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Antistatism and Government Downsizing: an Historical Perspective

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Antistatism and Government Downsizing: an Historical Perspective THE URBAN INSTITUTE Antistatism and Government Downsizing: An Historical Perspective Mary O. Furner n recent years the size and role of gov- good ahead of private gain. Advocates of ernment have become by far the most republicanism viewed government as the OR OR important issues facing the electorate. instrument for articulating and implementing Lending focus to a broad-based dissatisfaction the collective purpose. Traditional liberalism, with government, antistatists have made as opposed to modern welfare liberal- Ispecial targets of the national ism, elevated individual autonomy bureaucracy and the escalating Politicians, above all other values, counted cost of the welfare state. In pundits, and citizens on the market to supply the 1996, for the first time since seem to agree that a more needed regulation, and coun- the origins of the federal or less continuous growth of seled against relying on welfare state during the national government has government. Although New Deal, both houses of finally been reversed. On the Adam Smith defined jus- Congress overwhelmingly basis of the historical record, tice, defense, basic infra- passed, and a Democratic however, nothing could structure, trade, and educa- president signed, welfare be further from the tion as matters for the state, reform legislation repealing a the most extreme libertarians federal entitlement. Partly due to truth. see even this much government as budget constraints and partly to a lack a source of tyranny. Reflecting the of trust in the national government, historic tension between civic republican Congress over time has been trimming federal and liberal values, our polity has been subject regulations and devolving control over expen- to recurrent episodes of antistatism. sive social programs to the states. History reveals a sequence of movements Politicians, pundits, and citizens seem to to cut the size and scope of government, and to agree that a more or less continuous growth of devolve—or transfer functions and power from national government has finally, and for the the central state to lower levels of government first time, been reversed. On the basis of the or to the private sector. Prior to the current historical record, however, nothing could be devolution, there have been five major cycles THE FUTURE OF THE FUTURE OF further from the truth. of revulsion against government, each of them related to an earlier period of government Cycles of Antistatism and growth. Periodic reversals in the size and scope THE PUBLIC SECT of government and changes in the balance of THE PUBLIC SECT Government Downsizing power between the state and national govern- A fundamental bipolarity in our political ments define us as a people. traditions dating back to the American Revolution makes us highly ambivalent about Resisting Hamiltonian Centralization the state, and leaves the federal relationship The first assault upon the central state was perpetually contested. Our political culture is the Jeffersonian crusade against Treasury an uneasy mixture of ideas about how to Secretary Alexander Hamilton’s late 18th cen- A series on achieve a just and prosperous society. On the tury centralization of power and authority in the long-term one hand, republicanism—in its original, non- the national government. The Jeffersonians forces affecting partisan sense—is a commonwealth tradition considered small government and an expand- that stresses the importance of civic virtue, ing market the best basis for preserving a U.S. social policy defined as a willingness to place the public democratic republic. They dismantled No. 9, December 1996 Hamilton’s plan for a major national also created the first national-level action to redistribute income, discipline government role in promoting econom- welfare programs to aid the four mil- corporations, guarantee a “living ic development. They devolved author- lion freed slaves of the former wage,” regulate factories and housing, ity over banking to the states, canceled Confederacy in the transition to free- and provide social insurance against an industrial policy intended to pro- dom. Much like a modern social wel- dependency. Following this agenda, the mote manufacturing, and acquired fare agency, the Freedmen’s Bureau national government regulated busi- Louisiana to open new land for expan- distributed food and clothing, helped ness and finance through the Federal sion of an agrarian economy that would freedmen negotiate fair work contracts Reserve, the Federal Trade Com- not require extensive government. with their former masters, set up mission, and a rebuilt Interstate Com- schools for teaching reading, numbers, merce Commission and banned child Unleashing Market Forces and citizenship, and helped African labor. During World War I, government Following a reinstatement of Americans to register and vote. implemented many statist progressive some of the old nation-building poli- These efforts provoked hostility policies when it took control of war cies by Jefferson’s more nationalistic toward federal activism on the part of mobilization. successors, liberal, monopoly-hating both states-rights southern conserva- After World War I and until the Jacksonian Democrats once again tives and business interests within the Great Depression of 1929, Herbert attacked the state in an effort to Republican Party, eager to get on with Hoover (as commerce secretary and restore what they saw as a virtuous national reunification and economic president) was among those who guid- democracy of small farmers and inde- expansion. Seeking accommodation ed a reversal. America’s railroads, pendent artisans. Defining govern- on the race issue, a new Republican nationalized for the war effort, were ment as the source and protector of policy effectively devolved control of quickly returned to private hands. monopolies, they dismantled the race relations to the states. President Steeply progressive and mildly redis- Second Bank of the United States, Grant withdrew most federal troops tributive individual and corporate slashed tariffs, stopped income taxes were slashed. national subsidies for Government pressure for improving transportation, A fundamental bipolarity in our political union recognition and col- and squelched a Whig plan traditions dating back to the American lective bargaining ended. A to use tariff and land rev- Revolution makes us highly ambivalent relaxation of antitrust regu- enues to promote economic lation inspired a massive development. After a rash about the state, and leaves the federal rela- wave of mergers, which of bankruptcies requiring tionship perpetually contested. Prior to the effected a private reorgani- taxpayer bailouts, state leg- current devolution, there have been five zation of the economy. islatures outlawed the use of major cycles of revulsion against govern- government debt to finance Repealing the New Deal railroads and canals, a prac- ment. Periodic reversals in the size and Order tice previously common, scope of government and changes in the Antistatism returned in and privatized existing balance of power between the state and the late 1940s, after a major THE FUTURE OF THE PUBLIC SECTORfacilities. To eliminate the national No. 9 governments define us as a people. expansion of government in corruption involved in spe- the Great Depression and cial chartering of banks and especially during World railroads, state legislatures War II. Conservative passed general incorporation laws, from the South, and after 1876 the Congresses curbed the power of the reducing political control over the Republicans abandoned the effort to National Labor Relations Board, shut flow of investment. protect the black vote. Coming just as down agencies involved in economic a new class of entrepreneurs was mov- planning, and stopped expansion of the Undoing Big Government after the ing mass production into high gear, welfare state. Responding to investors’ Civil War this devolution left the emerging cor- concerns about inflation and excessive The next assault on government, porate-industrial order largely unregu- statism, conservative legislators in the 1870s, aimed at undoing the lated until the turn of the century. defeated a popular movement to make explosive growth of national authority the national government responsible that came with the Civil War. Lincoln’s Targeting Early 20th Century for maintaining full employment. then new Republican Party was a big- Statebuilding During the Eisenhower years, govern- government party. In power, the The next rollback of government, ment resumed the “corporate liberal” Republicans not only preserved the in the 1920s, targeted what antistatists strategies of the Hoover era (in which union, they resurrected the prodevel- defined as the excessive state-building government’s role was mainly to pro- opment projects of the antebellum efforts of the turn-of-the-century mote self-government of the economy Hamiltonians and Whigs, taxed Progressive Movement. Concerned by American business), which had incomes to support the war, and broke about economic instability and rising been discredited by the Great new ground by legislating protections inequality, some “democratic statist” Depression. Rather than requiring that for American workers. Lincoln’s party progressives favored government public spending be sufficient to main- 2 tain adequate investment and growth, dramatically since World War II. Faith theoretical systems, full of suggestions No. 9 THE FUTURE OF THE PUBLIC SECTOR the national government used fiscal in the
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