Trump Wasn’t the Beginning
“And it is a basic rule of politics that if the left fails to mobilize the working class, the right will do so instead. That is exactly what has happened”. -Historian David N. Gibbs, 2024
It started in 1947 in Switzerland.
A group of elite intellectuals were alarmed at the policies that FDR was initiating that would challenge the power of the elite to control governments. These reforms would provide a better distribution of the wealth of a nation to the working class and would provide them with improved financial security. They would not be easily manipulated workers desperate to take any job at any wage under any condition.
What got them distressed about the FDR reforms? It was government intervention in the economy. To FDR proper government regulation was the solution not the problem. This group called these solutions, socialism: Social Security, employment insurance, and infrastructure projects to create jobs are some of the better known.
Also, there was another disturbing encroachment, the regulation of banks: dividing investment banks from commercial banks — and more importantly restricting commercial banks from using the depositor money to speculate in the markets.
And worse, high taxes on the rich:
● In the 1950s, when the U.S. economy was booming and the middle class was thriving, the top marginal tax rate was 91%.
● Until the 1980s, the rich paid 70%. (Economic Policy Institute, Ap 06, 2025)
And more distressing, it seemed that the Republicans were also likely to expand this march to what neoliberals called the welfare state.
And they were correct in their fears. Eisenhower kept the high tax rate on the rich of 91% and expanded FDR’s new deal program:
“He signed legislation that expanded Social Security, increased the minimum wage, and created the Department of Health, Education and Welfare. He also supported government construction of low-income housing but favored more limited spending than had Truman” (The Miller Center, 2025).
Thus it was in 1947, that this group of intellectuals, primarily economists, met at Mont Pellerin in Switzerland to devise a strategy to counter the incursion of these feared socialistic measures. They had good grounds for their concern because it was at this point that a period began when the average person, on a single salary, prospered and could afford a home, a new car every few years and save.
This unusual sharing of prosperity in history continued for decades until this group convinced the working class that tax cuts to the rich would benefit them more than taxing the ultra-rich.
And this expansion of dreaded socialism was a real danger because every other developed nation was in the process of doing this. (And every other G7 country has had universal medical care and heavily subsidized education for over 100 years. Their citizens have no medical debt and graduate with very light education debt, if any). This group had to convince the citizens of the richest country in the world that they couldn’t do what lesser economies could do — and at that they have been wildly successful.
Outside of a few on the left of the political spectrum, few have heard of this group or if they do, know of its objectives. In the title of his book, journalist George Monbiot called its unseen tenets: Invisible Doctrine: The Secret History of Neoliberalism.
While this group, composed mainly of economists, does not want to have any label so they could remain undetected, they have been called ‘neoliberal’. But this term is misleading in that liberal normally implies a theory that has concern for the disadvantaged. Here it means liberal for the wealth class so that it has no restraint on how it makes and retains wealth, mainly through its businesses.
The measures that they attack are not socialism as Marx defined it, which is an alternative to capitalism, a stepping stone to communism. These programs are not designed to replace capitalism but to work within it, restricting some of its predatory aspects if unrestrained.
The Mont Pelerin group planned a long-term strategy. They would first build support in think tanks and university economic departments, which they did, and wait. Examples are: Business Roundtable, The Heritage Foundation, the Cato Institute, Citizens for a Sound Economy, Accuracy in Academia and the Manhattan Institute for Policy Research.
The neoliberals were correct about the march of America toward legislation that kept taxes on the rich high and that benefitted the working class by both Democrats and Republicans. As Thom Hartmann summarized it:
“Congress and the Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, and Carter administrations got a hell of a lot done for the average American citizen and worker. They included:
Social Security, the right to unionize (Wagner Act), the minimum wage, restrictions on child labor, mandatory overtime pay, the TVA that brought electricity to Appalachia, the FHA that made housing affordable, the SEC that protected small investors, two different GI Bills, the National School Lunch Act, the interstate highway system, Medicare, Medicaid, the Civil Rights and Voting Rights Acts, the Elementary and Secondary Education Act that funded new schools across the nation, Head Start, Food Stamps, the Truth in Lending Act, OSHA, the EPA, WIC (Women and Infant Children), Clean Air Act, Clean Water Act, Wilderness Act, etc., etc., etc.” (Hartmann, Ap 18, 2025)
Despite all of these achievements to help the working class, the neoliberals worked tirelessly undeterred in spreading their faith. Their chief evangelist, Milton Friedman, identified the turning point that rewarded their unswerving efforts: the oil crisis and stagflation in the 1970s.
As George Monbiot reported it: “In the words of Hayek’s disciple Milton Friedman, “when the time came, we were ready … and we could step right in”. Taxes were cut, trade unions crushed, public services privatised and outsourced, markets deregulated.” (The Guardian, May 29, 2024).
Since that time the neoliberal goal of low taxes on the rich and deregulation has dominated both the Democrat and Republican parties in an agreement that has been called, ‘the Washington Consensus’.
Economist James K. Galbraith describes the consensus with a warning in the title to an article, The Death of Neoliberalism Is Greatly Exaggerated:
“For 40 years in the United States, through Republican and Democratic administrations alike, a certain brand of economic thinking held pride of place. It was an economics of markets, governed by regulations as light as possible under a government of low expenditures, low taxes, balanced budgets, and private ownership of capital and land”. (Foreign Policy, Ap 26, 2021).
The historical record bears this agreement out:
• It was Jimmy Carter (1977–1981) who first opened the door to the neoliberal idea that government is the problem and deregulation was the solution. Carter played a significant role in dismantling New Deal legislation with the deregulation of major industries including airlines, banking, trucking, telecommunications, natural gas and railways (Forbes, Sep 30, 2024).
• Ronald Regan (1981–1989) adopted Milton Friedman as his economic guru and implemented that most sought after prize, lower taxes on the rich and deregulation as much as possible as the goal.
• Bill Clinton (1993–2001) did more significant deregulation than Reagan. In his 1996 State of the Union address, he said “the era of big government is over” (Jan 26, 1996). Clinton undid the FDR legislation regarding banking that had provided a stable financial system from 1933 until the near complete financial system meltdown in 2008 (The Guardian, Ap 19, 2014).
• In the Obama administration (2009–2017), the neoliberal economic advisors, such as Larry Summers: — including those who had advised Clinton to deregulate the banks — who had failed to detect that the financial system was in serious difficulty until one minute after the failure of the investment bank Bear Sterns — were left in place to advise on the solution, Dodd Frank. (The Guardian, Ap 19, 2014).
The sharing of prosperity that started because of the FDR and following administrations’ ‘socialist’ policies began to reverse in the late 1970s as the neoliberal goals, especially deregulation crept in. The graph of the measure of economic inequality below, the Gini coefficient, shows that after the 1970s, inequality rose under every administration. It remained high under the Obama, Trump 1.0 and Biden administrations (Government Census Report, 2022, Fig. 1).
Noteworthy: this graph shows, the reforms by FDR set the US economy on the road to a better sharing of prosperity. The reforms by Obama left the trend to inequality high.
The Last Turning Point
By the end of 2008, the working class had turned against the Republicans. They looked to Obama’s promise of Hope and Change. Obama failed them:
• The bankers got their outrageous bonuses for even the time that they screwed up so badly;
• Some 6 million people lost their homes (NYU Law, Jan 06, 2021)
• The reforms to the economy only benefitted the upper 10%, those who controlled the Democratic Party. (IMF Report, Nov 8–9, 2012)
Sociology professor Ken-Hou Lin and business professor Megan Tobias Neely compared the effects of the FDR New Deal with the Obama solutions and came to the same conclusion as my review of the Gini coefficient::
“While the reforms during the Great Depression fundamentally restructured the financial system, the regulatory policies since the financial crisis largely were designed to restore a financial order tht, for decades, has been channeling resources from the rest of the economy to the top” (Oxford University Press, Feb 10, 2020).
And yet the Democrats celebrate the Obama response as saving the system, which it did — but to the detriment of the working class and the Democrat’s ability to win elections.
Near the end of his life, Friedman noted there was still much for the neoliberals to do: “we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course,”(Hoover Institution, Oct 30, 2006).
Friedman viewed any government program, Including the post office and education, as socialist and therefore inherently bad. He would feel vindicated to see how Trump and Musk are gutting all federal programs so that they become so grossly inefficient that the voters will demand they be given to businesses to run for profit.
Trump understood the anger against both parties. He spoke directly to the working class; helping them, his central message. The elite controlled Democrats remain wedded to the failed neoliberal ideas for their financial policies.
Acknowledgement: Graph by Thomas Piketty, President images by David Brethauer.
