The modern-liberal confidence in FDR, the New Deal, and Keynesian economics is such an article of faith that fully four generations of Americans are still lured by its empty assurances and blind to its frauds.

For weeks, President Obama has been drawing Lincoln-esque comparisons to his style of leadership, but his acolytes have a different model of him in their heads, and with some justice.

This month's American Prospect is entitled "New Deal II: This Time It's Global" and includes six articles promising we are, once again, in for a dizzyingly madcap ride into alternative-reality economics.  In addition to current articles, I sifted TAP back issues for similar content confirming these folks are in full fawning progressive mind-meld; which is to say mired in past liberal glories.  This provides us not only with a glimpse of the widespread wobbly calculus, but of the overburdening of economics with social baggage liberals expect from any return to Rooseveltian mismanagement, never having learned the KISS rule in life, economics, or governance.

Here are their taglines with my remarks:

"A Global New Deal" – Harold Meyerson "The next New Deal won't work if it's only American. Fixing our economy will require fixing international systems."

– i.e., business has gone global, ergo new New-Dealers must keep up if they are to keep it down.  (Meyerson is the scion of L.A. Socialist Party leaders and a member of the 1970s Democratic Socialist Organizing Committee.  He recently smeared the GOP as racist, seemingly and solely because Republicans failed to produce a black candidate to match their own.)

"Number Cruncher-in-Chief" – Ezra Klein "The work of government is fundamentally the work of raising money and spending it."

– And, all this time we've been laboring under the delusion the function of government was providing our common defense, keeping the peace, creating a little justice and safeguarding our personal liberties.  After two centuries, we learn its main function has, all along, been the raising and dispensing of monetary largess.  How can we have been so blind?

"From Consumers to Commons" – Robert Reich "Consumer spending is unlikely to return to the levels it once reached and so the economy will not recover until the government finds ways to invest in the common goods we all share. "

– For, as we all know, the economy is incapable of recovery on its own.  Yep, he is that Robert Reich – former Clinton Labor Secretary now demanding stimulus money be kept out of the hands of skilled-workers (the better to be certain it has no effect on improving the economy while guaranteeing unskilled-workers, aliens, and the perennially shiftless dance the Democrat tune).

"The Competence Dodge" – Robert Kuttner "The experience and competence of Obama's economic team are not substitutes for true progressivism." "Obama's best speeches — the early ones that he wrote himself — suggested the soul of a New Dealer."

– Obama's cliché hand-me-down economic-gurus may be a bit overqualified but, not to worry; Master Obewan is a genuine New Dealer socialist who has "the force" with him.  If experience and competence are deemed "inferior" to "true progressivism," what does that tell us about progressivism and progressives?  It can only mean putting our economy back on its feet is less important than their political agenda – which is to supplant freedom with socialism.

"Our Capitalist Government" – Mark Schmitt ". . . the needs of the moment force government to find entirely new ways to fix problems, improvisations which then live on as tools of policy."

– And, don't think for one second liberals aren't salivating at the prospect! "Needs of the moment" is code-speak for "needs of the Democrat Party" as, obviously, the "moment" is without needs and a policy that lives on is entrapment. (Schmitt operates the Decembrist weblog in addition to his TAP editorial duties.  "Decembrist" refers to the disastrous and failed 1825 Russian land-redistributing revolution.) Here it is again, using saving-the-economy as pretext for permanently compromising policy.

"Obama's Economic Opportunity" – earlier article by Kuttner "The dismal state of the economy presents Obama with the chance not just to produce a recovery but to restore a more egalitarian society – and a progressive majority."

– i.e., the proper object of capitalism is advancing socialism (and rigging things so they stay that way). Could he have stated it any more blatantly that pushing the socialist agenda (not restoring the economy) is the real Democrat objective?

"Learning From the New Deal's Mistakes" – Eric Rauchway "The New Deal was, for the most part, phenomenally successful, but there are many ways it could have gone further or been better organized — failings it is critical we avoid this time around."

– i.e., new New-Dealers have the advantage of 20/20 hindsight; and, what their "ignore-history" telescopic x-ray vision is telling them is the New Deal did not go far enough; plus they're determined to get that universal (socialist) healthcare system this time around.  I am amazed by the admission there were ever any New Deal failures!  The only other way to interpret this (assuming he's not a complete moron) is the success he refers to is the opening the New Deal gave to socialists and commies, the failure, then, being the subsequent retreat.

"Can We Have a New Deal without the New Dealers" – earlier article by Rauchway "Can a massive government intervention in the economy work if it is being run by people who don't believe in government?"

– (U.C. Davis history professor; books include: The Great Depression and the New Deal, Blessed Among Nations: How the World Made America)  Clearly, Rauchway is one of those who attribute national greatness to anything but us or our values, as evidenced by the second book title.  The inference he makes in the article's tagline is: if conservatives and libertarians are so anti-government, then we must be hypocrites for supporting government economic interventions (bailouts).  The problem with Rauchway's analysis is he hasn't paid attention: a) we don't support massive economic interventions and b) don't be so darned confused by the labels because not every politico with an 'R' after the name rates "fiscal-conservative."  Any doubt he believes government is the answer to everything from holocausts to hemorrhoids?  He's positively salivating over the prospect of life permanently shackled.  Man, get a life!

"McCain's Do Nothing Economics" — earlier article by Rauchway "The Great Depression was caused not by a stock crash but by a banking system left to self-destruct by a conservative president who, like John McCain today, insisted that the economy's "fundamentals" were strong."

– Whatever goes wrong in the world, liberals have it covered because it must be the fault of the Republican-most-recently-in-charge, or about-to-take-charge.  Sometimes that's true, but there is no way Republicans can have done all the damage claimed, and liberals need to own up to at least a share. We impute godlike powers to kings despite centuries of history telling us they put pants to loins the same as everyone else and are not to be relied on for miracles.  He is right, of course, that Hoover played a part in it; just as McCain couldn't stand to wait and triggered an unnecessary bailout. But, that is not quite the same as desiring economic disruptions the better to advance socialism.  McCain lost faith, whereas Obama's trust in catastrophe has served him and his cause well.

"A Stimulus Everyone Can Love" – earlier article by Kuttner "As Congress dithers, the economy continues to crumble. The consensus that we need a stimulus package has been undermined by deadlock over what should get funding. Here's a plan both sides can agree on."

– Don't you just feel the love?  Okay, he wasn't really including conservatives in "everyone."   And what, pray tell, is Kuttner's brilliant formula for recovery?  Why, bailout state and local governments first and foremost, then spend, spend, spend on those social programs, neither of which has any possibility of increasing anything but debt.  Tell me, Kuttner, if your personal finances are in the tank, do you spend your remaining savings on creature comforts while keeping your ne'er-do-well relatives afloat, or do you cut your losses, tell the parasite brother-in-law to shift for himself, and spend only on that which has a serious chance of putting food on the table?

"What We Need Out of a Second Stimulus Package" – Reid Cramer ". . . the focus on stimulus is now misplaced. American families and the overall economy would benefit more if our elected officials served up a suite of policies that instead focused on security . . . In other words, we need both a safety net . . ."

– plus incentives + infrastructure + inertia (401K's for all, &c) (research director Asset Building Program, New America Foundation)

Basically, Cramer wants to exploit the current recession to burden small employers with employee benefits that will strain the small business paradigm similar to what is being hyped in healthcare.  If big businesses can handle it, surely small business can too – right?  Never mind that 401K's are a luxury item big corporations use to entice good workers away from small businesses where they stand a better chance of growing along with the enterprise, and that 401K's are only effective where there are sufficient participants to attract investment partners.  So, this will succeed in forcing brokers to absorb marginal clients, driving up overhead and damping profits and force employers to cut jobs to afford the "employer contributions" sure to follow.  Unmentioned in Cramer's remarks is the Congressional intent of absorbing our 401K's into a second-tier Social Security pyramid.  So, now we get mandatory 401K savings coupled with governmental confiscation.  Now, there's an incentive to save money if I ever heard one – not!

"Government is Back" – Paul Waldman ". . . it's worth remembering why the Great Depression finally came to an end . . . both progressives and conservatives agree that it was World War II that finally put the Depression into the past. Conservatives . . . from an economic standpoint, the war was a gigantic public-works program. The economic benefits came from the federal government spending staggering amounts of [borrowed] money on factories, materials, and Rosie the Riveter's salary."  

– [Media Matters senior fellow], I leave my remarks on Waldman for the next section

Are all liberals this clueless to how the world actually works, or just TAP's arsenal of wonks?  These are respected liberal pundits.  If they look on FDR as a model for economic salvation and Obama is made of the same cloth, is that what we are in for? Or, can we hope Obama is any wiser than his spiritual predecessor or may, at the very least, not repeat the same awful mistakes?

Will the real FDR please stand up?

Before selling the genius of an icon like FDR, it is a good idea to take a good hard look at just what is being sold.  There is no shortage of evidence, yet our ignorance of FDR fills volumes.  This is, of course, by design as his devotees long ago realized the legend could not stand the light and went to great lengths burying the evidence while preserving and enhancing the myth.  Because of this, none of the above scholars appear overly acquainted with how deep the New Deal failures ran, never having studied the subject; or as is more likely, having studied it, embrace it anyway for its political utility; making any understanding they do possess subject to the demands of ideology.

Waldman manages to be wrong on almost every count, not least that conservatives agree with the assessment WWII ended the Depression.  If some few conservatives still believe that, it is only because that is what all of us have been taught and are only now unearthing the reality.  The war and FDR's desire to prepare and get into it, forced him to abandon his more progressive policies.

Had FDR been a true progressive or socialist, this might have caused him some anxiety.  As it didn't, this says his ideological roots were shallow.  At the same time, he'd alienated his liberal-corporatist support going into the NRA debacle and needed to mend those fences to win re-election.  To these conflicting ends and two years short of Pearl Harbor, he began shifting policy slowly rightward, but only with regard to those businesses critical to warfare.

Outside these aims he continued to pander to progressives, leaving business to languish and generally ignored.  Small businesses, in particular, and agriculture suffered disproportionately.  Economic hardship outside the war industries was still going strong a full year after the war ended; and those too began having problems.  Massive inflation and debt caused by the war did not result in an automatic return to pre-Depression economic conditions; and, it is this restoration that formally marks the end of depression/recession cycles.

In fact, there was a very serious post-war slump.  Roosevelt's most significant economic gain came from ending the war quickly and on favorable terms.  To be sure, there were some economic winners in the war (GM, Lockheed, Litton, General Dynamics, &c), but this created big-brother cronyism and corruption (military-industrial complex Eisenhower warned of), and an industrial base needing massive retooling to civilian uses.   It can be argued that although ending the war eliminated any further need to bankrupt us, it might also have been won less expensively (in both money and lives) if prosecuted less hurriedly.

The present war provides a model for this.  It is less burdensome to prosperity despite its massive costs precisely because it does not divert more than a few percent of GDP at any time to war-fighting; the rest of capital continuing to be invested and reinvested in profitable civilian enterprises.  The disadvantage, of course, is it allows too much occasion for adversaries to undermine war-policy for political advantage.

The real end of the Depression came about because, without FDR pushing economic-quackery and with a conservative Congress eliminating many of the New Deal restraints, the worst of these policies were quietly retired.  By war's end, even many Democrats began suspecting the truth behind the Roosevelt myth, and, without FDR there to whip them back in line, could openly support the market-freeing tide.

Without fiscal quackery discouraging enterprise, business quickly rebounded.  Thousands of new small businesses emerged from among the ranks of returning veterans (construction, grocers, mechanics and mechanical contractors, independent trucking, &c) and war-bloated big-businesses were freed to make changes. Truman inherited a severe housing shortage, a consumption vacuum, violent labor strikes, high inflation (topping six percent), but also a Republican Congress determined to make tax cuts, end price-controls and cartels over fading liberal objections.  Republicans fiercely opposed Truman's "Fair Deal" housing and healthcare proposals, one of which proved enormously disastrous and the other promises to be every bit as bad when fully implemented.

Thus, WWII did not bootstrap us out of depression so much as did freeing us from governmental restrictions.

The priority at war's end was on restoring veterans to civilian life and rewarding their sacrifices with something more tangible than empty New Deal promises.  New Deal policies were incapable of providing real jobs to 16 million returning veterans (1-in-8 Americans), even with all the Rosie Riveters taken out of the equation.  For that, only a truly revived economy would serve.  And for that, confiscatory hyper-controlling New Deal economic policies would have been disastrous.

Had not the voters repudiated the New Dealers by choosing a Republican Congress, it is certain the Depression would have continued unabated until voters fully wised up.  In that case, there'd be no confuting today just who kept the depression brewing (New Dealers) and who ended it (a disenchanted Congress).  In effect, a deal was struck abandoning the New Deal while crediting FDR with the recovery.  That was the price of recovery.

FDR was an icon whose myth casts a long shadow, and in the next election Truman exploited that myth to hang on a little longer.  Over time, the Republican tendency to mimic liberal methods – adopting liberal fixations with government and making similarly empty promises – has resulted in frequent returns to liberal policies under LBJ, Carter, Clinton, and (now) Obama, but also Nixon and Bush.

The above TAP writers could not be more clueless as to Roosevelt's amateurishness and the countless failures of the New Deal; and that includes Rauchway the FDR historian.  John Flynn, also a liberal, wrote extensive contemporary criticisms of Roosevelt's antics, depicting his administration more as a lurching, free-wheeling, something-for-everyone, three-ring circus entertainment than planned economy with discernible goals.  Flynn claimed FDR was not himself a socialist; though perfectly comfortable accommodating socialism.

According to Flynn, FDR's main objective was with FDR "saving the country" more as a means of self-promotion.  Roosevelt blatantly ignored obvious flaws in his many schemes (and equally obvious failure to produce) so long as they had the desired effect of garnering votes, sometimes fatally.  This, then, dictated his policies more than humanitarian concern or ideology.  It was not that he didn't genuinely try to save the nation or have principles, only that these must first be hitched to pull his wagon.  Nor was Flynn alone in this appraisal as most of his criticisms were echoed by angry conservatives and disaffected New Dealers alike.  By 1938, few still believed and Roosevelt desperately needed a distraction.  Neither Rauchway nor Flynn got FDR and the New Dealers completely right, but Flynn comes far closer to the truth.

One characteristic of FDR stands out as defining of his policies: that he was open to every snake-oil salesman and prophet turned economist.  He would lurch between credentialed economic expertise and quackery as though unaware of any difference, revealing the emptiness of his own economic prowess.  He became, in time, the ultimate illusionist taken in by his own showmanship.  Another characteristic was his tendency to keep associates in the dark, delighting in springing the latest brainchild from the latest protégé on his own brain-trust.  However, as they were mostly charlatans themselves, this made little real difference to outcomes other than creating great uncertainty and anxiety within New Dealer ranks and chaos in the market.

The modern-liberal confidence in FDR, the New Deal, and Keynesian economics is such an article of faith that fully four generations of Americans are still lured by its empty assurances and blind to its frauds.  Something for nothing does not calculate in any book, nor is it possible to spend your way out of a recession other than by embracing that which generates some kind of profit or creates genuinely marketable goods.  The Keynesian model these TAP writers mistakenly associate with FDR is not much better than FDR's actual (sometimes Keynesian, sometimes conservative, sometimes crackpot) policies.

In fairness to Keynes, his pump-priming analogy was inappropriately expanded (by progressives) beyond simple economic recovery.  Regardless, his idea proved flawed.  Keynes believed government has a role in stimulating the economy whenever it slumps.  His idea was to pump money in to avert recessions, thereby sustaining a perpetual growth.  What really happens is this "pump-priming" competes with private capital and promotes unproductive behaviors; leading to a need to pump indefinitely and increasingly.  Those who directly benefit from the pump, become addicted to it. Rather than being a temporary expedient, it becomes a necessarily permanent feature whose sudden withdrawal, itself, triggers recessions.

In political application, it is worse yet because progressives invariably overburden the pump with social objectives unrelated to the recovery.  To the degree we apply Keynesian solutions, the longer we languish and think recovery just around the next corner.

In depression, this paradigm becomes self-reinforcing because fear so badly grips us we cannot believe that we – and not government – are the key to our own regeneration.  It has been proved time and again that each individual is free to climb out of every recession regardless of its depth and regardless the mental state of those around us.  If this is true of the individual, what can induce us to continually cling to the hopelessness of hope-hype?  Social programs are generally sinks and not sources of profits (other than marginal effects).  Moreover, they are a disincentive to both labor and business, facilitating enormous sloth.  In this, they are a drag on the economy out of all proportion to their supposed benefits to worker and corporate-fitness.  So, regardless whatever socially redeeming value they may or may not have, they are not engines for an economic recovery.

Further readings:

http://www.history.army.mil/documents/mobpam.htm – source material on force mobilization

http://www.hbs.edu/bhr/archives/bookreviews/80/lgerber.pdf – documents FDR's abandonment of New Deal social structuring to prepare for war

http://www.americanheritage.com/articles/magazine/ah/1995/2/1995_2_16.shtml – FDR's guarded magnetism & the messianic expectations made of him (Obama's appeal similar?)

Some examples of Roosevelt's grosser failures:

http://www.thefreemanonline.org/columns/which-new-deal-program-had-a-death-rate/ – FDR playing politics with airmail service led to the death of 12 pilots and nearly shut down airmail

http://www.thefreemanonline.org/book-reviews/reviews-4/ – FDR deliberately inflated the economy by abandoning the gold-standard (failed to produce desired result, despite which FDR kept us off GS), redistribution of wealth to stimulate economy (failed to produce desired result), collectivized industry and commerce (WPA – not only failed to produce desired result [re-employment] but also caused economic revolt), deliberately punishing business for its greed (used taxes to ‘police the rich' – worked, but discouraged investment; but utterly convinced this would increase wages at low end)

http://www.mises.org/freemarket_detail.aspx?control=284&sortorder=authorlast – FDR doubled federal expenditures between 1933 and 1940, draining much of the economic lifeblood out of the economy, increased unemployment from 9% in 1934 to 24% in 1936 and 19% in 1938 (actually much higher, rationalized government make-work programs as ‘employed'), union protectionism resulting in business failures and greater unemployment, and ruinous deficit spending that accomplished zilch

http://www.mises.org/books/taxpayersinrevolt.pdf – early tax-revolts FDR's policies triggered, their causes, results, and the futility of spending us out of the Depression

http://www.lewrockwell.com/raico/fdr-toc.html, http://www.lewrockwell.com/raico/fdr-3.html – interesting background on FDR prior to his presidency, including term as Asst Sec Navy under Wilson (see also http://www.fff.org/freedom/0498e.asp ); his less than commendable treatment of the Haitians