President Trump delivers his inaugural address at the U.S. Capitol on Friday.
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“The Forgotten Man” is not likely to be forgotten in the Trump presidency. In his inaugural address, the new chief executive promised that “the forgotten men and women of our country will be forgotten no longer. Everyone is listening to you now.” Trump was reprising a mention of “forgotten men and women” made back in November, in his victory speech.
It’s clear why Trump hopes to build a presidency on service to the “forgotten.” The quality of the economic recovery after the financial crisis of 2008 was poor, and to this day many Americans feel they are not back where they were in 2007.
It is all too obvious that the “too big to fail” doctrine favored Wall Street behemoths like Goldman Sachs, as has post-crash statute. Laws such as Dodd-Frank force all kinds of negative consequences upon smaller financial institutions -- call them forgotten banks -- as Senator Bill Cassidy, a Louisiana Republican, noted at the confirmation hearing for Steven Mnuchin, the nominee for Treasury secretary and former Goldman executive.
So who precisely is this Forgotten Man?
In fact, two opposing Forgotten Men figure in American history. Which one Trump actually backs will determine what kind of presidency his ends up being.
The more familiar Forgotten Man was the brainchild of another populist campaigner, Franklin Roosevelt. During the 1932 presidential campaign, a point when two in 10 workers were unemployed, Roosevelt expressed concern for “the forgotten man at the bottom of the economic pyramid.” The New York governor meant the poor man, whose poverty he blamed on a failure of Wall Street.
When he was asked about hiring some executives from the House of Morgan, a bank that loomed as large then as Goldman Sachs does today, FDR rejected the idea outright. “We simply can’t tie up with 23,” the new president said, a reference to the Morgan headquarters at 23 Wall Street.
As president, Roosevelt used his social program, the New Deal, to expand his definition of the Forgotten Man. He moved on from that first group, the poor, to others: the elderly, the infirm and the worker. To him, “the forgotten man” was the vulnerable constituent group which longed for economic and political support.
Roosevelt’s is the first Forgotten Man who comes to mind now. But in those days, another version was just as familiar. That was the one captured by a legendary Yale professor named William Graham Sumner. His Forgotten Man was an anonymous figure, suffering the collateral damage of a project advanced to help the group identified as vulnerable. In Sumner's definition, he was “the man who pays, the man who prays, the man who is not thought of.”
A classical liberal in the U.K. tradition, Sumner therefore rejected any law for special groups: earmarks, targeted social programs, official interest-group organizations, narrow tax breaks. The professor especially abhorred protectionism, then also a plank in the Republican platform, because protectionism benefited a narrow group: New England industrialists. Sumner called protectionism "the ism which teaches that waste makes wealth."
Politically, the attractions of Roosevelt’s Forgotten Man definition are powerful. In his first term, Roosevelt delivered benefits to so many groups -- organized labor especially comes to mind -- that in his second election he took 46 of 48 states.
Economically, the record suggests that Sumner’s forgotten man is the more valuable. After all, the New Deal, as inspiring as it was, did not yield a strong recovery. FDR’s wildly pro-union legislation priced many workers out of the market, thereby failing the very poor Roosevelt had vowed to serve. High unemployment endured right up to World War II.
”Who is the forgotten man in Muncie?” asked an Indiana paper in the late 1930s, doubtless thinking of Sumner’s figure. “I know him as intimately as I know my own undershirt. He is the fellow that is trying to get along without public relief... In the meantime the taxpayers go on supporting many that would not work if they had jobs.”
So which Forgotten Man will Trump make his own? His protectionism, a reversion to ancient Republican trade policy, is seen as a pitch to one such group. But this doctrine only deters economic growth, and favors what you could call "remembered groups," like organized labor, instead of helping "the man who pays."
Some Cabinet selections suggest Trump favors Sumner’s anonymous man or woman. One example is the nominee for Labor secretary, Andy Puzder, the chief executive of CKE Restaurants. While most Labor secretaries have a background in dealing with unions or are otherwise focused on organized labor, they have not always had experience in creating jobs and working with smaller employers like the fast-food industry's franchisees, who employ thousands of nonunion workers. Puzder's focus is on general growth in his industry, not on specific trades with groups.
But other moves by the president suggest a penchant for service to “remembered groups.” Take the decision to pluck Mnuchin, along with several other executives, from Goldman Sachs.
Given the cronyism that characterized the bailout policy of another Goldman alum, Treasury Secretary Hank Paulson, the choice of so many of the bank's veterans is disconcerting. Trump, to paraphrase Roosevelt, is “tying up,” not with 23 Wall Street but with 200 West Street, the Goldman headquarters. If anyone is the Forgotten Man, FDR's or Sumner's, it is not Goldman.
In his testimony, Mnuchin emphasized that he stood for general growth, the faith that a stronger economy will pull everyone forward, not just favored groups. The hope is that Trump policy will also do so -- and thereby serve all Forgotten Men.
Amity Shlaes is author of “The Forgotten Man: A New History of the Great Depression” (2007).
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.