Take Hope in The Great Depression

There’s a great short piece at Human Events by Burt Folsom Jr. called, “Obama’s Giving Us the Same Raw Deal as His New Deal Here, FDR,” which goes over a few of the more absurd violations of economic freedom under the Roosevelt administration.  What struck me about the piece is that it gives me a bit of hope that America can survive the tyrannical Obama regime, which has employed very similar tactics that FDR did (and for that matter, add Woodrow Wilson).  Here is an excerpt:

The Great Depression dominated the 1930s, in large part because President Franklin D. Roosevelt’s New Deal programs failed to create jobs.  In May 1939, shortly after learning that unemployment stood at 20.7%, Henry Morgenthau, the secretary of the Treasury, exploded:  “We have tried spending money.  We are spending more than we have ever spent before and it does not work.”  Morgenthau concluded, “I say after eight years of this administration we have just as much unemployment as when we started.  . . .  And an enormous debt to boot!”

Why did Roosevelt’s New Deal fail so miserably?  The larger problem is that federal spending can’t create jobs.  It merely transfers wealth from taxpayers to central planners.  But worse than that, most of FDR’s New Deal was driven by politics.  It was economically unsound.

Take the National Recovery Act (NRA), for example, which was FDR’s program for industry.  The NRA set the prices of thousands of products.  Merchants who gave discounts to customers were subject to fines and imprisonment.  For example, the fixed price to press a pair of pants was 40 cents.  Jacob Maged of Jersey City, N.J., gave a 5-cent discount because his shop was far from the main shopping area.  He needed to give discounts to attract customers and stay in business.  “You can’t tell me how to run my business,” Maged insisted.  Yes, they could, Maged discovered when he went to jail for charging his customers a nickel less.  Neither FDR nor any of his New Dealers, however, could clearly explain why jailing merchants for giving discounts created jobs or made American industry more competitive.

FDR also supported the Agricultural Adjustment Act (AAA) for farmers.  Granted, farmers suffered from low prices, but the AAA solution was preposterous—pay farmers not to produce on up to one-fourth of their land.  Farmers would get instant cash, and also, because less land was being cultivated, prices for crops would go up.  But of course those rising prices would make it harder for city dwellers to put food on the table.  The farmer’s gain was the city dweller’s loss, and the AAA may have destroyed more jobs than it created.

Many New Deal programs were pure politics—targeting federal money to lure specific voting groups into the Democratic Party.  For example, Social Security taxes, FDR confessed, “were never a problem of economics.  They are politics all the way through.”  Tie older voters to the Democratic Party.

In a similar vein, FDR funded the Works Progress Administration (WPA) with $4.8 billion to build roads, bridges and other infrastructure projects.  But he targeted most of the road-building to favored Democratic congressmen.  James Doherty, a New Hampshire Democrat, agreed with the President:  “It is my personal belief,” Doherty announced, “that to the victor belongs the spoils and that Democrats should be holding most of these [WPA] positions.”  After FDR and the Democrats trounced the Republicans in the 1936 presidential election, Sen. Carter Glass of Virginia said, “The 1936 elections would have been much closer had my party not had a four billion, eight hundred million dollar relief bill as campaign fodder.”

Read the rest here.

While America’s debt crisis will be incredibly difficult to surmount, considering what we owe to foreign creditors like China and Japan, along with a retiring baby boomer generation that certainly will live longer than generations past, and whose unsustainable and illiquid Social Security Mistrust Fund will drain dry tax coffers far into the foreseeable future, we can buffer the economic comeuppance if we act now.  Deregulate, disband the EPA and other self-restraining agencies, and lift energy moratoriums for starters.  Lower corporate taxes, capital gains taxes, and other taxes across the board.  It is not that difficult, but it will take an immense amount of political will for the American people to impose its preferences on an out-of-control ruling class.

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