We all remember the scene in the movie version of Frank Baum’s Wonderful Wizard of Oz when Toto pulls the curtain aside and the Wizard turns out to be none other than the snake oil salesman from Kansas. In William Leach’s wonderful history of consumerism, Land of Desire*, Leach points out that Baum was one of the earliest store window designers for Wannamaker’s Department Store in Philadelphia and that Baum’s American fairy tale was an allegory for the concept of consumerism. The snake oil salesman was the Wizard of consumerism who could grant everyone their dreams.
Within a few decades of Baum’s publication of Wonderful Wizard of Oz American politics took a particular turn. A snake oil of illusory democracy and equality were sold to the American public by a series of Wizards who managed to transfer increasing quantities of wealth to Wall Street and the banking industry while, at the same time, convincing Americans that they were doing so in the interest of the poor and middle class.
Americans have traveled the Yellow Brick Road for more than seventy years while the snake oil has done its work. During that time, both conservatives and “liberals” have played their part. The conservatives, keying off the social Darwinism of the late 19th century, have claimed that “liberals” are soft on the poor and do not recognize the importance of incentives. They pretend to libertarian views on government, but when push comes to shove conservatives advocate a key role for big government in the form of Soviet-style central planning by the barbaric relic known as the Federal Reserve Bank. The “liberals” say that the conservatives are greedy and indifferent to income inequality. Both sides agree that big government is needed and neither questions the Federal Reserve Bank’s existence.
The faux debate has left open an opportunity for the RLC: a benign libertarianism where freedom works in favor of the poor; government serves to oppress them; and freedom (as opposed to border fences or wealth transfers) provides the opportunity for achievement. This is the authentic American dream that both conservatives like Sean Hannity and “liberals” like Paul Krugman have deserted.
The use of illusion is fundamental to Keynesian economics and its argument for Soviet-style planning by Fed economists. On page 8 of his General Theory of Employment, Interest, and Money Keynes writes:
“Although a reduction in the existing money-wage would lead to a withdrawal of labour, it does not follow that a fall in the value of the existing money-wage in terms of wage-goods would do so, if it were due to a rise in the price of the latter. In other words, it may be the case that within a certain range the demand for labour is for a minimum money-wage and not for a minimum real wage.”
In other words, policy makers can trick workers into working for lower wages through inflation. Keynesian macro-economics is rooted in the use of deception: tricking workers into working for lower wages by increasing both prices and wages. And who is in charge of increasing prices and wages? Commercial banks and their Wall Street colleagues who are, of course, dependent on the Federal Reserve Bank for the Wicked Witch’s broomstick of an ever-expanding monetary base.
For seven decades the faux debate between conservatives and “liberals” has proceeded apace. The conservatives say that property is important but we need a central bank to stimulate the economy–ignoring that inflation is the surest way to transfer property from the general public to those receiving fresh reserves. The liberals say that income equality is important and as a result need a central bank to stimulate the economy–ignoring that inflation is the surest way to transfer wealth from poor to rich. Both sides claim faux expertise–junk economics, quack sociology and crackpot psychology, to bamboozle the public.
But this year something odd happened. The Wizard became over-confident. Paulson, Geithner, Bush and Obama left the curtain open. They stopped claiming that they are transferring from rich to poor. Instead, they claimed that they are transferring from the public to the rich.
The Republican Liberty Caucus now has a golden opportunity to undo the harm that more than seven decades of snake oil has done to American political debate.
*William Leach, Land of Desire: Merchants, Power and the Rise of a New American Culture. New York: Vintage Books, 1993.
Mitchell Langbert is associate professor at Brooklyn College. He can be visited at http://www.mitchell-langbert.blogspot.com.