, the result is the same: more burdens for Americans and the U.S. economy.

We Don’t Know the Costs   Leave a comment

A necessary part of understanding the burden regulation puts on American society is knowing what it costs the government to implement the regulation and what it costs American society to comply with the regulation.

The actual cost of new regulations is probably considerably higher than the totals reported by the regulatory agencies, a portion that I detailed yesterday. I only listed “major” regulations because the Governmental Budget Office typically only performs cost-benefit analysis on “major” rules, although the costs non-major rules could be substantial. As it is, regulatory agencies failed to provide quantified costs for 10 of the 25 MAJOR regulations issued in FT 2012, so why would we trust any figures released for non-major regulations?

In fact, the quality of cost analyses by regulatory agencies is often substandard. A prime example is Dodd-Frank. Faulty cost-benefit analyses have caused the courts to invalidate many of the regulations issued by the Securities and Exchange Commission. For instance, the proxy access rule, adopted by the SEC in August 2010, would require publicly traded corporations and investment first to disseminate information about board nominations made by shareholders. Critics argue that this will make it difficult to retain executive talent while inviting special-interest groups to harass firms. The SEC claims the benefits justify the costs.

The U.S. Court of Appeals for the District of Columbia Circuit castigated the SEC’s cost analysis as “inconsistently and opportunistically framed” in a manner that constituted “statutory neglect,” adding that “[b]y ducking serious evaluation of the costs that could be imposed upon companies from use of the rule by shareholders representing special interests, particularly union and government pension funds, we think the Commission acted arbitrarily.”

Legal briefs are currently being submitted in another SEC case involving the “conflict minerals” rule, which requires firms to guarantee that its sources for four specific minerals are not fueling conflict in central Africa. The three business groups that filed suit allege that the commission failed to conduct a proper cost-benefit analysis and underestimated the costs of the regulation.

These are not isolated cases. One of the CFTC’s commissioners, Scott O’Malia, excoriated the CFTC last year for its shoddy analyses. In stating his opposition to a major Dodd–Frank regulation on swaps, O’Malia wrote: “I have reached a tipping point and can no longer tolerate the application of such weak standards to analyzing the costs and benefits of our rulemakings.”

Problems are not limited to financial regulators. A recent study by a business group of the EPA’s cost analyses for six major regulations identified systemic problems in agency methods; the EPA changed amortization scheduled for capital expenditures from 30 to 50 50 years, distorting the financial burden firms will experience to meet near-term compliance deadlines.

The EPA’s habit for ignoring the impacts on the supply chain when regulations create a surge in demand for emissions-control technologies and equipment, has “inevitably increased input prices and the compliance costs well above the EPA’s estimates, which are based on current prices in the pollution abatement industry.” The EPA’s penchant for regulation at any cost was laid bare in its analysis of the so-called Utility MACT rule:

“We may determine it is necessary to regulate…even if we are uncertain whether [the rule] will address the identified hazards.… We also may find it necessary to regulate…even if we conclude…that the imposition of the other requirements of the [Clean Air Act] will significantly reduce the identified hazard.”

In other words, regardless of the costs and in the absence of proof that it has improved air quality, the EPA will impose regulation as it sees fit.

Yeah, there’s no reason for us to be concerned! Pay no attention to the tentacle that just rubbed the bow of the ship. That’s nothing to be concerned about!

Measuring the Red Tape   Leave a comment

Unlike federal taxation and spending, there is no official accounting of total regulatory costs. Estimates range from hundreds of billions of dollars to nearly $2 trillion each year. However, the number and cost of new regulations can be tracked, and both are growing substantially.

The most comprehensive source of data on new regulations is the Federal Rules Database maintained by the Government Accountability Office (GAO). According to the GAO data, federal regulators issued 2,605 new rules during Obama’s fourth year in office. Of these, 69 were classified as “major,” generally defined as having an expected economic impact of at least $100 million per year. Forty-two of these major rules were administrative or budgetary in nature, such as Medicare payment rates or hunting limits on migratory birds; twenty-five were “prescriptive” regulations that imposed burdens on private-sector activity. Only two major rules decreased regulation. During the President’s first term there were 131 prescriptive rules. This compares to 52 such rules imposed during George W. Bush’s first term. And, no, I’m not saying this made Bush a good president in terms of regulation. I’m saying he produced less regulation than Obama.

Based on agencies’ own analyses, more than $23.5 billion in new annual costs were added last year, which brought Obama’s first-term total to $69.8 billion. In addition, there were $4.6 billion in one-time implementation costs in 2012, raising the first-term total for one-time implementation costs to nearly $12 billion.

Only two major rules adopted in 2012 reduced regulatory burdens, providing just $81 million in savings. For the entire first term, there were only 12 such rules, worth $857 million in savings—about 1.2 percent of the new costs. Four major regulations, representing $982 million in costs, also were invalidated by the courts. Subtracting these amounts from a gross total of $71.6 billion in new costs leaves the total increase of $69.8 billion. This compares to $15.7 billion during the first four years of the Bush 43 administration. For those of you who are math challenged, that’s a better than 4:1 ratio.

According to research by Washington University in St. Louis and George Washington University’s Regulatory Studies Center, federal spending on regulatory agencies increased more than 10% in President Obama’s first term. Staff levels grew by 21,654 full-time employees in the same period, which is an 8% increase.

No wonder the federal budget overflowth! And, the question remains – did any of these new regulations make us healthier, wealthier or happier?

Personally, my income did not go up, but my costs did, which means I’m eating lower quality food in smaller quantities and keeping my house a few degrees cooler. So, poorer and less healthy – CHECK.

Oh, wait a minute! I think I’m moving in the wrong direction. And, no, I’m not happy about it.

Life, liberty and the Pursuit of Happiness? Where did that go?

I didn’t see a tentacle! There are no tentacles! Any impression that you have lost rights or freedoms is purely a product of a propaganda-fueled imagination. The administrative state is our friend! Red tape is the price we pay for a well-ordered society.

There is absolutely NOTHING to WORRY about!

Uh, except THAT!


Regulatory Hang Man   Leave a comment

I’ve been blogging on the administrative state, sometimes called the “regulatory state”, the largely-invisible, increasingly powerful “shadow” government of unelected bureaucrats that control so much of American life. Like Jack Sparrow, we feel the presence of the Kraken, lurking just beneath the surface, ready to drag us down to our destruction, but we never quite put our finger on why we feel so off-kilter and most none of us know what to do about it. We sense that something has gone seriously awry with “life, liberty and the pursuit of happiness”, but we feel powerless to get the ship of state back on course.

Hangman - hangman photoCongress and the White House are currently focused on the federal budget. They should be, given the perennial deficits and the unsustainable levels of U.S. debt. However, federal spending accounts for only a portion of the burden government places on the American public. Regulatory costs, representing the largest cost of government, hinder job creation and innovation while undermining American liberty.

Woodrow Wilson, the American “father of administration”, thought that we would eventually come to see regulation as a form of liberty, because it would free the people from being involved in governmental “housekeeping”. Do we feel free in the 21st century? Does liberty abound in our modern era?

We may be free of responsibility, but we are certainly not at liberty to enjoy it.

President Obama and the sitting Congress of both parties talk a good game about reducing regulation, but the facts don’t match their rhetoric. President Obama’s first term saw a nearly $70 billion increase in regulatory burden as federal agencies imposed 131 new major regulations. In 2012, the Obama administration issued a total of $23.5 billion in new regulatory costs from 25 major rulemakings. Only two rules in 2012 decreased burdens. Sadly, a tsunami of regulation is following with another 131 major rules on the Administration’s agenda. These include dozens of rules for implementing Dodd-Frank and Obamacare. The magnitude of regulations is unmatched by any administration in the nation’s history.

The obvious solution is Congress exercising its oversight authority on the Executive branch, passing the REINS Act or something similar, which would require congressional approval of each new major regulation before it is implemented. Sunset deadlines should be set for all major regulations as well as so-called “independent” agencies, such as the Securities and Exchange Commission. If these regulations and independent agencies are vital to American society, they can go before Congress and make their case for an up or down vote. It’s a big job, but it is essential for the cause of liberty in our nation.

You’re not convinced? Don’t we need regulation to keep us safe, healthy, wealthy, etc.? I agree, we need some regulation, but the mountainous labyrinth of rules we have now is beyond the pale and may be damaging to safety, health, wealth, etc.

I’m planning to measure some of this red tape, so we understand just how bad it is and provide an understanding of why you need to write your congressional delegation.

Releasing the Kraken Part 2   6 comments

The question is: how did we get from a modest 1% income tax on fairly wealthy people to the current system?

It’s easy to say — well, it’s been a century, but actually it took a lot less time than that. Within the space of seven years, the income tax had grown beyond its modest beginnings to become something close to what it is now.

In 1913, newly elected President Woodrow Wilson included a call for tariff reform in his inaugural address, then reiterated the need for revenue reform in that joint session of Congress, with a particular emphasis on lower import duties. House Ways and Means Chairman Oscar W. Underwood (D-Va.) introduced a bill to lower tariff rates from an average of 40% to roughly 29%. To compensate for lost revenue, the bill also included an income tax. The House passed the legislation in May and the Senate four months later. When Wilson signed the bill in October, it included an income tax of 1% on individual income over $3,000 ($4,000 for married couples). It also featured a progressive surtax ranging from 1 to 6%, depending on income.

The Bureau of Internal Revenue established a Personal Income Tax Division to collect the new tax, including a Correspondence Unit of 30 employees dedicated solely to answering questions about the new levy. The four-page-long Form 1040 was considered by many congressmen to be too complicated.

That sounds sort of familiar, doesn’t it? Here we see a professional bureaucracy created to deal with a crisis it created. It’s still going on 100 years later. The solution might be to make the form less complicated, but that wouldn’t employ thousands of IRS agents, so ….

Of course, the administrative state never lets a crisis – even one not of its manufacturing – go to waste. World War I brought a sharp decline in international trade, further affecting tariff revenue, causing President Wilson to call for emergency revenue legislation, which featured a whole new slate of excise taxes. These consumption taxes were lucrative, but proved unable to close the fiscal gap, so Wilson joined Democrats in Congress to support a steeper, more productive income tax. 

The Revenue Act of 1916 set out to raise $205 million in new revenue, more than half coming from the income tax. The “normal” income tax rate rose from 1 to 2% on net incomes over $3, 000 ($4,000 for married couples). Surtax rates also rose from 6 to a maximum of 13% on incomes over $2 million. To avoid widespread protests, the changes made the personal income tax steeper, but left its base quite narrow as the levy still applied only to the nation’s richest taxpayers. Corporation income tax also increased from 1 to 2% and a new federal estate tax was introduced with an exemption of $50,000 and rates ranging from 1 to 10%. The law also included a novel munitions tax designed to appease opponents of American involvement in the war; levied on manufacturers of military equipment, it was advertised to prevent war profiteering. Finally, the law featured a host of excise taxes, as well as a capital stock tax on corporations. Because of widespread voter objections, the 1916 revenue law repealed the “collection at source” provisions of the 1913 tax. Instead, the law now required simply that income sources provide information to the government on the amount of income paid out to recipients.

In March 1917, Congress introduced a corporate excess profits tax, a major innovation to the federal tax system. This levy taxed any profits above a “reasonable” rate of return, which was originally set at 8% profit; if owners made more than that, then they paid taxes according to a steep rate schedule.

Supporters defended the new tax on equity grounds, but it also turned out to be the biggest money maker among new wartime taxes. It attracted bitter opposition from business groups, who considered the tax a threat to managerial prerogatives. They were certainly justified in their suspicion, since both Wilson and his allies in Congress considered the levy a legitimate means of business regulation that many hoped to retain it after the war ended.

The excess profits tax applied to individuals as well as businesses. Individuals were taxed at 8% on incomes over $6,000. This innovation applied mostly to professionals and other highly educated workers, prompting critics to call it a “brain tax”.

Additionally, regular income taxes now applied to incomes over $1000 ($2000 for married couples), imposing a 2% rate, with graduated surtaxes as high as 63% of income.

Federal revenue grew dramatically. From 1900 to 1915, the average annual revenue collection was $281 million. From 1915 to 1926, the average collection was $2.78 BILLION.  

That enabled the administrative state, naturally. Every new type of tax required new administrative machinery to interpret and administer the law and the resultant rates. The Bureau of Internal Revenue had 524 headquarters staff and 4,529 field staff in 1917. By 1920, it employed about 12,000 staff nationwide.

Rates were raised in 1919. Corporations were allowed to exempt the first $2000, but rates were raised to 12% on net taxable income and large income individual payers were forking over 77% of their income. Still, it remained a narrow levy. In 1920, only 5.5 million returns showed any tax due.

In May 1919, lame-duck President Wilson made his famous “politics is adjourned” speech, urging higher taxes on income, estates and excess profits and the Bureau of Internal Revenue began a massive recruitment campaign to reduce its personnel shortage.

There existed a broad consensus that the steep wartime tax rates were unsustainable, driven home by a mid-term election that ushered the Democrats out and the Republicans in. Even Wilson’s own Treasury secretaries, Carter Glass and David Houston, suggested cuts. Wilson himself even suggested reducing taxes in his 1919 State of the Union Address. Still, many Democrats and progressive Republicans were unwilling to roll back wartime tax reforms. They liked the newly progressive cast of federal revenue policy, especially the excess profits tax, which they saw as a blow for egalitarian ideals. They argued that it would shift the fiscal burden to the individuals and corporations whose wealth posed a threat to American society.

Voters disagreed, however.

Wilson as President   Leave a comment

It’s hard now to see that Wilson’s contemporaries in the academic world considered him a conservative when they persuaded him to run for Governor of New York. That’s right, in 1910, Wilson was a “conservative”. During the campaign, he asserted his independence from the conservatives and the machine that had nominated him, endorsing a progressive platform, which he pursued as governor. When nominated for President in 1912, he campaigned on a platform called the New Freedom, which stressed individualism and states’ rights. He won a three-way election with only 42% of the popular vote, but the overwhelming electoral vote.

Woodrow Wilson, a Democrat, was inaugurated as the 28th President of the United States on March 4, 1913, proclaiming it his duty “to cleanse, to reconsider, to restore, to correct the evil without impairing the good, to purify and humanize every process of our common life without weakening or sentimentalizing it.”

He then set about to maneuver major legislation through Congress. First, the Underwood Act enabled a lower tariff and a graduated Federal income tax, which would later survive a Supreme Court challenge. The passage of the Federal Reserve Act provided for a more elastic money supply. The Clayton Antitrust legislation in 1914 established the Federal Trade Commission to prohibit unfair business practices and legalized many union activities. That same year, John D. Rockefeller – one of the richest men in America – donated $100 million to establish the Rockefeller Foundation, which remains the largest philanthropic act in American history.  Henry Ford established the first automobile assembly line to produce the Model T, paying his workers an unprecedented sum of $5 a day as he believed higher wages could lead to greater worker productivity and loyalty.

Almost immediately, the “anti-war” Wilson became suspicious of Mexico and began issuing edicts to the Mexican government. By 1914, we were on the verge of war because a US General had demanded Mexican forces salute an American Flag as an apology for arresting drunken American sailors in Vera Cruz.

In Summer 1914, a Serbian nationalist assassinated Archduke Francis Ferdinand of Austria in Sarajevo, Serbia, resulting in most of Europe being drawn into what should have been a minor incident. The United States officially proclaimed neutrality. While Wilson gave lip service to staying out of the war, he pursued a very active role in various negotiations and the American merchant marine was actively involved in transporting American arms to Britain and France. Secretary of State Williams Jennings Bryant would resign in 1915, claiming Wilson was deliberately antagonizing Germany.

That same year, the Smith-Lever Act provided federal funds for agricultural instruction for farmers and state college students and the Panama Canal was completed.

The mid-term elections saw large Democratic gains in the Senate and a retained majority in the House.

Congress, reasoning the country was admitting too many poorly-qualified immigrants into the country, required literacy tests for all immigrants, but Wilson vetoed the bill. In 1915, he authorized the invasion of Haiti “to teach them to elect good men.” The United States occupied Haiti until 1934. The next year, Wilson would order the invasion of the Dominican Republic, which we would occupy until 1924.

In 1916, Wilson introduced legislation prohibiting child labor and limiting railroad workers to an 8-hour day and the Federal Farm Labor Act, which established a banking system for farmers to improve their holdings. While campaigning assiduously as the man who “kept us out of war”, Wilson began to beef up the military in preparation for war and blamed bombings on American soil on either the labor movement, socialists or German saboteurs. Margaret Sanger, Fania Mindell, and Ethel Burne opened the nation’s first birth control clinic in Brooklyn, New York.

Less than a month after his second  inauguration, Wilson declared war on Germany. Quickly, he established the Espionage Act that severely limited freedom of expression, chilling criticism of the military or the government by imposing a $10,000 fine or up to 20 years in prison. Federal agents raided the offices of the Industrial Workers of the World (IWW) in 24 cities, seizing literature and arresting 10, including William “Big Bill” Haywood. Congress also passed the Sedition Act which coupled with the Espionage Act virtually suspended first amendment. Prominent socialist and presidential candidate Eugene V. Debs was sentenced to a 10-year jail term for violating the Espionage Act, the result of an antiwar speech.

Congress submitted the 18th Amendment to the US Constitution to the states for ratification, which forbade the sale, manufacture, or transport of alcohol except under special circumstances and food administrator, Herbert Hoover called for one meatless day, two wheatless days, and two porkless days each week to promote food conservation. Wilson issued an executive order created the War Industries Board, an agency designed to coordinate wartime production and transportation. By August, the Labor Department announced that the cost of living jumped 17% in New York City from July 1917 to July 1918.

In a January 1918 address to Congress, President Wilson listed his “14 Points” for a just and lasting peace. His objectives included the self-determination of nations, free trade, disarmament, a pact to end secret treaties, and a league of nations to realize collective security. This speech became the basis for Wilson’s peace proposals at the end of the war.

The world-wide influenza epidemic reaches its height in the United States in October. The extremely virulent strain of the disease first developed in East Coast cities and spread rapidly across the country and the Atlantic as a result of war-related transportation. The epidemic eventually claimed more than 600,000 lives in the United States and perhaps 20 million globally.

In November, Republicans won majorities in both houses of Congress, securing a two-seat majority in the Senate and a comfortable cushion of fifty votes in the House. Kaiser Wilhelm II abdicated the throne of the German Empire after revolution broke out in Germany. Allied and German military leaders implemented an armistice as the new German government issued an appeal to President Wilson to negotiate peace along the lines he enumerated in his Fourteen Points speech. Wilson announced plans to attend the Paris Peace Conference and signed the Wartime Prohibition Act, banning the manufacture of alcohol for domestic sale effective from June 30, 1919, until demobilization.

The Paris Peace Conference opened in January 1919, two weeks after President Wilson received glowing welcomes in Rome and Paris. The State Department announced the ratification of the 18th Amendment to the Constitution as of January 16, 1919, when Nebraska’s approval achieved the amendment’s required three-fourths majority. A nation-wide ban on the sale, distribution, or production of alcoholic beverages would go into effect on January 16, 1920. President Wilson presented his draft for the League of Nations covenant to the Paris Peace Conference in February.

In March, the Supreme Court upheld the constitutionality of the Espionage Act in Schenck v. United States, establishing that civil liberties can be restricted by the government if there is a “clear and present danger” to law and order.

Congress adopted the 19th Amendment to the U.S. Constitution, giving women the franchise in May. Wilson had previously campaigned that women’s suffrage was vital to the war effort. The joint resolution read: “The right of citizens of the U.S. to vote shall not be denied or abridged by the United States or by any State on account of sex.”

In July, after failing to secure a peace without rancorous provisions from his fellow Allied leaders, President Wilson submitted the Treaty of Versailles and League of Nations to the Senate for ratification. Senatorial deliberation on the treaty would last longer than the Paris Conference itself.

In September, against the advice of his doctors and advisors, President Wilson opened his nation-wide speaking tour to promote the Treaty of Versailles and the League of Nations in Columbus, Ohio. Police in Boston walked out on strike.

In October, President Wilson suffered a serious stroke in Wichita, Kansas, in the middle of his national speaking tour and returned to Washington, DC. It is unclear how much of the rest of his term of office was Wilson acting as President and how much was his wife acting on his behalf, with or without his knowledge. Later that month, Congress overrode President Wilson’s veto of the Volstead Act to provide enforcement power to the 18th Amendment.

After a lengthy national debate, the Treaty of Versailles failed to achieve ratification in the Senate by a vote of 53 to 38.

In December, foreign-born radicals arrested by the Department of Justice in the “Red Scare” raids of 1919 were deported to the U.S.S.R. In January 1920, Attorney General A. Mitchell Palmer staged the most extensive series of raids of the entire “Red Scare,” arresting nearly 2,700 people in 33 cities. The Senate defeated a resubmitted version of the Treaty of Versailles with reservations added by Foreign Relations Committee chairman Henry Cabot Lodge.

In April, US forces ceased their operations in support of counter-revolutionary forces in Siberia and were withdrawn.  In May, Congress passed a joint resolution declaring an end to the war with Germany. President Wilson vetoed the resolution. In June, Republicans gathered in Chicago to select candidates for the presidential and vice presidential elections. After party leaders broke the convention deadlock in what one attendee called a behind-the-scenes deal “in a smoke-filled room,” Ohio Senator Warren G. Harding was nominated for the presidency. Massachusetts governor Calvin Coolidge received the vice-presidential nomination.  Ohio governor James M. Cox and Franklin Delano Roosevelt of New York received the nominations for President and vice president at the Democratic National Convention in San Francisco.

In August, the 19th Amendment, granting women the right to vote, officially became law. In a speech given from his front porch in Marion, Ohio, Harding denounced the League of Nations.

In November, Warren G. Harding was elected the 29th President of the United States with an overwhelming 404 electoral votes (60.3% of the popular vote to Democratic rival James Cox’s 127 electoral votes (only 34.1% of the popular vote). Eugene V. Debs garnered nearly one million popular votes for the Socialist Party despite his imprisonment for violating the Espionage Act the previous year. The election split the North and South, with Cox winning all states (except for Tennessee) below the Mason-Dixon line and Harding winning the rest.

Later that month, Woodrow Wilson won the Nobel Peace Prize for his efforts to secure a lasting peace after the Great War.

In January 1921, the US Census Bureau reported that for the first time in American history, 51% of Americans lived in cities and towns of more than 2500 people.

Rebuttal of Wilson on Administration Part 3   Leave a comment

Wilson concluded his study, but rest assured, I am not going to conclude mine, because it is important to take a look at where we are today in light of what Wilson was trying to accomplish.

For now, my final snark.

Government is so near us, so much a thing of our daily familiar handling, that we can with difficulty see the need of any philosophical study of it, or the exact points of such study, should be undertaken. We have been on our feet too long to study now the art of walking. We are a practical people, made so apt, so adept in self-government by centuries of experimental drill that we are scarcely any longer capable of perceiving the awkwardness of the particular system we may be using, just because it is so easy for us to use any system.

Self-government is easy for us, so we must make it more difficult. I suspect Wilson is looking at the American system from a European viewpoint. How crude, how grubby the American system appears to be.

So far as administrative functions are concerned, all governments have a strong structural likeness; more than that, if they are to be uniformly useful and efficient, they must have a strong structural likeness. A free man has the same bodily organs, the same executive parts, as the slave, however different may be his motives, his services, his energies.

Pay no attention to the loss of liberty, free man. That rope around your neck is merely meant to guide you on the safe path.

It is abundantly safe nowadays to insist upon this actual likeness of all governments, because these are days when abuses of power are easily exposed and arrested, in countries like our own, by a bold, alert, inquisitive, detective public thought and a sturdy popular self-dependence such as never existed before.

So, looking back over the last 140 years, has it really been easy for us to uncover abuses of power? Has self-dependence been encouraged by administration or damaged by it.

What do you think?

Woodrow Wilson on Administration Part 3   Leave a comment

Wilson’s concluding remarks on his administrative utopia are every bit as indicative as the rest of his essay. Please do read his original words. It is my belief that we should read what authors actually wrote in additional to what commentators say about what they wrote because a lot of the confusion about the Founding Fathers would be done away with if we actually read their writings rather than what Woodrow Wilson and his fellow “educators” wanted us to believe about their writings. We should give Wilson the same courtesy. Lela


Having thus viewed in some sort the subject-matter and the objects of this study of administration, what are we to conclude as to the methods best suited to it-the points of view most advantageous for it?

Government is so near us, so much a thing of our daily familiar handling, that we can with difficulty see the need of any philosophical study of it, or the exact points of such study, should be undertaken. We have been on our feet too long to study now the art of walking. We are a practical people, made so apt, so adept in self-government by centuries of experimental drill that we are scarcely any longer capable of perceiving the awkwardness of the particular system we may be using, just because it is so easy for us to use any system. We do not study the art of governing: we govern. But mere unschooled genius for affairs will not save us from sad blunders in administration. Though democrats by long inheritance and repeated choice, we are still rather crude democrats. Old as democracy is, its organization on a basis of modern ideas and conditions is still an unaccomplished work. The democratic state has yet to be equipped for carrying those enormous burdens of administration which the needs of this industrial and trading age are so fast accumulating. Without comparative studies in government we cannot rid ourselves of the misconception that administration stands upon an essentially different basis in a democratic state from that on which it stands in a non-democratic state.

After such study we could grant democracy the sufficient honor of ultimately determining by debate all essential questions affecting the public weal, of basing all structures of policy upon the major will; but we would have found but one rule of good administration for all governments alike. So far as administrative functions are concerned, all governments have a strong structural likeness; more than that, if they are to be uniformly useful and efficient, they must have a strong structural likeness. A free man has the same bodily organs, the same executive parts, as the slave, however different may be his motives, his services, his energies. Monarchies and democracies, radically different as they are in other respects, have in reality much the same business to look to.

It is abundantly safe nowadays to insist upon this actual likeness of all governments, because these are days when abuses of power are easily exposed and arrested, in countries like our own, by a bold, alert, inquisitive, detective public thought and a sturdy popular self-dependence such as never existed before. We are slow to appreciate this; but it is easy to appreciate it. Try to imagine personal government in the United States. It is like trying to imagine a national worship of Zeus. Our imaginations are too modern for the feat.

But, besides being safe, it is necessary to see that for all governments alike the legitimate ends of administration are the same, in order not to be frightened at the idea of looking into foreign systems of administration for instruction and suggestion; in order to get rid of the apprehension that we might perchance blindly borrow something incompatible with our principles. That man is blindly astray who denounces attempts to transplant foreign systems into this country. It is impossible: they simply would not grow here. But why should we not use such parts of foreign contrivances as we want, if they be in any way serviceable? We are in no danger of using them in a foreign way. We borrowed rice, but we do not eat it with chopsticks. We borrowed our whole political language from England, but we leave the words “king” and “lords” out of it. What did we ever originate, except the action of the federal government upon individuals and some of the functions of the federal supreme court?

We can borrow the science of administration with safety and profit if only we read all fundamental differences of condition into its essential tenets. We have only to filter it through our constitutions, only to put it over a slow fire of criticism and distil away its foreign gases.

I know that there is a sneaking fear in some conscientiously patriotic minds that studies of European systems might signalize some foreign methods as better than some American methods; and the fear is easily to be understood. But it would scarcely be avowed in just any company.

It is the more necessary to insist upon thus putting away all prejudices against looking anywhere in the world but at home for suggestions in this study, because nowhere else in the whole field of politics, it would seem, can we make use of the historical, comparative method more safely than in this province of administration. Perhaps the more novel the forms we study the better. We shall the sooner learn the peculiarities of our own methods. We can never learn either our own weaknesses or our own virtues by comparing ourselves with ourselves. We are too used to the appearance and procedure of our own system to see its true significance. Perhaps even the English system is too much like our own to be used to the most profit in illustration. It is best on the whole to get entirely away from our own atmosphere and to be most careful in examining such systems as those of France and Germany. Seeing our own institutions through such media, we see ourselves as foreigners might see us were they to look at us without preconceptions. Of ourselves, so long as we know only ourselves, we know nothing.

Let it be noted that it is the distinction, already drawn, between administration and politics which makes the comparative method so safe in the field of administration. When we study the administrative systems of France and Germany, knowing that we are not in search of political principles, we need not care a peppercorn for the constitutional or political reasons which Frenchmen or Germans give for their practices when explaining them to us. If I see a murderous fellow sharpening a knife cleverly, I can borrow his way of sharpening the knife without borrowing his probable intention to commit murder with it; and so, if I see a monarchist dyed in the wool managing a public bureau well, I can learn his business methods without changing one of my republican spots. He may serve his king; I will continue to serve the people; but I should like to serve my sovereign as well as he serves his. By keeping this distinction in view,—that is, by studying administration as a means of putting our own politics into convenient practice, as a means of making what is democratically politic towards all administratively possible towards each,—we are on perfectly safe ground, and can learn without error what foreign systems have to teach us. We thus devise an adjusting weight for our comparative method of study. We can thus scrutinize the anatomy of foreign governments without fear of getting any of their diseases into our veins; dissect alien systems without apprehension of blood-poisoning.

Our own politics must be the touchstone for all theories. The principles on which to base a science of administration for America must be principles which have democratic policy very much at heart. And, to suit American habit, all general theories must, as theories, keep modestly in the background, not in open argument only, but even in our own minds,—lest opinions satisfactory only to the standards of the library should be dogmatically used, as if they must be quite as satisfactory to the standards of practical politics as well. Doctrinaire devices must be postponed to tested practices. Arrangements not only sanctioned by conclusive experience elsewhere but also congenial to American habit must be preferred without hesitation to theoretical perfection. In a word, steady, practical statesmanship must come first, closet doctrine second. The cosmopolitan what-to-do must always be commanded by the American how-to-do-it.

Our duty is, to supply the best possible life to a federal organization, to systems within systems; to make town, city, county, state, and federal governments live with a like strength and an equally assured healthfulness, keeping each unquestionably its own master and yet making all interdependent and co-operative combining independence with mutual helpfulness. The task is great and important enough to attract the best minds.

This interlacing of local self-government with federal self-government is quite a modern conception. It is not like the arrangements of imperial federation in Germany. There local government is not yet, fully, local self-government. The bureaucrat is everywhere busy. His efficiency springs out of esprit de corps, out of care to make ingratiating obeisance to the authority of a superior, or at best, out of the soil of a sensitive conscience. He serves, not the public, but an irresponsible minister. The question for us is, how shall our series of governments within governments be so administered that it shall always be to the interest of the public officer to serve, not his superior alone but the community also, with the best efforts of his talents and the soberest service of his conscience? How shall such service be made to his commonest interest by contributing abundantly to his sustenance, to his dearest interest by furthering his ambition, and to his highest interest by advancing his honor and establishing his character? And how shall this be done alike for the local part and for the national whole?

If we solve this problem we shall again pilot the world. There is a tendency—is there not?—a tendency as yet dim, but already steadily impulsive and clearly destined to prevail, towards, first the confederation of parts of empires like the British, and finally of great states themselves. Instead of centralization of power, there is to be wide union with tolerated divisions of prerogative. This is a tendency towards the American type of governments joined with governments for the pursuit of common purposes, in honorary equality and honorable subordination. Like principles of civil liberty are everywhere fostering like methods of government; and if comparative studies of the ways and means of government should enable us to offer suggestions which will practicably combine openness and vigor in the administration of such governments with ready docility to all serious, well-sustained public criticism, they will have approved themselves worthy to be ranked among the highest and most fruitful of the great departments of political study. That they will issue in such suggestions I confidently hope.

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