Saturday, February 21, 2009

We Need A Fair Deal on Roosevelt's New Deal

"Everyone is entitled to their own opinions, but not their own facts." -- Senator Daniel Patrick Moynihan 

Since the election of Barack Obama, there has been some increasing "thunder' from some select media outlets of a conservative brand in America concerning Franklin Roosevelt and his "failure" to cope with the staggering breath of the Great Depression.  One wag went  so far as to state that Roosevelt  CAUSED the Great Depression, which would have been a neat trick since it began three years before he took office as President. Another member of the Punditicracy, Sean Hannity of Fox News, claimed last night that Roosevelt was deliberately using policies to starve Americans by wasting agricultural crops (when it actually was major farm combines that were destroying the fruit and vegetables because they couldn't get the price they wanted from financially strapped consumers.)    

I find this irritating not because I think FDR was some kind of saint (he wasn't) but that this an attempt to distort history.  And the only reason anyone would want to do that I feel is more consumed by malice in their hearts for the Other Side of the political divide than for the economic health of the country.      

 Much of this is the kind of rhetoric one would expect from professional pundits and revisionists who were upset about the results of the last American elections. 

 Let it be noted that I, too, raised similar objections myself to friends and acquaintances in the past.  When I was a young man in 1980s and Ronald Reagan was elected President--twice--I would rail verbally against many of his domestic programs, especially those that raised the federal deficit by giving out large tax cuts to the higher-end income levels and cutting social programs. In the first two years of his Administration the economy plunged. Unemployment in many states reached double-digit unemployment levels (just as they have started to creep toward after George W. Bush's tenure as the Deregulator-in-Chief.

   Reagan's party lost two-dozen seats in the Congress during the 1982 elections. His policy of refusing to meet with Soviet Leaders over cutting the massive nuclear stockpiles of the bi-lateral arms race seemed, to me and millions of others, a reckless course.  He compounded by floating a "Star Wars" Missile Defense System, or, as he called it, a "Peace Shield".  That the technology was untested a the time, and might provoke the very thing Reagan was hired to avoid (World War Three), seemed not to bother him.  It was a nervous time for many  with "The Gipper " in the White House.    

Yet, by 1984, the economy had recovered and the economic morass that had been triggered by inflation and unemployment in the last years of Jimmy Carter's Presidency, had improved considerably. Unemployment went down again and the dollar was stronger.  And, although the national government started out a reckless course of over deregulation and the federal deficit began to grow as it never had before, things in the immediate were on the upswing.

    By the next Presidential election, Reagan carried 49 states and won a huge mandate.  Though I never supported him, I would be a fool to proclaim that the public at large didn't see Reagan as the leader best suited to the times.     

Which bring me back to FDR.   Fifty years earlier he was the President and, despite some bumps along the road, he was "that man in the White House" who made things better for the public at large.  The economic  disaster he inherited from his Republican predecessors was worse than what Reagan had to deal with: unemployment was officially at 24.9 percent when Roosevelt  took office in 1933.  By the end of 1936 that  was cut down forty-percent (to 14.3). Source: The US Bureau of Labor Statistics.

 Roosevelt won a Reaganesque landslide at his next campaign and walloped his opponent, Governor Alf Landon of Kansas, so badly that Landon lost the home state to FDR in the November elections!  Landon lost almost as many states as Walter Mondale (Reagan's opponent) lost in 1984.   

For those who haven't heard much about The New Deal Era in American History, I offer this brief  synopsis: 

"Roosevelt's efforts began on March 6, 1933, when he proclaimed a bank holiday and called Congress into special session. In the hundred days of that session, from March 9 through June 15, Congress passed Roosevelt's program: the Emergency Banking Act, the Agricultural Adjustment Act, and the National Industrial Recovery Act, as well as the bills creating the Tennessee Valley Authority   (which built dams and power stations to provide power in a six-state region), the Home Owners Loan Corporation (which made mortgage loans to encourage home owning), and the Federal Emergency Relief Administration (which provided funds to the jobless). Roosevelt also took the United States off the gold standard to prevent a run on government gold reserves by people worried about the value of the currency.

"Later New Deal laws created public housing for workers, unemployment insurance, and Social Security benefits (pensions) for workers when they retired. Other laws made federal grants to states to provide welfare for needy families with children and established a legal framework for organizing labor unions and for collective bargaining with management (to discourage companies from breaking strikes by employing nonunion labor or intimidating workers from joining unions). New Deal legislation also created public service jobs for the unemployed, including the Civilian Conservation Corps for youths and the Works Progress Administration, which sponsored environmental and cultural public works projects. Other new government agencies included the Federal Communications Commission (which regulated radio broadcasting and telephone companies), the Securities and Exchange Commission (which regulated stock markets to ensure fair trading practices), the National Labor Relations Board (which ensured the rights of workers to unionize and bargain collectively with management), the Federal Housing Administration (which constructed public housing), and the Rural Electrification Program (which brought electric lines to rural areas that had never had power before)."

from "Answers.Com" (see under 'New Deal')

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Do those programs listed above sound like the work of an Administration that was trying to let millions of people go hungry and jobless?

It seems if Reagan gets credit from conservative pundits for the economic recovery of  the mid-1980's, then Roosevelt should at least get some of the credit from these same media jockeys for ameliorating the worst effects of the Depression and, indeed, like Reagan, giving people hope and putting millions of men and women to work.  Of course, FDR made mistakes, trying to "pack" the Supreme Court in 1937 for one, but so has everyone who came before and did after he died in office in 1945.  

And, since it was ultimately World War II that ended the Depression not only in the USA but also in many non-dictatorial nations in Europe, perhaps President Obama's spending stimulus program will turn out at least as successful as The New Deal if he spends more, not less, to stimulate the markets.   And,as Senator Moynihan put it, critics are only allowed one set of facts, and the facts show that FDR did not make the Great Depression worse. To the contrary.  The votes of the public in 1936 and 1940 on his continuing mandate in the White House are just one measure of  that! 

8 comments:

  1. You make some important points about FDR and the New Deal here Doug, it comes as no surprise that Sean Hanity is spouting ahistorical propaganda about this period following the Wall Street collapse of 1929. That is Hanity's job of course and as a 'shock jock' of the right his wittering cannot be taken seriously, he is merely a malevolent entertainer.
    The inter-war recovery was of course an international event as was it's causes in the First World War and different countries dealt with it in different ways. The Soviet Union prospered from it and was by it's economic and political isolation unaffected by the economic upheavals of capitalism.

    The US economy lies at the root causes of the Great Depression which was driven by.
    1.Overproduction
    2.Uncontrolled use of credit-buying (concealed over-production)
    3.Speculation
    4.Weak banking structure
    5.Uneven distribution of wealth.

    The New Deal responses helped to fuel the global catastrophe that followed in the form of economic nationalism, the rise of fascism in Europe and Japan and the Second World War.

    1. Isolationist policies of the USA who imposed heavy import duties which led to retaliation from European states
    2. Keynes promoted Gov. intervention and this tended to result in economic nationalism
    3. USSR was the only one not to experience the effects of the depression and this led to a belief in tight state control as the way of the future.
    4.Failure to keep international agreements
    5. The rise of fascism which was highly nationalistic

    Hitler and FDR adopted basically Keynesian solutions to the problem which resulted in isolationism in both the US and Germany. There are concerns that the Obama administration may be about to repeat the same mistakes and cannot see that recovery in America is entirely contingent in a global recovery and cannot succeed as an 'in house' response to the current crisis in capitalism. Despite Hilary Clinton's present attempts to establish a bi-partisan approach with China, this way forward does not have a good track record and will result in increased animosity from other countries experiencing the meltdown in specific ways.
    Obama is attempting to stimulate the domestic economy in ways reminiscent of both the New Deal and Nazi Germany i.e. increased military spending (the root cause of the crisis) and rapid expansion of the armed forces (Afghan 'surge'), increases in public works, high degree of central planning, attempted 'autarky' or economic self sufficiency and isolationist perspectives of capitalism in one country.

    These are I think the historical concerns attached to the current strategies of US economic planning. FDR's New Deal was a version of a strategy that was employed in various ways in most countries during the interwar period, a global Keynsianism that was for example particularly successful in Hungary during the 1930s partially due to the prosperity of it's agricultural sector. Highly urbanised industrial societies were rather less successful until military industrial recovery stimulated capitalist economies after 1933.

    Hanity's ahistorical rantings are not helpful, but in my view a national economic analyses also fall short of learning important lessons of the past as do bi-lateral recovery plans that would absolutely depend upon military solutions to the inevitable resistance and non-compliance this would bring about in other countries around the globe.
    .
    Excellent blog Doug.

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  2. Thanks for the thoughtful and through analysis Aaran.

    I'm glad you brought up the international nature of the economic crisis in their respective eras. What is going on in China now with Hillary is indeed something that bears watching. With so many points to consider, I will have to return to your essay when more time permits.

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  3. Doug, you're right here - because your main point wasn't to slice-and-dice the New Deal, but (if I read this right), to point out that revisionism is valid only if new facts have emerged - and as the whole process was pretty-well documented, there aren't any new facts - only the interpretation of Faux-historians like Hannity and O'Reilly.

    The REAL crime here is not that people are taking a renewed interest in FDR, but that people like Hannity and O'Reilly are allowed to put their opinions forth as fact under the guise of a 'news' program.

    In this, Goebbels was right -- tell a big lie long enough, and people will believe it.

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  4. Damn straight, Astra, that was exactly my point. And thanks for adding the Goebbels quote--it fits just what riles me about this issue.

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  5. There's a good deal of truth to this "repeat" of excessive nationalism, AA. On the one hand its a sure-fire winner at the polls. It's also a long-term recipe for trade wars that will drop the global economy further down the chute. Economic chaos in Russia looms up as oil prices fall and their mono-industrial factory-heavy cities grind to a halt; China would drop next. One would not want to see a revival of the chaos and disaster those countries went through in the 1920's and early 1930's, not the least of which being there is no longer any "spendid isolationism" for empires of any variety. Perhaps the last stroke of the Anglo-American Empire on the world stage would be to spark a global recovery plan, one without the necessity of stoking nationalistic fervor.

    I notice the dour clergyman Gordon Brown is calling for a "global New Deal". Perhaps in Brown's case the advantages of losing the grip on power and authority can lead to a point of mental clarity.

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  6. People are always trying to re-write history. President Roosevelt inherited a mess just like President Obama. I only hope President Obama is up to the challenge.

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  7. Yes, rewriting history is a full-time job for media pundits. And I only hope Obama is up to this challenge, Fred, too. Four years of floundering is something we cannot afford.

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  8. You are correct. We need some direction and we need it now. It is getting scary!!

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