Friday, April 17, 2009

Policy Round-Up: the Apollo Initiative as Democratic Planning

Policy wonks and other people who follow public policy issues are probably familiar with the Apollo Alliance, a blue-green alliance of environmentalists and labor unions that's become a stock part of the Democratic Party's platform on environmental and economic policy. Back in 2004, Kerry signed onto it; Obama basically did the same.

For those of you who aren't familiar with it, the basic idea is to fuse environmental policy - alternative energy, "green tech," energy-efficient building, mass transit - with labor and economic policy - creating new jobs that are well-paid, have good benefits, and are union-friendly, as a way to create new domestic industry and manufacturing. The Apollo Initiative, which they were promoting back in 2004, envisioned $30 billion a year for ten years as a public investment into " promoting new technology, improving manufacturing processes, and expanding markets [of "green tech"]...improving the performance of our existing energy system... construction of high performance, energy efficient buildings...[new sources of] renewable transit system starts, maintenance of the nation’s passenger train system, development of regional high speed rail networks, and improvements in the nation’s roads and highways." Their current Apollo Program calls for a $50 billion a year for ten year investment in energy-efficient buildings, renewable fuels, a new power grid, increasing efficiency of existing power plants, building mass transit, building fuel-efficient cars...the list goes on and on.

In and of itself, it looks like nothing special - basic, Democratic Party boilerplate, the kind of buzzword-driven wonkery that gets tossed around in primaries and never amounts to nothing. I'm going to argue that it's actually a way to recover a missing part of progressive politics and policy that was lost to us during the Cold War.

Ever since the Progressive Era (1880s-1910s), one of the major political and policy divides has been between the advocates of economic planning and the advocates of the free market. To our modern ears, this sounds a little bit ridiculous - planning recalls the Soviet Five Year Plans, the forced industrializations, lousy steel being made to fit Communist Party quotas that couldn't be used, the whole panoply of anti-communist imagery that people who were born after the start of the Cold War have in our heads. But once, there were great thinkers like Thorstein Veblen, Henry Carter Adams, Richard Ely, and John Bates Clark debated whether the free market was an inevitable facet of economic life, or whether rational planning could replace it.

Enter the New Deal. With the free market in total collapse, economic planning entered into the mainstream of American politics and public policy, and the government for the first time in a non-war situation attempted to direct the course o economic activity. Roughly speaking, three kinds of economic planning were attempted during the New Deal:

Tennessee Valley Authority - founded on May 18th, 1933, the Tennessee Valley Authority (TVA) was an experiment in regional democratic planning. Supported by activist-bureaucrats like David Lilienthal, and Arthur Morgan, the idea behind the TVA was to attack the economic problems of the Tennessee Valley from multiple directions - producing fertilizers and promoting modern farming techniques to raise production, hiring the unemployed to do conservation work, generating electricity and irrigation through the construction of hydro-electric dams, flood-control, reforestation, the development of industry (especially through the provision of cheap hydro-electic power), and so on. The TVA also recognized labor unions, and less successfully sought to find jobs for unemployed African-Americans and women.

However, the idea behind the TVA went far beyond that. In the vision of Arthur Morgan, the key element of the TVA were local democratic planning boards, in which farmers, aided by experts from the TVA, would decide the future of their areas and work to develop their way out of poverty. In the vision of David Lilienthal, the key element of the TVA was the creation of public power utilities which could restore competition, lower the price of electricity and water, and extend services to the underserved - with the ultimate aim being to challenge the monopolistic private utilities on behalf of consumers. While the two bitterly fought, the ultimate vision, of a public intervention into the economy, the creation of public economic power used on behalf of the poor, of attacking every aspect of regional poverty and underdevelopment was a powerful one.

And in a nation supposedly devoted to the free market, the TVA exists to this day as a massive publically-owned industry, a living legacy of economic planning, and one that is politically beloved by Americans of all stripes of political opinion.

National Recovery Administration - founded on June 16th, 1933, the National Recovery Administration (NRA) was an experiment in tripartite economic planning. Promoted by expert-administrators like Don Richberg, Rexford Tugwell, and Raymond Moley, the basic concept of the NRA was that American industry could recover through an increase in prices, production, employment, and wages if government, business, labor worked together. The normal anti-trust laws would be suspended, and Codes would be set up for each industry, establishing codes of "fair competition," setting prices, wages, and hours, abolishing child labor and recognizing labor unions. The idea would be that by reducing competitive pressure and restoring profitability, production and employment would increase and the economy would recover.

The experiment has widely been seen as an utter disaster - codes were widely ignored, especially in regards to minimum wages, maximum hours, and the recognition of unions, red tape and arbitary regulation were blamed for strangling recovery and extneding the Great Depression. It was declared unconstitutional in 1935, and even many New Dealers saw the program's terminationa as a relief from an embarrasment. Economists especially hate the NRA and point to it as the prime example of why interfering with the free market never, ever works.

Myself, I'm a little bit more skeptical. After all, unemployment dropped from 22.9% in 1932 to 14.4% in 1935 (personally, I think that the New Deal's job programs had more to do with this). Prices went from dropping about 10% the year before, to increasing by an average of 3% in 1934 and 1935. Industrial production, which dropped by 25% in the first six months of the NRA, was up by 22% from its May 1933 levels when the NRA was terminated in 1935. If the NRA was so economically damaging, it didn't seem to prevent a recovery from taking place; perhaps the worst that could be said against it is that it was ineffective but benign.

While I wouldn't bet the farm on it, I think the case against the NRA might be worth re-opening.

National Resources Planning Board - the NRPB was founded in 1933, as a modest agency within the Interior Department, with a mandate to plan public works projects so that the Public Works Administration and the Works Progress Administration could have a "shelf" of "shovel-ready projects" to build in the future. In 1939, however, this little policy shop was transferred into the Executive Office of the President, and was given an expanded brief as the central agency for national economic planning. Under the direction of FDR's uncle, Frederick Delano, and the research expertise of Eveline Burns (a Columbia University economist who had consulted for the Committee on Economic Security that established the system we know today as Social Security, and had worked closely with the WPA), the NRPB was tasked with envisioning the future direction of America, in every aspect of life.

By 1939, the New Deal had begun to adopt the theories of Keynesian economics, and many of the economic planners in the NRPB and other agencies thought that they now had the tools to ensure permanent prosperity and full employment, through government activism in the economy. The NRPB's main contribution to this body of thought were a series of reports laying out plans for economic development, government organization, the use of natural resources, and so on. The most important of these reports was Work, Security, and Relief Policies. In this report, the NRPB outlined a vision for a "cradle to grave" welfare state that would cover all Americans who were unable to work, and the "right to a job" for all Americans who wanted to work. In this manner, the government would ensure full employment, and the full production and rapid economic growth that would follow - and the expanded revenues would pay the cost of the welfare state. It was a total economic vision of a new economic order defined by universal rights and characterized by economic security - a world in which no American would ever have to fear poverty.

In the 1940s, the principles of the NRPB's report were introduced into Congress as the Wagner-Murray-Dingell Bill (combining the nationalization of unemployment insurance and disability insurance and the expansion of Social Security with a universal health insurance system), and the Full Employment Act (mandating full employment through Keynesian planning and a public employment program as employer of last resort). It was probably the most left-leaning moment in American history. And the result was total defeat - the Wagner-Murray-Dingell bill went down to defeat every year between 1945 and the present day (John Dingell introduced the bill every year between 1945 and his retirement, his son John Dingell Jr. has continued this tradition); the Full Employment Act was eviscerated in committee and was passed in a toothless, watered-down version; and the NRPB itself was disassembled by a hostile Congress. Once the Cold War had set in, anything that smacked of state planning was demonized as Communistic, socialistic, and red.

Ok, so what's the relation between the Apollo Alliance and the New Deal's economic planning? Because when I look at the Apollo Alliance, I see something that looks like a cross between the NRPB (national forward planning) and the TVA (focused public investment in particular industrial developments). What animates the Apollo Alliance is a vision of a new kind of economy, one that has lower emissions, uses less carbon, is more energy-efficient and self-sufficient with alternative fuels, that has more of a manufacturing base, and develops towards high-density urban development along mass-transit corridors instead of massive sprawl.

What excites me about them is that what we have here are the first glimmerings of an idea, one not seen in seventy years, that the economic future of this country should ultimately be in the hands of a democratically-elected government, and not the whims of the casino we call the free market. Ultimately, if the Apollo Alliance is about anything, it's the idea that through a direct public investment, we can shift ourself from one economic model to another. While this might sound inconsequential to some, I would argue that the lifework of dozens, if not hundred and thousands of activists throughout the twentieth century, so long denied by the forces of fear and anti-communism, testify otherwise.

If we think of the economy and economic forces as similar to the great oceans and the natural laws that govern the winds and the tides, the hope of democratic planning is that we can build a ship and learn to tack into the wind, to guide ourselves with compass and sextant and marine chronometer, and that human reason, rather than the blind workings of fate, shall determine the course of our lives.


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