DRI-161 for week of 11-30-14: The Enemy Within: The Move to Strangle Welfare-State Reform In Its Crib

An Access Advertising EconBrief: 

The Enemy Within: The Move to Strangle Welfare-State Reform In Its Crib

The resurgence of the Republican Party after the overwhelming victory of Barack Obama and the Democrats in the 2008 elections was led by the Tea Party. This grassroots political movement began as a popular uprising and only gradually acquired formal organizational trappings. As yet, its ideological roots are so thin and shallow that they provide no support for the movement.

This contrasts sharply with the conservative movement, in which the order of development was reversed. Ideology came first, with roots implanted firmly by opposition to the New Deal and a foreign policy led by Sen. Robert Taft. The intellectual foundation laid by William F. Buckley, Jr. in National Review Magazine educated a generation of young Republicans and paved the way for the candidacy of Barry Goldwater in 1964. Goldwater’s landslide defeat nevertheless introduced Ronald Reagan to national politics. By the time Reagan became President in 1980, conservatism had become the dominant political paradigm.

Nowhere is a vacuum more abhorrent than in political ideology. Today’s victorious Republicans may purport to search for a mode of governance, but what they are really doing is belatedly deciding what they stand for. (The hapless domestic and foreign policies of the Obama administration gave them the luxury of winning the elections merely by signaling their lack of congruence with President Obama et al.) They enjoy a surfeit of advice from all quarters.

Nowhere is this advice more pointed than in its economic dimension.

 

Should Republicans “Take ‘Yes’ For an Answer?”

 

Although Buckley died in 2006, National Review still retains some of the intellectual momentum he generated. Its “Roving Correspondent,” Kevin Williamson, devoted a recent essay to an advisory for the Republican Party on post-victory strategy. Williamson sees the solid victory in the 2014 mid-term elections as “a chance to meet voters where they are.” To do that, Republicans need to “take ‘yes’ for an answer.”

Exactly how should we interpret these glib formulations? Williamson insists that Republicans should not treat electoral good fortune as the opportunity to create change. Instead, the Party should reverse the normal order of precedence and cater to popular disposition – “meet the voters where they are” instead of persuading the voters of the desirability or necessity of change. Don’t continue the campaign, Williamson pleads. The votes have already been counted; just “take ‘yes’ for an answer” and get on with the business of crafting a governing compromise that everybody can live with.

So much for the revolutionary stance of the Tea Party; the EPA won’t have to test BostonHarbor for caffeine contamination.

The reader’s instinctive reaction to Williamson’s essay is to flip the magazine over and re-check the cover. Can this really be National Review, legendary incubator of conservative thought, renowned for taking no prisoners in the ideological wars? We have just suffered six years under the lash of a Democrat regime whose marching order was “elections have consequences.” Now the flagship of American conservatism is preaching a gospel of preemptive surrender?

Williamson’s mood is apparently the product of disillusionment. The birth of NR, he reminds his readers, was a reaction to Eisenhower Republicanism. Instead of rolling back the welfare state installed by Roosevelt and Truman, Ike accepted it – thereby setting the tone for Republican policy thereafter. The magazine fulminated, but to no avail. Goldwaterism produced Reagan… “a self-described New Deal Democrat,” pouts Williamson, “who famously proclaimed that he hadn’t left eh Democratic Party but the party had left him.”

Reagan revisionism is part of a new NR realpolitik, it seems. “At the end of the Reagan years, the Soviet Union was dead on its feet, the United States was a resurgent force in the world… and spending and deficits both were up, thanks to the White House’s inability or unwillingness to put a leash on Tip O’Neill and congressional Democrats. The public sector was larger and more arrogant, there were more rather than fewer bureaucrats and bureaucracies, and nobody had made so much as a head fake in the direction of reforming such New Deal legacies as Social Security or even Great Society boondoggles such as Medicaid.”

The author’s psychological defeatism apparently so overwhelmed him that he lost touch with reality. The Soviet Union is “dead on its feet” but the singular responsibility of President Ronald Reagan for this fact is unmentioned. (One cannot help wondering whether this is an oversight or a deliberate omission.) But Reagan is held liable for the actions of the Democrat Speaker of the House and Congressional Democrats! Has anybody blamed Barack Obama for not “putting a leash on House Republicans” to achieve more of his agenda? Has Williamson published his Canine Theory of Congressional Fiscal Restraint in a peer-reviewed journal of political science?

One might have thought that winning the Cold War, taming hyperinflation and reviving moribund economic growth (also left unmentioned by Williamson) constituted sufficient labor unto a Presidential tenure. Various authors, ranging from Paul Craig Roberts to David Stockman, have chronicled the internecine warfare attending the Reagan administration’s efforts to cut the federal budget. Apparently Williamson has forgotten, if he ever knew, that Reagan enjoyed the reputation of a ferocious budget-cutter while in office. This dovetailed with his famous declaration that “government isn’t the solution – it’s the problem.” If, three decades after the fact, Reagan’s efforts seem puny, this may be because we hold him responsible for failing to effect a counterrevolution to match the permanency of FDR’s New Deal. One would think, though, that the only President since FDR to actually reduce the size of the Federal Register deserved better at Williamson’s hands.

Obviously, Williamson paints a false portrait of the Reagan years to justify the counsel of despair he gives today. “We did not undo the New Deal in the 1980s. We are not going to undo the New Deal before 2017 either… the fact remains that the American people are not as conservative as conservatives would like them to be, nor are they always conservative in the way conservatives would like them to be.” It seems that there is a “disconnect between the numbers of Americans who describe themselves as ‘conservative’ or ‘liberal’ and the policy preferences those Americans express.” Americans think of themselves as conservative but favor liberal policies. So, Williamson concludes, the only sensible thing to do is humor them.

“Americans …are, by and large, conservative in the same sense that Ronald Reagan was, not in the sense that Robert Taft was, or… Barry Goldwater was. They intuit that the federal government is overly large and intrusive, they resent the slackers and idlers who exploit that situation, and they worry that our long-term finances are upside down, but they do not wish to repeal the New Deal.”

“Example: A majority of voters believe that something must be done to rectify Social Security’s finances, and a plurality of voters believe that a combination of benefit cuts and tax increases should be adopted to achieve that… [but] strong majorities … of 56 percent… oppose Social Security benefit cuts and Social Security tax increases, according to Gallup. No doubt many of these voters think of themselves as conservatives… it is likely that the great majority of self-described conservatives would support continuing current Social Security policies indefinitely – if they believed it fiscally possible. The current Left-Right divide on Social Security is not a question of what we ought to do, but of what we can do.” Williamson cites Robert Taft’s eventual concession on Social Security as an example of the Right bending its principles to his form of pragmatism. After all, “populist measures are, to the surprise of nobody except scholars of political science, popular, hence the support among a majority of registered Republicans for raising the minimum wage.”

Instead of fighting among themselves on principle, Williamson contends, Republicans should be scanning the polls to find out where their base stands – and adjusting their stance accordingly. They should be meeting the voters where the voters are rather than persuading voters to see the light of sweet reason. They should take “yes” for an answer when they hear it from the networks on election night.

Rebutting Williamson’s “Populism”

 

No full-blooded Tea Party member will swallow Kevin Williamson’s argument, despite the author’s insistence that he is really enunciating their position. They didn’t overcome the twin obstacles of the Democrat Party and the Republican establishment only to be lectured on their extremism in the pages of National Review, for crying out loud. But we must go beyond visceral rejection of Williamson’s moral and psychological defeatism. Straightforward analysis indicts it.

Since the venue is National Review, it is fitting to recall Bill Buckley’s distinction between politics and economics: “The politician says: ‘What do you want? The economist says: What do you want the most?'” For many decades, voters have been offered big government as if it were a consumer product with zero price. That is the context in which to contemplate the poll responses that Williamson treats as commandments graven in stone. In the beginning, there was the word. And conservatives believed the word. But when the world around them changed and God neither smote the unbeliever nor struck down the evil Antichrist, conservatives eventually shrugged and went with the flow. After a while they began singing the same hymns to Baal as the liberals. They couldn’t very well go to jail for non-participation in the Social Security system and they discovered that the government checks always cashed – so why not go along? It was the only way they could get their money out.

In due course, conservatives found out along with the rest of society that they had been lied to and flimflammed by the pay-as-you-go status of Social Security. It was not a system of insurance, after all; the word “social” in the terms “social insurance” and “Social Security” should be taken to mean “not,” just as it does in terms like “social justice,” “social democracy” and “social responsibility.” By then, though, everybody was so thoroughly habituated to the system that it would have required something close to a revolution to change it. Something like what the colonists originally did when they revolted against the British and dumped tea in Boston harbor, for example.

When Williamson implies that conservatives are entirely comfortable with Social Security today, he is being disingenuous. (That either means “lacking in candor” or “naïve;” he is either lying to us or he is plain stupid.) In fact, conservatives (and just about everybody else) below the age of 50 no longer expect even to receive Social Security benefits – they expect the system to go bankrupt long before they collect. They are not comfortable with the system but resigned to it; there is a world of difference between the two. And considering that Williamson himself just published an article on “Generation Vexed” and its growing dissatisfaction with the Obama regime in the previous issue of NR, he cannot claim indifference to their electoral attitudes in this context.

But this attitude of resignation is wildly optimistic compared to the fiscal reality facing America and the rest of Western industrial society today. The welfare state is collapsing around our ears. Central bankers are in extremis; they are reduced to printing money to finance operations. The Eurozone staggers from crisis to crisis. Japan is now working on its third “lost decade.” Demography is a disaster; birth rates will not bail us out. Worse – they are falling like leaden raindrops, reducing the number of workers paying in per welfare-benefit recipient. The crisis is not in the far-off future but today – if the U.S. had to finance upcoming deficits at normal rates of interest rather than the “zero interest rates” of the last five years, the interest charges alone would eat up most of the federal budget. And the entitlement programs that Williamson views as sacred are now eating up most of that budget.

Williamson acts as if Social Security finance were a Starbucks menu. He treats longstanding conservative doctrine on Social Security as if it were excerpted from fundamentalist Scripture out of Inherit the Wind. But he is no Clarence Drummond; Social Security is exactly the Ponzi scheme that conservatives have always fulminated against. In fact, it is worse, because the Day of Judgment is arriving even sooner than prophesied.

True, it isn’t just Social Security – it’s also Medicare and Medicaid and the welfare system. (Welfare reform didn’t come close to reforming the whole system, just one of the six components of it.) The point is that we have passed the elective stage and have now entered the stage of imminent collapse. In that stage, monetary chaos and an uncertain fate for democracy await.

And what is Williamson’s reaction? When Americans protest, “I can be overdrawn; I still have checks,” Williamson nods, “Right you are.” But we’re not just overdrawn – we’re completely bankrupt.

Under these conditions, what are our choices? Suppose we remain in Obamaville. That will result in collapse. Suppose we go Williamson’s route, a route of picking and choosing a few pieces of low-hanging fruitful reform. That will also result in collapse.

We have nothing to lose and everything to gain by telling voters the truth and opting for revolutionary reform. If they reject us, we will be hung for offering a full-bodied sheep – limited government, free markets and freedom – rather than a bleating lamb of meekly pandering populism.

Popunomics

 

Williamson isn’t just selectively bad on economics – he has renounced economic logic entirely in favor of populist emotion. Take the minimum wage – Williamson’s shining example of popular Populism. The minimum wage is one of three or four most heavily researched measures in economics, having attracted empirical studies consistently since the late 1940s. Until the notorious Card-Krueger study in 1993, these found that the minimum wage adversely affected employment of low-skilled labor. These findings jibed with a priori theory, which predicted that a minimum wage would produce a surplus of labor (unemployment), increase the scope for discrimination by buyers of labor against sellers of labor, reduce the quality of labor and/or jobs, encourage businesses to offer fewer benefits and more part-time jobs and encourage businesses to substitute machinery and high-skilled labor for low-skilled labor. All these effects have been observed in conjunction with the minimum wage since its imposition. Card and Krueger offered no rebuttal to the eloquent testimony of the research record and were notably silent on the theory underpinning their own research result, which purported to find an increase in comparative employment in one state after an increase in the minimum wage. Both the validity of their data and the econometric soundness of their results were later challenged.

Having carefully chosen one of the most economically untenable of all Populist positions on which to “meet voters where they are,” Williamson next ups the ante. From the debased coin of the minimum wage, he turns to the fool’s gold of restrictionist anti-immigrationism. The late Richard Nadler painstakingly showed – and in NR to boot, in 2009’s “Great Immigration Shoot-Out” – that restrictionists were big and consistent electoral losers in Republican primaries and general elections. But Williamson is back at the same old stand, hawking “stronger border controls… mandatory use of E-verify… and like measures” because “voters are solidly on the conservatives’ side on this issue.”

Oh really? Just in time – net immigration has been roughly zero for the last few years. Market forces, not government quotas, control international migration; the quotas merely serve to criminalize violators. Immigration benefits America

on net balance, regardless of its legal dimension. Along with free trade and opposition to the minimum wage, place support of free international migration among the issues upon which economists strongly agree.

Wait a minute – Williamson has gone from supporting brain-dead economics because it is generally popular (the minimum wage) to supporting it because it is popular with NR’s constituency. Just as Buckley had to rescue the Right from the anti-Semitism of the American Mercury and the conspiratorial John Birch Society, we are now faced with the task of rehabilitating the right wing from the crank nativism and restrictionism that has asserted squatter’s rights at National Review. Calling Williamson’s version of expedience Populism gives ideology a bad name. The 19th-century Populism of Pitchfork Ben Tillman, et al, featured cheap money and fashionably bad economics but it was more consistent than Williamson’s proposal.

Borrowing the argot of the digital generation, Williamson is expounding not Populism but rather PLR – the “path of least resistance.” Put your finger to the wind and sense what we can get the voters to sign off on. See how many fundamental principles and how much government money we’ll have to sacrifice to win the next election. Williamson purports to be lecturing us on why Republicans fail – because they are too ideologically scrupulous, insisting on free markets, free trade, open borders, flexible prices, deregulation. But the encroachment of big government and the welfare state proceeded mostly unabated throughout the 20th century despite periods of Republican ascendancy. How could this have happened? Because Republicans were really heeding Williamson’s doctrine all along; PLR ruled, not ideological constancy. Goldwater never led the Republican Party, even when he won the nomination. Reagan was detested by the Party establishment and his philosophy was ditched the minute Air Force One lifted off the runway to return him to California. PLR was always the de facto rule of thumb – and forefinger, ring finger and all other digits. How else could a Party ostensibly supporting limited government have countenanced the transition to unlimited government?

Williamson treats the rise of the Tea Party as America’s version of China’s Cultural Revolution. Whew! We must cease all this senseless bloodletting and wild-eyed revolutionary fervor; return to our senses and settle for what we can get rather than striving for Utopia. Back to normalcy, back to pragmatism and compromise and half-a-loaf … well, maybe a quarter-loaf… or even a slice… hell, maybe even a few crumbs, just so its bread.

It is fitting that Keynesian economics has come home to roost in this time of Quantitative Easing and central-banking hegemony and liquidity everywhere with not a loan to drink. “In the long run, we are all dead” was Keynes’ most famous quip. Well, we can’t live in the short run forever. The procession of short runs eventually produces a long run. And the long run is here.

It’s time to pay up. The voters have given Republicans a gift – the chance to tell the truth and turn the ship around before we reach the falls. PLR is no longer sufficient. It’s time – no, it’s long past time to start doing all the things that Williamson says Republicans can’t do and mustn’t do.

The Anti-Economics Party of the Party of Sound Economics?

 

“The American public is in many ways conservative, but in many ways it is not, and its conservatism often is not the conservatism of Milton Friedman or Phil Gramm but that of somebody who fears the national debt and dreads bureaucracy but rather likes his Social Security check.” The Republican Party’s glory days of the post-World War II period came during the Great Moderation ushered in by the Reagan Presidency, beginning in late 1980 and continuing into the present millennium. This success and victory in the Cold War were the only departures from PLR. This period of prosperity was driven by an economic policy whose positive features were disinflation, sound money, low taxes and low inflation. This is a combination that Keynesian economics finds contradictory and now repudiates utterly. Williamson repudiates it, too, hence his explicit rejection of Milton Friedman and Phil Gramm as exponents of conservatism. (Once again, his use of Friedman, a libertarian rather than a conservative, is disingenuous.) He is still living in the past, the days when we could have our conservatism and our Social Security checks, too. Sorry, we have bigger problems now than how to buy votes from our own voter base to win the next election.

For years, Republicans have been able to win occasional elections the easy way, by adopting PLR. Those days are over. From now on, the Republicans will have to earn their money as a party of limited government by actually practicing the principles they profess. That is the bad news. But the good news is that they cannot lose by doing this. The very economics that Kevin Williamson looks down on tells us that.

Economics defines “cost” as the alternative foregone. If telling the truth will cause you to lose the election, you may well decide to lie; the cost of truth-telling will seem too high. But if winning the election and losing the election are reduced to equivalence by the consequences of economic collapse, then telling the truth suddenly becomes costly no longer. Now avoiding collapse becomes the only matter of consequence and the election outcome fades into insignificance.

Ironically, that is not only sound economics; it is also supremely pragmatic.

DRI-287 for week of 8-31-14: The Hollywood Blacklist as an Economic Phenomenon

An Access Advertising EconBrief:

The Hollywood Blacklist as an Economic Phenomenon

Very few people will ever develop an econometric model. Even fewer will use abstruse mathematics to formulate economic theory. A larger subset of the population is called upon to interpret the output of these economic tools, but this group is still microscopically small. To pinpoint the practical value of an economic education, we will have to look elsewhere.

Economics should enable us to understand the “blooming, buzzing confusion” of our daily life, to borrow the characterization of a 19th-century historian. Indeed, the great historical questions of yesterday should yield their mysteries to basic economic logic.

No economic exercise is as deeply satisfying as the parsing of a great historical dispute or debate using economics. When this exercise overturns the conventional thinking, it is one of life’s most exhilarating moments.

The famous Hollywood Blacklist is a ripe subject for this economic treatment.

The Blacklist as Portrayed by the Political Left

The stylized portrayal of the Blacklist by the political Left begins in the 1930s, when numerous actors, actresses, screenwriters and other rank-and-file motion-picture personnel were strongly attracted by the tenets of socialism and Communism. Indeed, for many Communism was the practical embodiment of socialism. This attraction led them to participate in rallies, join organizations and make contributions in kind and in cash to the socialist and Communist movements. Some even joined the Communist Party, but these were mere flirtations, more emotional than intellectual. Almost all of these Party memberships were short, transitory affairs that, however, would later come back to haunt the participant.

Even the biggest movie stars were contractual employees of the big movie studios. The operational heads of the studios, moguls like Louis B. Mayer of Metro Goldwyn Mayer, Darryl F. Zanuck of Twentieth Century Fox and Harry Cohn of Columbia Pictures, were fanatically dedicated to the profits returned by their movies. This led them to take an unseemly interest in the private lives of their actors and actresses, even to the point of influencing the stars’ marital, pre-marital and extra-marital pursuits. The moguls feared that unfavorable publicity about a star would destroy his or her box-office value.

After World War II, American attitudes toward the Soviet Union underwent a reversal. The public became inordinately fearful of Russia and of Communism. This wave of emotion was typical of a country that was governed by a chaotic, competitive spirit rather than by a tightly regulated bureaucracy run by left-wing intellectuals, or what the radical economist Thorstein Veblen had called a “Soviet of engineers.” The same spirit had made America society racist (anti-black, anti-immigrant) and sexist (anti-woman). Now it had become “anti-Communist,” which was the same thing as anti-intellectual, anti-democratic and fascist. After all, the Fascists and Communists had opposed each other in the Spanish Civil War prior to World War II, hadn’t they?

This inordinate fear was exploited by Senator Joseph McCarthy of Wisconsin, who used his government investigative committee as a tool to further his political career by pretending to expose Communists operating in government and virtually every other nook and cranny of institutional America. The Left originated the term “McCarthyism” and used it as shorthand for the Cold War anti-Communist mentality and all its representations.

The moguls were less interested in anti-Communism as a political project than for its financial implications on their industry. They feared that the public would associate the left-wing sympathies of their actors, actresses and screenwriters with Russian Communism. This potential linkage threatened studio profits.

Thus was born the Blacklist. The moguls commissioned their sycophantic underlings and outside organizations, such as the newsletter Red Channels, to provide lists of Hollywood artists who were current or former Communist Party members. Those on the list were blacklisted – they could no longer work. The lists were compiled partly by offering an inducement: Those “naming names” of other current or former Party members would be spared punishment. The question “Are you now or have you ever been a member of the Communist Party?” became associated with the House Committee on Un-American Activities and McCarthyism in general.

The Left saw the dilemma faced by witnesses testifying before security hearings as a Catch 22. A witness admitting current or former Communist Party membership would subsequently be blacklisted. A witness refusing to “inform” on his friends and/or colleagues would also be blacklisted. A witness citing his or her Fifth Amendment right against self-incrimination as justification for a refusal to testify would be blacklisted. But a witness who testified and named names could work only at the cost of eternal damnation – by universal understanding, the most despised and despicable of all human beings is an Informer.

Thus, the Blacklist is pictured as an intellectual Dark Age, a dark night of the American soul. Some blacklistees (John Garfield, J. Edward Bromberg) were so traumatized by their plight that they died from the stress. Others (Larry Parks) suffered permanent destruction of their careers. Most (Lee Grant, Dalton Trumbo, Carl Foreman, Marsha Hunt, Michael Wilson, Jules Dassin) lived in literal or figurative exile for one or two decades, suffering financial reverses and emotional isolation. A few (Edward G. Robinson) coped with a quasi-blacklist (“greylist”) that produced similar but less severe effects.

The Blacklist hovered like a great plague over the land for many years until it finally ended suddenly in the early 1960s. The heroic Kirk Douglas (or, in some retellings, the heroic Otto Preminger) openly hired long-blacklisted screenwriter Dalton Trumbo, thus breaking the back of the Blacklist.

The Blacklist as Seen Through the Lens of Economics

If the left-wing tale of the Blacklist has a fairy-tale quality, that is apt. Despite the acceptance and even reverence with which it is treated, it makes little sense. The principals behave in unreal ways, unlike actual human beings impelled by rational motives. The portions of the story that are correct are woefully incomplete. The rest is inaccurate. Most misleading of all is the complete absence of economic logic from the tale.

America’s “inordinate” fear of Communism. To be sure, fear is a prime mover of human action. But fear is conditioned and shaped by our rational understanding of the world around us. After World War II, the Soviet Union’s public face was rapidly transformed. Russia blockaded Berlin. It invaded or formally occupied Eastern Europe. After a few years, it acquired nuclear weapons that it pointed at the U.S. It aided its client states in the export of Communism throughout the world and indirectly fought the U.S. by aiding North Korea against South Korea. Eventually, the confluence of all these actions resulted in the term “Cold War.”

We know now what we strongly suspected then – that the Soviet Union had unleashed the worst campaign of mass murder in human history during the 20th-century’s first half. Joseph Stalin supervised the killing of more Jews than did Adolf Hitler and killed more of his own citizens than did the Nazis in wartime. We also know that the America Communist Party was the Soviet espionage apparatus in the U.S.

Given all this, the fear of Soviet Russia does not seem “inordinate.” Moreover, the actions of the Communist Chinese subsequent to the fall of Nationalist China in the late 1940s validate the fear of Communism generally. Red China did not export terror and death to the extent that Soviet Russia did. But their murderous reign within China itself surpassed even Stalin’s butchery.

In this light, the American reaction against Communism seems mild and tentative. And indeed we know that prior to the accession of Ronald Reagan to the Presidency in 1980, the Cold War was all but lost. While the American public displayed a well-founded a prophetic fear of Communism, our intellectual elites showed a shocking indifference to it. This began with the attempts by the Truman administration to cover up the discovery of high-level Communist penetration of the U.S. State Department and continued with the friendliness shown to Communist dictators by the American intelligentsia and to Marxist ideology by the American academy. Marxist economics has long exceeded free-market economics in popularity at American universities. Mainstream economics textbooks, notably the best-selling Economics by Nobel laureate Paul Samuelson, touted the superiority of Communist central planning to American free markets in promoting economic growth right up to the day when the Soviet Union collapsed.

Time after time, the American public’s fear of Communism was validated while the American elites’ acceptance of it was not.

The Moguls and the Blacklist. The Left portrays the Hollywood Moguls as craven cowards because they were profit-motivated. Of course, when those same moguls occasionally dabbled in politics without a business rationale, the Left excoriated them for that as well. This leads us to suspect that the Left simply approved of the Communist sympathies of the blacklistees.

Left-wing intellectuals criticized corporations in the 1930s for putting the interests of executives ahead of shareholder and consumer interests. Yet here the moguls are criticized for doing just the opposite. Using the Left’s own premise – but applying it within the model of economic logic – the moguls were safeguarding the interests of consumers and shareholders when they instituted the Blacklist.

The movie moguls developed – or, more accurately, stumbled upon – the “star system” of moviemaking as a way of stimulating movie attendance by focusing their attention on movie stars. This system worked so well that in the 1930s and 40s, average weekly movie-theater attendance approached the population of the entire country. (Today it languishes at 10-15% of U.S. population.) The leading actors and actresses may have been salaried employees, but they were the best-paid people in the nation – behind only the moguls themselves.

The appeal of the stars rested on the image they projected. Of course, audiences knew that Clark Gable was not really a reporter or a British naval officer and Errol Flynn was not really a pirate or a medieval aristocrat-turned-rebel-bandit. But they believed that the roles were extensions of the stars’ true personalities – Gable’s as a straightforward, aggressive male and Flynn’s as an irresistible cavalier. Ditto for Gary Cooper as a man of few words and James Stewart as hesitant and bashful.

In order to keep their profit machine humming, the moguls inserted morals clauses in studio contracts allowing termination for “moral turpitude” or anything that would destroy the good will vested in those personalities. From the standpoint of consumers – and therefore from the standpoint of shareholders and the moguls as well – a movie star was a product consisting not wholly but largely of image. A mogul that ignored the image projected by a star would have been derelict in professional duty.

Communism was a label that threatened a studio’s brand just as (for example) genetic modifications affect the brand of certain foods today. The comparison is apt. Communism was a genuine threat, regardless of whether or not any actor or actress really ever espoused Communist doctrine. Genetic modification, on the other hand, is a bogeyman whose dangers are illusory. But in both cases, the relevant consideration was and is what consumers think rather than objective truth. Consumer beliefs, truth aside, will govern their actions and the marketplace outcome. Consequently, moguls must act on their perception of what consumers perceive.

The moguls accurately judged that any actor or actress linked to Communism would be box-office poison, as would any writer whose words were being spoken on screen. Therefore, they had to purge their industry of Communists and suspected Communists – and do so in the most visible way possible. After all, any executive could, and presumably would, say that there were no Communists working for him. But the Blacklist was an exercise in product labeling – just the sort of thing that the political Left likes and even demands from corporations. The moguls were trying to obtain independent certification that their motion-picture product was “Communist -free.” Audiences could safely admire the actors and actresses appearing in it; they could safely consume the spoken and visual content contained within it. If the moguls had been selling apples, the Left would surely have admired the energy and determination devoted to preserving the purity and wholesomeness of the product.

But since we were talking movies, the Left was outraged by the Blacklist.

The Blacklist helped usher in an undemocratic reign of terror in America. Nothing prevented the dozens of competing movie studios and independent movie producers from advertising their movies by saying “we employ Communists and former Communists” or “we cast Fifth-Amendment-takers in our productions.” If the public was indifferent to this or even pleased by the idea, they could have flocked to these competing movies and enriched the maverick studios and producers. Of course, that didn’t happen because the public held no such beliefs. The moguls were neither craven cowards nor undemocratic tyrants. They were doing exactly what producers are supposed to do in a free market and what the Left criticizes producers for not doing: catering to consumers by insuring the quality of their product, thereby catering to shareholders by safeguarding profits.

The Blacklist was undemocratic and unfair because it denied blacklistees the means of earning a living. This is completely untrue. At worst, blacklistees were denied the ability to work in Hollywood productions. That is, they were denied the same thing that actors and actresses are denied when they are not cast and writers are denied when their scripts are rejected – which is the fate of the overwhelming majority of all actors, actresses and writers. In this case, the denial was figuratively stamped “unsuitable due to Communism.” This was a subjective evaluation, just as all rejections are subjective. Of course, the particular artist involved will take the blow hard and view it as unfair – just as all rejects do when consumers prefer the work of somebody else.

At all events, the so-called “victims” of the Blacklist were not denied the “right to work.” Movie actors went abroad and worked. Michael Wilson and Dalton Trumbo wrote Oscar-winning scripts submitted under false names while working and earning income abroad. Other blacklistees worked on Broadway or on television. And of course, nothing prevented them from – hold on to your seats here – getting an ordinary job and earning an ordinary living instead of earning thousands of dollars per week in Hollywood while the average American wage was less than five thousand dollars per year. Indeed, from among the few hundred documented Blacklist cases, it is often difficult to sort out those people whose Hollywood careers were ended by the Blacklist from those whose careers petered out naturally. In Hollywood as in professional sports, the average career is short though often sweet.

Among the victims of the so-called “greylist,” Edward G. Robinson made 13 movies during the short time period when he was allegedly greylisted. All but one of these was for American studios, mostly major ones. Of course, his roles were not necessarily plum ones, but that was certainly because his career was declining both before and after the Blacklist. For those whose career proved disappointing, claiming victimization by the Blacklist has provided compensation for the recognition fate denied them and an excuse for failing to justify their own expectations of success.

The Blacklist was evil because McCarthyism itself was evil and threatened America with dictatorship. We have shown that, far from being evil, the Blacklist was a product of free-market economics at work. The Left excoriates free-market economics when it fails – or supposedly fails – then turns around and excoriates it for succeeding while correcting its supposed errors. But even more ridiculous is the fact that the Hollywood Blacklist – today almost always linked with McCarthy and McCarthyism even by those caught in its toils – had nothing whatever to do with Joe McCarthy.

Senator Joseph McCarthy was elected to the Senate from Wisconsin in 1946. But he was virtually unknown to most of America until he made a speech in Wheeling, West Virginia in 1950. The speech concerned Communists that McCarthy alleged to reside in the U.S. State Department, not in Hollywood. And throughout McCarthy’s subsequent career, Communists in Hollywood were not an issue raised by McCarthy. McCarthy’s Senate Committee was Government Operations, not too surprisingly in view of his preoccupation with Communists in government. The government committee most often concerned with Communists in Hollywood was not even in the Senate – it was the notorious House Committee on Un-American Activities (HUAC).

Hollywood Communism made national headlines in 1947 when the so-called Hollywood Ten were called to testify before HUAC. These were a group of actors, writers and directors who were known to be current or former members of the Communist Party. They included now-famous names like writer Dalton Trumbo and director Edward Dmytryk. In his memoir Odd Man Out, Dmytryk confirms that all of the Hollywood Ten were indeed current or former Party members. He recounts how the appearance of the Ten before Congress was orchestrated by the Party and how non-Communist Hollywood liberals like Humphrey Bogart, Lauren Bacall, Gene Kelly and Danny Kaye were duped into supporting the Ten. The Party line was that the Ten were exercising their First Amendment rights of free speech and free association. After all, Communist Party membership was legal.

But when the hearings began, Dmytryk was astonished to find that the Ten uniformly pleaded their Fifth Amendment right against self-incrimination to avoid answering questions and having to name names. Their testimony consisted of diatribes against the Committee in a Communist-Party vein. This episode reinforced Dmytryk’s resolve to quit the Party and sever his ties with his Leftist colleagues. His refusal to name names led to a prison sentence for contempt of Congress, after which Dmytryk emerged one year later to testify again and salvage his career by naming the names of his Party colleagues.

In 1947, McCarthy sat in Congress but was uninvolved in the Hollywood Ten episode. He played no part in the Hollywood Blacklist. By the time McCarthy delivered his Wheeling speech, the Blacklist had already been established. McCarthy played no part in it; he was concerned with security risks in government (the State Department) and the military (the Army). McCarthyism, whatever it was or meant, was a phenomenon of the 1950s, while the Blacklist was the outgrowth of the Cold War security debates that began in the 1940s.

McCarthy is notorious today for claiming that large numbers of Communists were employed in government without naming any names. (“He never produced a single Communist.”) As is usually the case, the Left is wrong. McCarthy did name names and was usually right about those he named, such as Owen Lattimore. He also named numbers, but the numbers did not refer to those currently employed but rather Communists known to have operated within government. We know now that substantial numbers of Communist agents operated within the State Department, for example, and the exact number is not of paramount importance today because we are still uncovering more. All this is irrelevant to the Hollywood Blacklist.

The Blacklist was evil because (a) the blacklistees were never Communists (b )the blacklistees had every right to be Communists and still remain employed in Hollywood (c)anti-Communism was evil by definition (d) choose any one or all of the above. Perhaps the most amazing facet of the Left’s portrayal is its fuzziness. When discussing blacklistees like Larry Parks, the Left implies that all blacklistees were innocent victims who were selected at random by Red Channels or victimized by John Wayne, Ward Bond or an anonymous grudgeholder. It is true that fellow actors at the Motion Picture Alliance, including stars like Wayne, were involved in the interviews prepatory to blacklisting. By blacklisting a fellow performer, MPA officials might leave themselves open to a charge of thinning the ranks of their competition. But every blacklistee was a potential employee of the studio; this was the opportunity cost incurred by the moguls. They had no incentive to be randomly vicious or inaccurate, since they were cutting their own throats by doing so – and the object of the exercise was to preserve their profits, not squander them. Presumably, this is why prospective blacklistees were always given an out, either by naming names or by pleading innocence with sufficient eloquence. This latter course was taken by various stars, including Lucille Ball and James Cagney.

The Left has gotten a lot of mileage out of the implication that the blacklistees were all, or mostly, innocent. But the problem is that this does not imply that the investigations of Communist infiltration of Hollywood were wrong; it implies that there was not enough investigation. Even if the moguls had done nothing, if Red Channels and the MPAA had never existed, the American public’s well-founded fear of Communism would have remained. The investigations did not convict innocent people of being Communists; they gave people under suspicion the opportunity to absolve themselves. Those who seized the opportunity – e.g., most people involved – emerged better for the process.

When the subject changes to avowed Communists like Dalton Trumbo, the Left abruptly changes its tune to focus on the unfairness of denying the writer his right to write, to earn income, support his family, etc. But what the Left is defending is not a right but rather Trumbo’s power to force people to hire him when his qualifications for hire no longer pass muster. While Trumbo would have protested that he was still the same writer he always was, the truth was that his qualifications did not consist solely of his writing talent. He also had to be free of moral taint. Would the Left defend O. J. Simpson’s “right” to work as an actor today even after a civil conviction for murder? Would they have defended Lord Haw Haw’s right to remain employed as an announcer after he worked for the Nazis in World War II?

Indeed, suppose the word “Communist” in the entire Blacklist controversy were to be replaced by the word “Nazi” – would the Left still take the same anti-blacklist position? Of course, we all know that the answer to that question is “no.” Right-wing writers like Ayn Rand and Morrie Ryskind were subjected to the Left’s own Blacklist after they objected to the Communist penetration of Hollywood. In the ensuing years, nobody on the Left has come to their defense.

The Blacklist killed blacklistees. The few blacklistees who died, including John Garfield and J. Edward Bromberg, had pre-existing medical conditions. (Garfield’s heart condition exempted him from military service in World War II.) Medical science lacks the capability of assigning causation to an external event like the Blacklist, which is one of many potential stressful events that might or might not contribute to death.

The overarching question, though, is why any moral opprobrium should attach to the Blacklist. The moguls had no incentive to kill Garfield or Bromberg. If nobody intended to cause the deaths, then the Blacklist is like any other stressful event. All kinds of morally innocuous actions might conceivably result in a death without adversely transforming the character of the action.

The Blacklist was an anti-competitive cartel. Intriguingly, this argument was advanced not by the Left but by free-market economist Milton Friedman in his book Capitalism and Freedom. Its problem is that it fails to distinguish between actions taken simultaneously and those taken in concert. To use the O.J. Simpson case again, it is obvious that Simpson became unemployable the moment he killed Nicole Simpson. Hollywood moguls did not need to collude to achieve that outcome. The same is true of the Hollywood Blacklist. If simultaneous actions taken to insure product quality are “collusion,” then the word has been distorted beyond all semblance of meaning.

The Blacklist was not destroyed by the heroic actions of Kirk Douglas or Otto Preminger in hiring Dalton Trumbo (to write Spartacus or Exodus, respectively). The Blacklist was already a dead letter by 1960, then these movies were produced. It was killed by the death of anti-Communism, which died when Joe McCarthy was discredited during the Army-McCarthy hearings in 1956. If Douglas or Preminger had hired Trumbo in 1953, that would have been courageous. But they didn’t because – at that point – it would also have been suicidal.

Forcing witnesses to inform to keep their jobs is immoral. The injunction against informing is the heart of the criminal code. (It is even the title of a cult-movie classic from 1931, Howard Hawks’ The Criminal Code.) Without informing, police would be unable to solve most criminal cases; even with the sophisticated technology aired on television shows like CSI, the solution of most crimes depends on confession and prying information out of witnesses. The technique of threatening knowledgeable parties with sanctions in order to induce testimony is perhaps the most venerable – and successful – of all police techniques.

The position taken by the Left aligns it perfectly with the criminal element, which tries to preserve collusion between criminals against the substantial inducements for confession. It is those economic incentives that persuaded Dmytryk and others, such as director Elia Kazan and actor Lee J. Cobb, to relent and name names.

It is unfair that people should be held accountable for past actions that led to unforeseeable consequences such as blacklisting. When people publish embarrassing photos or posts about themselves on the Internet, they give hostages to fortune. Yet the prevailing sentiment today seems to be that they should have known better. If anybody should have known better, it was Hollywood actors with morals clauses in their lucrative contracts. Communism was both controversial and popular in the 1920s and 30s. During World War I, the “Palmer Raids” had set a precedent for government interference with the exercise of a right to practice Communism. Yet an illusion of invulnerability and messianic notions of social responsibility persuaded countless Hollywood figures that their moral duty lay in following the red star of Communism.

If people choose to offer sympathy for former Communists, that is their business. Most of the original editors of the conservative magazine National Review were former Communists. They rebuilt their lives despite this youthful misstep by forcefully changing direction and repudiating their past. That is exactly what too many Hollywood Communists were unwilling to doand that is why we owe them no sympathy, just as we owe their arguments no respect.