PHILADELPHIA, PA – JULY 25: Sen. Elizabeth Warren (D-MA) acknowledges the crowd as she walks on stage to deliver remarks on the first day of the Democratic National Convention at the Wells Fargo Center, July 25, 2016 in Philadelphia, Pennsylvania. An estimated 50,000 people are expected in Philadelphia, including hundreds of protesters and members of the media. The four-day Democratic National Convention kicked off July 25. (Photo by Joe Raedle/Getty Images)
Senator Elizabeth Warren is running for president on a platform of pseudo-progressive angst, socialist redistribution, and unbridled resentment and envy. Like most liberals, she sees herself at the head of the enlightened vanguard. She has declared war on that uniquely American species, the successful business owner, and wants to confiscate several percent of their wealth every year to fund her agenda.
Warren is the political legacy of the American liberal aristocracy, the likes of Herbert Cody, Randolph Bourne, Sinclair Lewis, H.G. Wells, and H.L. Mencken. A century ago, these supposed intellectuals embarked upon a crusade to turn America into a copy of fascist Europe. It would be wrong, however, to surmise that 2019 is the point of departure for Warren’s political ambitions or her capacity to relieve you of your hard-earned dollar in her quest for celebrity.
Like many liberal Democrats, Warren’s political focus is on consumers rather than the business community. She is a self-appointed overseer determined to destroy any remnant of traditional American small-town values of individual liberty and free enterprise. The result is a pandering and increasingly unreasonable approach to any issue that touches consumers, which inevitably would add friction and cost to the economy.
The policy prescriptions of the Democrats enrich chosen social groups, as well as their friends in the trial bar and in government. But they also have a dramatic cost to the U.S. economy—as well as, ironically, to consumers and small business. There is nothing “progressive” about Warren and her fellow liberals.
The Massachusetts socialist promises to fight monopolies and bring fairness to the American system, but her true objective is to extract money from businesses and wealthy individuals to buy political support from the client groups that comprise her base. Her political creed has little to do with free-market democracy and is increasingly a derivative of the fascist, elitist culture of 1920s Europe—a culture many American liberals have embraced after the disappointment of Woodrow Wilson a century earlier.
“Progressivism was a middle-class Protestant movement that hoped to adapt to the strains of big corporations and big-city political machines in order to restore the traditional promise of American life,” wrote Fred Siegel in his wonderful 2013 book The Revolt Against the Masses. He continues: “Modern liberalism was born of a discontinuity, a rejection of Progressivism – a wrenching betrayal and a shift in sensibility so profound that is still resonates today.”
A century later, Elizabeth Warren is leading the charge against America as a quintessentially middle-class, democratic, and capitalist nation. If you think of Warren’s big policy achievement, the 2010 Dodd-Frank Wall Street reform law, as a virtual monument, the various pieces of the edifice consist of oppressive regulation and extortion of private wealth. This noxious combination limits the degree of leverage and growth in the economy.
Dodd-Frank, for example, has turned banks into islands of cash that don’t lend. In this way, it directly contributed to the liquidity problems seen in the financial markets during 2019. Not all of the Dodd-Frank law is badly considered, but Senator Warren and her fellow travelers have poured too much sand into the economic gears, with the result that credit creation has been retarded and growth and employment are far below potential.
As the great American economist Irving Fisher taught us a century ago, less leverage means less employment. Senator Warren’s personal authorship of another monstrosity, the Consumer Financial Protection Agency, has caused banks to take less risk, and the cost to the American economy has been fewer jobs, fewer new homes being built, and far lower levels of economic activity.
Warren and her fellow progressives, many of them former state attorneys general such as Senator Kamala Harris, have also cost American investors and pension participants billions of dollars in fines and penalties related to various wrongs allegedly committed against consumers. Bank of America, for example, has paid over $100 billion in fines, settlements, and losses since 2008. Add to this tale of woe billions more in penalties extorted from private investors under the threat of criminal prosecution by the Department of Justice with regard to government-insured mortgage loans and settlements of private litigation related to a long list of violations of consumers’ rights.
It’s not, you see, that Senator Warren wants to take your money if she wins the presidency. It’s that she already has her hand in your pocket. Her presidential quest is about institutionalizing the politically enabled theft of personal and corporate assets across a broad swath of the U.S. economy. In order to buy support from the less fortunate and turn America into a Euro-style administrative state, she must steal money from successful members of society and coerce them into submission.
Take one glaring example: in the decade since the passage of Dodd-Frank, the amount of mortgage debt backing single family homes in the U.S. has stagnated. A lack of lending for new home construction by banks has forced up the prices of new and existing homes. Americans—particularly lower income families—are finding it increasingly difficult to get access to credit in order to buy homes. And even if they are able to buy, a myriad of new regulations supported by Warren and other liberals makes it increasingly difficult for them to take cash out of their homes—the one asset that most families are able to leverage with mortgage debt to improve their lives.
Warren and other American liberals despise the small-town culture of America. They wish instead that our nation was more like the European Union, particularly France, with all of the attendant government regulation and taxes. While some liberal politicians promote a “Green New Deal,” the rights-based politics of the 2000s is grounded in a post-materialism that supersedes even the democratic politics of the New Deal. The Democratic Party that fought World War II and the Cold War, and for decades supported pro-growth economic policies, is dead and gone.
Today the glue that holds together the Warren political coalition is plain old government patronage cloaked in the language of victimization. The traditional focus on individuals endowed with natural rights has been replaced by a culture of entitlement, part of a new social order whereby client-groups make claims against society as a whole.
Thus we see Senator Warren giving explicit support for the idea of reparations for African Americans because of wrongs committed centuries ago. Forgiveness of government-guaranteed student loans is another favorite Warren device. Like a corrupt Mexican politician buying the votes of the poor with bags of groceries on election day, any deserving social group is eligible for patronage.
Warren’s hostility is not truly directed against the wealthy, but against a bourgeoise middle-class American society that has consistently defended democratic capitalism. If she is successful in attaining the presidency and implementing “big, structural change in American society,” then she’ll be in a position to realize the dreams of the liberal thinkers of a century ago, those who wanted to subjugate the masses of middle-class Americans to the leadership of the chosen elite.
As George Orwell wrote: “The real division is not between conservatives and revolutionaries, but between authoritarians and libertarians.”
Christopher Whalen is an investment banker and chairman of Whalen Global Advisors LLC. He is the author of three books, including Ford Men: From Inspiration to Enterprise (2017) and Inflated: How Money and Debt Built the American Dream (2010). He edits The Institutional Risk Analyst, and appears regularly on such media outlets as CNBC, Bloomberg, Fox News, and Business News Network. Follow him on Twitter @rcwhalen.