Representative Ryan's Path to the Past

Representative Ryan's "Path to Prosperity" is eerily familiar. His plan argues that the economic crisis in the U.S. right now comes not from the policy of the last 30 years that has redistributed wealth upward until the richest 1% of Americans control more than 34% of the nation's wealth, more than the bottom 90% combined. The problem, he says, is that the country has not pushed that policy far enough.

We've been through this before.

During the Civil War, a Republican Congress created a new tariff structure to protect the nation's developing businesses. It worked. In the 1870s and 1880s, industry boomed. Shielded from competition, business moguls nurtured empires: Andrew Carnegie controlled the steel industry; J. D. Rockefeller consolidated the oil business. Their deep pockets enabled them to bankroll politicians. In return, Congress passed more pro-business legislation.

But Congressmen provided no protection for laborers, farmers, or consumers to balance their aid to business. As industrialists consolidated power over the economy and government, industrial wages plummeted. Farm prices, too, fell dramatically. Consumers, meanwhile, had to pay whatever monopolists demanded. Those same monopolists shut entrepreneurs out of markets.

Protest movements began in the 1870s to demand that government protect workers, entrepreneurs, farmers, and consumers, or at least that Congress stop passing laws to benefit big business. Businessmen and Republican officials attacked these protesters as "socialists" and "communists," and insisted that the government could not pass "special interest legislation." It should, though, encourage economic development. Congress continued to cater to industrialists.

In 1884, protests against Congress's cozy relationship with business went mainstream. That year, disgruntled voters put a Democrat into the White House for the first time since the Civil War. Their choice was New York reformer Grover Cleveland, who promised to divorce the government from businessmen. Republicans howled that Cleveland's election was accomplished by voter fraud and charged that the Democrats were trying to destroy America. The Republican-controlled Senate blocked all Democratic economic legislation.

Republicans took back the government in 1888, electing the forgettable but staunchly pro-business Benjamin Harrison in an election so corrupt one of Harrison's managers grumbled that his men "were compelled to approach the penitentiary to make him President."

Harrison had lost the popular vote by about 100,000 votes, but he interpreted his victory in the Electoral College as a mandate for stronger pro-business legislation.

By 1889, when Harrison took office, the economy was faltering. The problem was absolutely not that twenty years of Republican policies had concentrated wealth at the top of society and decimated the purchasing power of the vast majority of Americans, Harrison's men said. The problem was that pro-business legislation hadn't gone far enough.

Harrison's ideologues berated anyone--even moderate Republicans--who doubted that stronger pro-business policies were the way to bring the nation "success and prosperity," "a long period of prosperity," "the welfare and prosperity of the American people."

Just like Representative Ryan, Harrison's men wanted to give more to the wealthy; just like Ryan, they used the word "prosperity" like a talisman.

Harrison's men passed the strongest measure yet to protect business. But prosperity did not follow. Instead the country fell into a great national depression. Unemployed workers and farmers marched on Washington; the president used the army against railroad strikers.

Out of the economic chaos emerged the Progressive Era, when President Theodore Roosevelt cast aside old Republican doctrines and used the government to level the playing field between workers and businessmen. Roosevelt's policies, not Harrison's, put America on the path to prosperity.

Pundits can say what they will about Representative Ryan's plan, but let's not pretend it's anything new.