A Convenient Lie

The “Dead Peasants” thing has a bearing on the economic mess. As I have argued, we need to bring back tariffs. But the bad name of Smoot-Hawley haunts the effort. A case can be made, however that Smoot-Hawley had the deleterious effects that it did, not because it protected domestic industry, but because it protected domestic industry at a time when America was running a massive trade surplus. We were prospering off of other countries’ unemployment, and Smoot-Hawley turned the knife. Still, the surviving myth is that protecting industry is bad, not that protecting a trade surplus is bad. And no matter how much evidence is adduced to demonstrate that the trade surplus is what matters, that China’s yuan policy is really a form of Smoot-Hawley, the free-traders will continue to use Smoot-Hawley as a conversation ender at every turn.

The poster child for such indifference to truth is Charles W. Wilson, who asserted his belief that General Motors was so tied to American prosperity that “what was good for the country was good for GM, and vice versa.” The potential ambiguity of such a remark was known as long ago as Plato. In Euthyphro, he asked: "Is the pious loved by the gods because it is pious, or is it pious because it is loved by the gods?" Is something good for GM because it is good for America, or is it good for America because it is good for GM? Wilson’s point, I think, is that there was no causation involved, just a community of interests. To suggest causation, to allege that Wilson intended to imply causation, is at best to err, and, to do so with animus is to lie. And yet, the implication that he saw GM as the source of all good things persists, because the lie is too useful to pass up.

I have written to Mike Myers, the lawyer who says that “Dead Peasants” referred to dead employees to tell him that the term actually referred to former ones who were still alive. So he now has reason to know that his explanation of how “Dead Peasants” insurance got its name is false. Will he change his story? Will he express at least some personal ownership of his inference, as opposed to his current flat statement of fact? I doubt it. The lie is too valuable, and, it has become sufficiently entrenched that he can pretend not to be responsible for its perpetuation even as he perpetuates it. Of course, I could be wrong. I could get an email from him any day thanking me for correcting his misapprehension, or he could amend his website to tell the story about how the media found the expression “dead peasants” in a memo and appropriated it to name the product, all on its own. One never knows. But one can guess.

In the scheme of things, Myers's inaccuracy isn’t that big a deal. Like the difference between calling it “janitor insurance,” as was done, and calling it “dead janitor” insurance, which was not. Indeed, I suspect the term “dead janitor insurance” was a corruption of “janitor insurance” in a sense “licensed” by the industry’s allegedly calling the product “dead peasants” insurance. (The little lie has babies.) But without the “dead peasant” or “dead janitor” label, outraged bloggers could not get all huffy about how “even the name” makes them cringe. Sort of like Obama’s death panels. Even the name makes me angry. (What, you say there are no death panels? Prove it, Commie bastard!)

A lot of comments on the aforementioned blogs are themselves mini-rants about how bad corporate America is. Care to lay odds that any of these posters will offer a heartfelt “oops” when they are told that companies who bought janitor COLI plans only made money while the employees lived? These are people who would happily admit that they know absolutely nothing about how COLI plans work – that the term “experience rating” is gibberish to them – but they will remain certain that the employers got rich when employees died, because, well, that’s what corporations do, isn’t it?

My claim that the COLI companies made money off living employees and not dead ones will be dismissed, coming as it does from someone who does not share the ranters' clear perception of corporate evil, someone who, therefore, must be lying. It’s a form of denial, really. They have a certain amount of emotional momentum, and no amount of truth is going to change that, not when there is a “bigger truth” (corporations suck) to support the rage, and the object of the game is not to know the truth but to pretend to have a reason to vent the rage.

And yet everyone in this drama would swear on a stack of Bibles that they are themselves not liars, and that they don’t like liars, like, for example, those big corporations and their apologists who say that COLI plan purchasers only made money while employees lived.

Not enough is riding on the rehabilitation of dead peasants insurance for anyone to care whether it was a good thing or a bad thing for employees. It’s been assigned to the “bad for” bin, and there it will stay. But Smoot-Hawley is another matter. We desperately need to end our addiction to foreign goods. We cannot run an economy if our only comparative advantage is in capital-intensive goods. I believe tariffs are coming, and I think the harbingers will be increasingly public questioning of Smoot-Hawley’s role in its time. Two rhetorical titans - “Protectionism caused the Depression” and “China is stealing our jobs” are going to duke it out. Just letting Smoot-Hawley into the ring is progress. Whether it can punch its way out of its historical prison remains to be seen. Our fondness for convenient lies argues against it. But stay tuned.