The American System

You know that you are listening to PBS News Hour when one of the commentators is enthusiastic about the Biden infrastructure proposal as he finds it comparable to the Whigs' American System economic policy.

Henry Clay, one of the founders of the Whig Party and the chief spokesman for its American System.

I had to look that up.

It turns out that I was slightly, and I do mean slightly, familiar with the American System, but not by that name and mostly in the form of its lingering influence on the GOP during the 1860s, 70s and 80s. And I really know nothing about Henry Clay, its chief proponent, other than that he was well known at the time. According to the Congressional website on such topics:

Henry Clay's "American System," devised in the burst of nationalism that followed the War of 1812, remains one of the most historically significant examples of a government-sponsored program to harmonize and balance the nation's agriculture, commerce, and industry. This "System" consisted of three mutually reinforcing parts: a tariff to protect and promote American industry; a national bank to foster commerce; and federal subsidies for roads, canals, and other "internal improvements" to develop profitable markets for agriculture. Funds for these subsidies would be obtained from tariffs and sales of public lands. Clay argued that a vigorously maintained system of sectional economic interdependence would eliminate the chance of renewed subservience to the free-trade, laissez-faire "British System."

Clay delivered a famous speech on the topic, which we won't set out here as its of epic length. You can read it, however, here:  The American System.

The American System was the main economic platform of the Whigs and it was ardently, and now ironically, opposed by the Democrats.  The Democrats were pretty much a laissez-faire party at the time and opposed to government having much of any kid of role in the economy.

The Congressional summation of the American System doesn't appear to be a fair one. The breadth of Whig support for a government role in the economy was pretty wide.  For instance, it reached down to supporting public primary education, something that wasn't universal at the time.

It was ultimately the economic policies, and the overarching issue of slavery, that did the Whigs in, causing them to collapse in the 1850s. By that time the Southern faction of the party was no longer supportive of an expansive Federal role in the economy, where as the northern "National Republican" faction was.  Slavery, of course, became a massive issue in the party.  By the mid 1850s the party was flying apart and a collection of new parties rose up to contest for its former members.  In the north the Republican Party soon emerged.  In the South, Whigs remained without a structure, but opposed succession and then went on to loosely start to form an emerging party in the Southern Congress that never fully formed due to the war ending before that could occur.  The Confederacy was, of course, nearly a one party state.

People often discuss the legacy of the Whigs, but one early legacy was that the GOP was, initially, pretty proactive in using Federal money and Federal assets in the economy. The most prominent example of that was the Transcontinental Railroad which would not have come about without a degree of government planning, favoritism, spending and intervention.  So, PBS isn't out to a left wing lunch when its commentator makes this comparison.

It's interesting too, in that may in fact be a much closer analogy to what Biden is attempting to do than the New Deal.

That doesn't mean its a good idea, or that all of it is.  But it's a very interesting historical analogy.

Blog Mirror: The Aerodrome: Air Subsidies Continue for Cody and Laramie. .. for now.

Air Subsidies Continue for Cody and Laramie. .. for now.

 

From Today's Casper Star Tribune, the following headline:

Air service subsidies expected to continue in Cody and Laramie. But larger questions loom.

But that apparently doesn't mean that such subsidies aren't on the firing line still, to some degree.

For those who might not be aware, air travel to Cody is subsidized by the Federal Government for the winter months, and for all passengers all year long for Laramie.  This provides for twice a day winter flights, for example, to and from Cody to Denver during the winter months.

It's pretty safe to assume that without these funds air travel to Cody would be impaired and for Laramie it would simply end.  The Tribune notes, regarding how this works;

United’s new contract to provide service to Cody guarantees the airline an annual payment of $850,000 to provide 14 nonstop trips each week from Cody to Denver between October and May.

That doesn't provide a reason to continue the subsidy, of course, and pure free marketers would argue that if the market doesn't support it, it should end.  On the other hand, it's been proven that a lack of convenient air transportation hinders Wyoming's economy fairly massively.  

For this reason, the state actually seriously took a look, and still somewhat is, on subsidizing air travel withing the state itself, although it didn't get to that. As the Tribune summarized it:

The Wyoming Department of Transportation presented an ambitious fix to the state’s reliance on commercial air carriers, who can currently decide whether and when to provide service — allowing the fortune’s of Cowboy State communities to rise and fall based on the whims of national corporations.

WYDOT proposed effectively creating its own airline, determining which communities would receive service as well as schedules, ensuring, for example, that it was possible for business people to catch an early morning flight into Casper or Rock Springs.

The state would contract with the same regional providers, like SkyWest or GoJet, that United and Delta Air Lines use on branded flights to connect relatively small communities, like those in Wyoming, with major hubs in Denver and Salt Lake City. These arrangements are known as capacity purchase agreements.

“This idea of capacity purchase agreements, for decades, has worked very well for airlines,” WYDOT director Bill Panos told lawmakers last summer.

At a bare minimum, a lack of air service certainly isolates Wyoming's economy.  So, at the end of the day, the argument somewhat comes the degree to which you favor practicality over economic purity, or whether you believe the government should have any role in subsidizing transportation.  The Governor's office noted, according to the Trib:

“Commercial air service is a significantly limiting factor,” Endow’s Jerimiah Reiman said earlier this year. “There’s a lack of air service particularly to global destinations.”

Of course, if we're going to go for economic purity, at some point we'd have to request that the Federal Government cease funding highway construction, which is a subsidy and a fairly direct one.  I can't see that request coming any time soon, but its interesting how in a state that tends to argue for a fairly laissez faire type of economics, we don't feel that way about highways.  No, not at all.  Of course, to be fair, funding the infrastructure, massively expensive though it is, is not the same as funding transportation itself.  I.e., there's no Federal bus subsidy, or Federal car subsidy. 

There isn't a Federal rail subsidy of any kind in most places, of course, although we do still have Amtrak, so I guess that's not fully true.  When railroads carried passengers everywhere cars were not as commonly used for over the road transportation and the Federal Government hadn't gotten in to highway funding yet.  Indeed, if the Federal Government quit funding highway construction it'd change the transportation infrastructure massively and we'd have to wonder if railroads and airlines would be big benefactors.  Anyhow, even at that time the railroads weren't necessarily super excited about passengers and the Federal Government somewhat forced the rail lines to carry them, but it didn't subsidize them.  The U.S. Mail was a big moneymaker for railroads back then, which it no longer is in any fashion, so the railroads had to listen to the Federal Government for that reason if none other.