Liberal-progressive-socialists again eagerly anticipate returning to the disastrously failed economic policies of Franklin Roosevelt.
The standard liberal-progressive-socialist litany is that socialism, in the New Deal and subsequent years, would have succeeded, if only the government had spent more money for a longer time.
Many liberals lament that the New Deal didn't go far enough in socializing the economy. That was a major reason for the savage antagonism between the liberal establishment of the 1960s and the New Left student radicals like Bill Ayers and Bernadine Dohrn, the spiritual parents of president-elect Obama's educational policies.
In addition to blind religious faith in the secular religion of socialism, liberal-progressives are beset by ignorance. For three generations, students have been taught a completely false version of the Depression's causes and of the actual results attained by President Roosevelt's New Deal.
Despite President Franklin Roosevelt's devaluation of the dollar, deliberate inflation of prices, nationalization of agriculture and industry and massive deficit spending, unemployment remained in double digits. Those levels, from 1933 until our entry into World War II in 1941, were more than twice as high as our present unemployment rate. Not until the 1950s did industrial production regain the levels of 1928.
The initiating cause of the Depression was over-expansion of the money supply by the Federal Reserve during the 1920s, which led to excessive investments in farm and machinery production for export to post-World War I Europe.
Similar over-expansion of the money supply led to over-allocation of resources in fledgeling tech companies in the 1990s dot-com boom-and-bust, as well as in the housing mania and speculative lending and investing practices in the present situation.
Presidents Hoover and Roosevelt turned an ordinary business recession (which should have lasted only about two years) into the worst economic downturn in our history. They accomplished that feat by pursuing the same economic policies now urgently sought by liberal supporters of president-elect Obama.
First, by raising income taxes on individuals and businesses; taxing "the rich" and distributing receipts to favored economic and social classes.
Second, by condemning businessmen as social criminals (note current rhetoric by Senator Charles Schumer and Congressmen Henry Waxman and Barney Frank).
Third, by promoting inflation and devaluation of the dollar (Fed Chairman Bernanke and Treasury Secretary designate Timothy Geithner are neo-Keynesian, flood-the-market-with-artificial-money advocates).
Fourth, by clamping many rounds of new regulations upon business.
Fifth, by supporting socialist labor unions (see the Wall Street Journal's interview with SEIU's CEO Andy Stern).
Sixth, by punishing businesses that sought to reduce costs enough to enable resuming production at a profit. Major employers that reduced wages or laid off workers were threatened with Federal reprisals.
Seventh, by pursuing beggar-thy-neighbor protectionist policies (raising tariffs, or today rescinding and curbing free-trade agreements with foreign nations in order to please labor unions).
Eighth, by centralizing business management decisions in Washington bureaus (see the current possibility of bailing out the Big Three automakers and subjecting their business plans to Federal oversight).
Ninth, by making it impossible for banks to float bonds for long-term credit to support business expansion; uncertainty about what the Federal government would do next was the enemy of credit expansion (witness today, when credit markets remain frozen, because of massive flip-flops in bailout programs by the Treasury and the Fed; Bear Stearns is merged into Chase, but Lehman is allowed to go belly up; the Treasury is to buy bad assets from lenders; then, instead, it injects capital into selected banks).
Tenth, by making daily business decisions a matter of speculative chance; FDR's New Deal came out with so many new plans, new agencies, and new regulations, month after month, that it became impossible for businessmen to make rational decisions for long-term investments that were needed to create new jobs and to ramp up the economy.
For more background, read Robert Higgs's post on the Mises.org website, "The New Deal and the Great Duration."
In "A New Deal Frame of Mind" (February, 2007), I wrote:
The New Dealers were a brash, cock-sure bunch who came from the academic world to Washington intending to wipe out as much of our capitalistic system as possible. They viewed the business and financial communities as a cross between Neanderthal ignorance and evil perversity. They assumed that all right-thinking people were united in the view that businessmen and bankers existed to oppress "the people."
While 1950s apologists like liberal historian Arthur Schlesinger, Jr., prettied the recollections of the New Deal by describing it as "saving business from itself," the facts show clearly that the New Dealers were rabid anti-capitalistic socialists . . .
Robert Higgs, in Depression, War, and Cold War (2006), writes:
Accepting his party's nomination for the presidency in 1936, Mr. Roosevelt railed against the "economic royalists" who were allegedly seeking a "new industrial dictatorship" . . . Privately, he opined that "businessmen as a class were stupid, that newspapers were just as bad" . . . Just before the election of 1936, in an address at Madison Square Garden, he fulminated against the magnates of "organized money" . . . To uprorious applause, he threatened: "I should like to have it said of my second Administration that in it these forces met their master."
See also "The Raw Deal" (June, 2007).
Andy
“For three generations, students have been taught a completely false version of the Depression’s causes and of the actual results attained by President Roosevelt’s New Deal.”
I can’t say for sure why it is, but I never bought into that version of history, even if FDR was a god to my parents. Maybe I was just a rebel, maybe it was my reading of Ayn Rand at an early age, maybe it was my conservative history teacher in 12th grade, or maybe it was the connection between personality type and political outlook, recently revealed here in another article. In any case, I recognize this to be a true statement for most Americans.
“by supporting socialist labor unions”
This may be true, but my experience with labor unions in the 60’s was not socialist. Many unions, especially the smaller trade specific ones like plumbers and patternmakers, worked in ways that protected their members at the exclusion of outsiders. It was a “who you know” thing. If your father, or uncle, was in the union then you could get in. If you didn’t know someone then forget it. This may be a bad thing, but I don’t see it as socialist.
Ivan, I read Ayn Rand at a young age as well and still give copies to those I think have the ability to read a book longer than 10 pages. Regarding unions I grew up in a small ethnically diverse island village with a Ford plant. We had the UAW and the steel workers unions in our area. The steel workers were a case study in how to kill their livlihood. My father in law was a strong member of the steel workers when they decided to strike. He told me that the union would bring the company to their knees. He was right they brought the company to its knees, closed the mill, and everyone lost their jobs. He ended up as a school janitor until he died.
I have lots of similar stories borne of a sub blue collar village. For example the Ford plant went on strike every other year or so and families like mine that at least had enough to eat tried to help our friends whose parents were on strike to eat too. What did the union gain? That plant is closed too and now turned into a municipal power generator. Where did all the jobs go? Away from where I grew up.
Regarding the New Deal, I had a college economics class in my undergraduate studies where I postulated the proofs that the only thing that saved the New Deal was World War II and the resulting manufacturing surge coupled with the need to conserve at home to support the effort which generated a surge in true savings. Prof did not like the paper one bit but when challenged on the original grade backed down to give it the A it deserved when he could not answer the arguments and prove the effectiveness of the FDR socialist programs.
fdr could only be where he is in history because of a education system that depends on the government for its salaries and raises. Follow the money. This is not as much ideology oriented as it is dollar oriented. We desperately need an alternative system. It will not come until the people rebel. As a side thought, only teachers should be able to sue, not parents. That being said, we must have vouchers for all and allow the free enterprise system to vote for the winner, not a bunch of rogue politicians seeking votes from the ignorant. fdr in my estimation did more to damage our country than any other president. In this case, history needs to be re-written.
hvance
What is this about teachers sueing?
Ivan, It was a short blurb that needed more explaining. In today’s classrooms, teachers are sued at the drop of a hat and have little or no authority in disciplining the students. Rewind in your mind and ask yourself what would have happened to a student if he would have said or done some of the things that happen in the classroom today. Did we have policemen in our schools? The inmates have taken charge. I think that neither parents or students should be able to sue in any fashion, that it is a privilege that they are afforded an education. As for teachers being able to sue, they should be able to sue for a parent not fulfilling his obligation of having the student at school on time, courteous to all, and have his homework done. Is this possible? Probably not but I see no way it could harm the students, it would only make them better citizens and able to compete better in this economy. What would happen to those who would not conform to the rules? Well right now those few are the ones that is making it worse for the majority. I would initially toss
them out for a period while they and their parents were made to dig a hole and then fill it up for a period of time. Forgiveness earned, not given. And oh by the way, the aclu would have to be dismantled for this to take place.
hvance
OK, I understand your comment now. I’m generally not in favor of any lawsuits. They just make the lawyers rich. I think that there is some validity to your opinion on students, but I prefer to put the responsibility on teachers, administrators, and school boards.
Rewinding my mind, as you say, I can think of two examples. When I was in driver training, in 1958, we had a teacher that was also the wrestling coach. One of the students was a smart ass and acting up. When this teacher came down the isle to see what was going on the student got up out of his chair in a threatening way to confront the teacher. In a split second the teacher made a move that put the boys arm behind his back and took him down. I don’t remember the immediate result, but the classroom got very quiet and resumed. Later there was some talk that the teacher was under review by the front office. I wrote a note to the office in support of the teacher, as did some other students, and the problem went away.
Back in 2001, my class had a reunion and we decided to plant a tree in front of the school. We needed a hole dug in front of the school 4 feet in diameter and 2 feet deep and being geezers we were looking for some help. My dad had some friends at the school and he talked with the assistant principle, who said he would take care of getting the hole dug. On the day we arrived we had a nice ceremony and we heard the story of how the AP went into the detention room and picked out four boys, handed them shovels, and told them were to dig. As it turned out the boys were happy to get out of the boring detention room and go outside for a while. They made a party out of the digging and left with a feeling of accomplishment. I don’t know how any of those boys turned out, but I suppose that each time they see that tree they remember the string of events that got them in trouble and how they earned their way out of detension.
Your third paragraph states; “In addition to blind religious faith in the secular religion of socialism, liberal-progressives are beset by ignorance.” While I’m willing to grant the first, I disagree with the “…beset by ignorance…” portion.
Today’s liberal-progressives know exactly where the currently espoused policies of an Obama administration will take the country; and it is exactly where they want the country ‘taken to’. Between current ‘bailout’ funds spent or earmarked to be spent, plus Obama’s $800 billion plus of new spending, they’ve got us right where they want us.
Choosing winniners and losers in the marketplace allows them to control all aspects of future capital. Lehman is the example. Play ball with the likes of Schumer, Waxman, and Frank, or suffer the consequences. Strings will be attached to all bailout funds. The price the Big Three will pay for their bailout is building the kinds of cars that Harry Reid and Al Gore think we should all be driving. Health care will be legislated as a ‘right’. Bailout funds for industries will eventually be tied to union representation.
Businesses with ‘green’ business plans will be moved to the head ofthe bailout line while those with more traditional business models will be allowed to whither on the vine.
Bailout money will give the businesses receiving such funds an inordinate advantage over those that do not. A guaranteed method politicians will use to get all businesses to toe the Party Line. Neither the favored businesses, nor the politicians give a tinker’s damn about the condition of future generations of Americans. This is the liberal-progressives big opportunity not only to sieze control of vast amounts of the economy, but to Tighten the grip of that control to the point where ‘We the People’ may never matter again!
Fanatically religious regarding socialism certainly, but ignorant; not by half!
Milbrat,
I know an awful lot of those liberals (even related to a bunch – I live deep in liberal country) and can say you are both right and wrong. Right, they wholeheartedly agree in the liberal-socialist agenda; wrong, they don’t fully get the consequences and do actually believe this is an economically sound agenda. And, these are not ‘ignorant’ people, but some fairly bright folks with advanced degrees. What both Thomas and you underestimate is the capacity of even bright, well-educated, articulate people to self-convince of pure hog-swallow. You also underestimate the power of the politically-correct mental straight-jacket (aka, group-think). Despite all the protestations of maverick-ness, darn few are really able or willing to confront elephants in the room most folks desperately want ignored. For example, it takes no great intellect figuring out Obama is an empty suit. But, saying so in a liberal crowd invites a withering fire of protests including accusations of ‘racism’. So, the real problem is not ignorance and it is not cynicism, it is simple cowardice. Otherwise, an awful lot of these fence-sitting liberals would shuck off the nonsense, realizing this is the only way they can ever be free to think again.