My Review of Daron Acemoglu's "What Happened to Liberal Democracy?”

The New, New Deal

M.I.T. economist and Nobel Laureate Daron Acemoglu’s idea of a liberal democracy is the New Deal era of 1933-1973 where under some very unique circumstances the U.S. enjoyed a “shared prosperity.” True to form, the book is being hailed by a host of Left and Far-Left economists.  As a result, his liberal democracy is not the liberal democracy of Milton Friedman and Friedrich von Hayek. Thus, if a reader wants a more balanced account on the need to restore liberal democracy, I would suggest Adrian Wooldridge’s the “The Revolutionary Center.” (See: Shulmaven: My Review of Adrian Woodridge's "The Revolutionary Center" ) What both books have in common is that they go back to the seminal works of Kant, Hobbes, and Locke.

 

In many respects this book is a follow-on to Acemoglu’s and James Robinson’s “Why Nations Fail.” Simply put, Acemoglu worries about how the collapse of democratic institutions leads to authoritarians of the Right and the Left. Here Acemoglu makes a plea to the Democratic Party to return to its working-class roots of the Roosevelt era. He notes that the party began going astray when it traded the working class for the college educated elites. This was in response to the post-industrial world’s reduced need for mass production factory workers in favor of highly educated technical workers needed to run the more automated work of the future.

 

To Acemoglu the first sign of this was the student deferments of the 1960’s during the Vietnam War. It was the factory workers that went to Vietnam while the college students of that era lived it up with sex, drugs, and rock ‘n roll. I know from experience as college graduate in the army at the time, college graduates among my fellow enlisted personnel were few and far between.

 

To Acemoglu, the turning point of the Democrats abandoning the working class went into full force in the 1980’s. This dating is no coincidence because it represented the start of Reagan’s first term. To the author the slow demise of the working class begins then.

 

He is wrong on this point. I would date the slow decline in the working class to the early 1970’s which brought with it the first oil shock and increased foreign competition in automobiles and steel. The date that will live in infamy was September 19,1977 when Youngstown Sheet and Tube shut down its 5,000-worker Campbell Works. Within five years the Mahoning Valley lost 50,000 workers. Why is this important? The Democrats held the presidency and both houses of Congress and did nothing.

 

At the same time the Democratic Party, instead of supporting in the interests of factory workers, turned its attention to the environment, abortion, and racial preferences. To be sure those are real issues, but it was of no solace to the relative and absolute decline of manufacturing work. Thus, it is no wonder that many workers moved away from the Democratic Party.

 

To cure this Acemoglu wants to return the Democratic Party to its to emphasize prolabor positions by strengthening labor unions, selectively supporting tariff, investment in public goods improving the safety net, and above all stop having its elites look down on people who work with their hands and live in small and mid-sized cities across America that have been devastated by deindustrialization. No more should a Hillary Clinton call them “Deplorables.” People forget that FDR was socially conservative, religious and very patriotic, characteristics that hardly define the Democratic Party of today.

 

What Acemoglu gets right is his hostility to identity politics and the cancel culture it breeds. As a liberal he believes in free speech and compares the cancel culture with the Spanish Inquisition, Maoism, and Soviet Communism. The logic behind identity politics requires Orwellian speech police to enforce all of its strictures. Acemoglu, within limits, accepts the rights of diverse communities to live their lives as they see fit.

 

My problem with Acemoglu’s New, New Deal is that the original New Deal was a product of a time and a place that no longer exists. The massive factories of that era are gone, and America has lost its postwar monopoly position in tradeable goods. Further the original New Deal was not bogged down by a host of regulations that make it impossible to build. To be sure Acemoglu is supportive of the “abundance agenda,” but that is a long way from being implemented. (See: Shulmaven: My Review of Ezra Klein's and Derek Thompson's "Abundance") Even more problematic is the prevalence of government employee unions which makes effective government hard to deliver. Recall that FDR himself was against public employee unions. And if you need further proof all you have to do is to look at the failed states of California, New York, and Illinois to see how a New, New Deal would work in practice.

 

To conclude I wish the Democrats would take to heart Acemoglu’s criticism of identity politics. Here he completely agrees with Adrian Wooldridge. I am also glad that Acemoglu is at the barricades fighting the illiberality of the Left and Right. It is good fight. On a more technical level, the book is in need of an editor because it bogs down in too many places and it is need of tables and charts to visualize the data in the text and finally why does the author have to cite himself 56 times in the bibliography, a bit over the top.