The American Experiment and the Role of Community Organizing and Expanded Trade

Conservatives champion the laissez-faire, or hands-off, model of political economy, arguing that the private sector and its vaunted “Invisible Hand” provides all the guidance necessary to deliver the benefits of free market capitalism. Conservatives deride activist government policies as meddlesome intervention and Big Government interference, but such practices have a proud history in the American experiment in democracy.

And in actuality, the American system has long utilized an activist approach to creating opportunities for more widespread prosperity, and this approach has taken many forms:

Ironically, it was a failing project that provided the impetus. In 1785, years before the Constitution’s signing and his election as our first President, George Washington helped establish and served as the first president of the Potomac Company. The firm attempted to construct a canal to make the Potomac River a major navigation channel for trade in the newly establishedUnited StatesWashington’s plans floundered because of, among other reasons, a lack of available technical expertise, conflicts between the states, an unstable American economy, and unreliable government aid. The Chesapeake and Ohio Canal Company stepped in and completed the project, linking the Ohio and Potomac rivers and opening up Appalachian trade to the Northeast.  

Washington’s project led to a realization that infrastructure would be crucial to facilitate trade and the development of a large and growing country, and that federal government support and oversight would be necessary. The shortage of American-based civil engineers ultimately doomed the original project but highlighted a need, and soon civil engineering came toAmerica to put planning, design and construction on a more sound professional footing.

In 1908 the Inland Waterways Commission noted the project’s significance: “The earliest movement toward developing the inland waterways of the country began when, under the influence of George Washington, Virginia and Maryland appointed commissioners primarily to consider the navigation and improvement of the Potomac; they met in 1785 in Alexandria and adjourned to Mount Vernon, where they planned for extension, pursuant to which they reassembled with representatives of other States in Annapolis in 1786; again finding the task a growing one, a further conference was arranged in Philadelphia in 1787, with delegates from all the States. There the deliberations resulted in the framing of the Constitution, whereby the thirteen original States were united primarily on a commercial basis — the commerce of the times being chiefly by water."

 As the nation expanded, additional infrastructural projects made other inland rivers and waterways more hospitable for trade.

Later on, at the height of the disastrous American Civil War, President Lincoln embarked on developing the Transcontinental Railroad, an ambitious project that connected the East to the vast western wilderness. Train stations rapidly developed as hubs for trading and, eventually, burgeoning cities, as a growing and restless population trekked west in search of a new life promising opportunity.

Lincoln also championed land-grant colleges, which provided government grants for agricultural colleges in each state and prepared students of modest means for the opportunities that lay ahead, and his Homestead Act made millions of acres of government-held land in the West available for purchase at very low cost and provided opportunities for ambitious citizens to settle and develop the untamed wilderness. 

Lincoln advocated for business interests and supported high tariffs (a protectionist measure but often seen as necessary in a developing nation), a strong banking system, and internal capital improvements and railroads (infrastructure in modern language) – in opposition to many conservative Democrats of his time, who favored a bucolic agrarian system overseen by enlightened and unregulated Jeffersonian “gentlemen farmers” (read: supposedly benevolent plantation slave owners).

Over the objection of some who feared the emergence of a financial elite, Lincoln’s National Banking Act created a system of national banks and provided a strong financial network.

A few decades later Republican President Theodore Roosevelt responded to the failure of French interests to construct thePanama Canal, and he pushed the U.S. to step in and complete the job, one of the greatest engineering challenges of its time. With trade in the Western Hemisphere growing, the need was obvious: prior to the canal, a ship traveling from theAtlantic to the Pacific Ocean had to go clear around South America. A New York to San Francisco journey measured some 13,000 miles and took months.

Teddy’s Democratic cousin President Franklin Roosevelt got this nation out of the worst economic disaster in its history with massive government investments that provided work to citizens and then, faced with the prospect of a fascist takeover of Europe, organized every mothballed factory, every shuttered foundry – every rusted scrap of obsolete productive capacity – into an economic powerhouse and fighting machine capable of turning the tide of history and liberating Europe.

Yes, FDR organized the nation's recovery around the exigencies of war, but he did not anticipate the US maintaining a continuous war footing.  Instead, due to his planning for a postwar America, and robust government investments, progressive tax policies that channeled private investment into job-creating economic activities, and programs such as the GI Bill and the FHA that enabled veterans to buy homes, go to school, and support and contribute to American prosperity, we were able to transition into the largest peacetime economy with the biggest technological base. 

FDR also famously told British Prime Minister Winston Churchill, the U.S.’s ally in World War II, that the US would not enter World War II in order to preserve the British Empire. To that end, he helped convene the Bretton Woods Conference to formulate an economic plan for a postwar world revolving around open trade and a free flow of capital to replace older systems of trade blocs and spheres of influence.

And due to FDR’s vision of a postwar community of nations united by expanded international trade and security treaties, and agreements to help our former opponents Germany and Japan revive their devastated economies, our allies were able to rebuild and also enjoy higher standards of living and increased productivity. For a quarter-century, the Bretton Woods regime of a fixed exchange rate system served as an anchor for international financial stability and cooperation until it was discontinued by President Nixon in favor of the current system of floating exchange rates. 

The value of Republican President Eisenhower’s interstate highway system to expanded trade is well known, but Eisenhower also pushed for developing the St. Lawrence Seaway, which connected the Great Lakes to the Atlantic Oceanand facilitated expanded international trade.

And that is the genius behind the success of the American Experiment: we have never stood still and passively waited for the ministrations of the “Invisible Hand” to guide the marketplace and shape our destinies. No, as Americans we believe optimistically in our ability to organize, shape and transform our environment, and fulfill our capacity to actively create opportunities and achieve our potential – a capacity enshrined and safeguarded in our Declaration of Independence as the “pursuit of happiness.”

Which brings us to today.  

President Obama a few years ago assured a war-weary public that he intends to pivot from the Middle East quagmire to Asia and the Pacific. To many grateful Americans and skeptical allies, that announcement signaled an end to ill-conceived and unwinnable wars and fractured relations with our international allies, and an opportunity to blunt China’s rising influence in the Asian-Pacific region. 

But now, many Americans have succumbed to fear-mongering over a trade deal that promises to boost worker interests and establish important protections for workplace safety and the environment. 

What gives?

In a recent interview with the Wall Street Journal, President Obama expressed his frustration with fellow Democrats and liberals: “Mr. Obama did acknowledge that he is annoyed by the criticism of both him and the trade negotiations: ‘What I take personally is this notion somehow that after 6½ years of working to yank this economy out of a ditch, strengthening middle-class homeownership, making sure that their 401(k)s have recovered, making sure that we’ve got much better education systems and job-training systems, fighting for the minimum wage, fighting for a vibrant auto industry, that after all the work that I have done and we have done together to make sure that middle-class families have greater stability, that to believe some of the rhetoric that has been coming out of opponents—that I’m trying to just destroy the middle class or destroy our democracy—is a little unrealistic. And they know it.’”

As President Obama has said, today we have an opportunity to rewrite the rules of international trade in a way that protects workers rights, environmental standards and workplace safety. And, considering the strong pro-worker and environmental positions this President has fought for – and his success in steering us out of the worst economic crisis of our lifetimes – I look forward with optimism to a trade deal which will finally replace a system in which powerful multinational corporations, authoritarian governments and unaccountable financial interests called the shots and exploited workers and developing countries with a community of free nations respectful of worker interests and responsible stewardship of our environment, freely engaging in international trade and mutually beneficial economic, scientific and cultural exchanges, and championing the public interest. 

And, since our economy is on an upswing, and with much of the developed world experiencing contraction or declining growth rates and looking for American leadership, we might have an opportunity – and the leverage – to execute an advantageous, landmark trade deal.

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Open thread

Irony-Deficient: Everything "Progressive" Company Challenging President Obama on Trade Sells is Made in Sweatshops

Irony-Deficient: Everything "Progressive" Company Challenging President Obama on Trade Sells is Made in Sweatshops