THE NEW DEAL WAS BAD FOR THE ECONOMY, PROLONGING THE DEPRESSION

THE NEW DEAL WAS BAD FOR THE ECONOMY, PROLONGING THE DEPRESSION

1. FDR’S POLICIES ACTUALLY PROLONGED THE DEPRESSION

Robert Higgs, Senior Fellow in Political Economy at The Independent Institute and editor of The Independent Review, THE FREEMAN, September 1998, p. np, http://www.independent.org/tii/news/x980900Higgs.html, accessed May 02, 2002.

The irony is that even if Roosevelt did help to lift the spirits of the American people in the depths of the depression-an uplift for which no compelling documentation exists-this achievement only led the public to labor under an illusion. After all, the root cause of the prevailing malaise was the continuation of the depression.

2. THE NEW DEAL PROLONGED THE DEPRESSION

Robert Higgs, Senior Fellow in Political Economy at The Independent Institute and editor of The Independent Review, THE FREEMAN, September 1998, p. np, http://www.independent.org/tii/news/x980900Higgs.html, accessed May 02, 2002.

In fact, as many observers claimed at the time, the New Deal did prolong the depression. Had Roosevelt only kept his inoffensive campaign promises of 1932—cut federal spending, balance the budget, maintain a sound currency, stop bureaucratic centralization in Washington—the depression might have passed into history before his next campaign in 1936. But instead, FDR and Congress, especially during the congressional sessions of 1933 and 1935, embraced interventionist policies on a wide front. With its bewildering, incoherent mass of new expenditures, taxes, subsidies, regulations, and direct government participation in productive activities, the New Deal created so much confusion, fear, uncertainty, and hostility among businessmen and investors that private investment, and hence overall private economic activity, never recovered enough to restore the high levels of production and employment enjoyed in the 1920s. In the face of the interventionist onslaught, the American economy between 1930 and 1940 failed to add anything to its capital stock: net private investment for that eleven-year period totaled minus $3.1 billion.2 Without capital accumulation, no economy can grow. Between 1929 and 1939 the economy sacrificed an entire decade of normal economic growth, which would have increased the national income 30 to 40 percent. The government’s own greatly enlarged economic activity did not compensate for the private shortfall.
3. THE NEW DEAL WAS A MASSIVE VOTE-BUYING SCHEME

Robert Higgs, Senior Fellow in Political Economy at The Independent Institute and editor of The Independent Review, THE FREEMAN, September 1998, p. np, http://www.independent.org/tii/news/x980900Higgs.html, accessed May 02, 2002.

In this madness, the New Dealers had a method. Despite its economic illogic and incoherence, the New Deal served as a massive vote-buying scheme. Coming into power at a time of widespread destitution, high unemployment, and business failures, the Roosevelt administration recognized that the president and his Democratic allies in Congress could appropriate unprecedented sums of money and channel them into the hands of recipients who would respond by giving political support to their benefactors. As John T. Flynn said of FDR, “it was always easy to interest him in a plan which would confer some special benefit upon some special class in the population in exchange for their votes,” and eventually “no political boss could compete with him in any county in America in the distribution of money and jobs.”
4. ROOSEVELT’S LEGACY IS TO TRAMPLE ON LIBERTY

Robert Higgs, Senior Fellow in Political Economy at The Independent Institute and editor of The Independent Review, THE FREEMAN, September 1998, p. np, http://www.independent.org/tii/news/x980900Higgs.html, accessed May 02, 2002.

But however significant his legacies, Roosevelt deserves no reverence. He was no hero. Rather, he was an exceptionally resourceful political opportunist who harnessed the extraordinary potential for personal and party aggrandizement inherent in a uniquely troubled and turbulent period of American history. By wheeling and dealing, by taxing and spending, by ranting against "economic royalists" and posturing as the friend of the common man, he got himself elected time after time. But for all his undeniable political prowess, he prolonged the depression and fastened on the country a bloated, intrusive government that has been trampling on the people’s liberties ever since.

FDR’S ECONOMIC POLICIES WERE NOT TRULY EFFECTIVE

1. FDR, DESPITE ESTABLISHMENT HISTORIANS, DIDN’T ADDRESS INEQUITY

Noam Chomsky, DETERRING DEMOCRACY, 1992, Chapter 2, http://www.zmag.org/chomsky/dd/dd-c02-s03.html, accessed May 1, 2002.

Franklin Delano Roosevelt attained similar heights among large sectors of the population, including many of the poor and working class, who placed their trust in him. The aura of sanctity remains among intellectuals who worship at the shrine. Reviewing a laudatory book on FDR by Joseph Alsop in the New York Review of Books, left-liberal social critic Murray Kempton describes the "majesty" of Roosevelt's smile as "he beamed from those great heights that lie beyond the taking of offense... Those of us who were born to circumstances less assured tend to think of, indeed revere, this demeanor as the aristocratic style... [We are] as homesick as Alsop for a time when America was ruled by gentlemen and ladies." Roosevelt and Lucy Mercer "were persons even grander on the domestic stage than they would end up being on the cosmic one," and met the great crisis in their lives, a secret love affair, "in the grandest style." "That Roosevelt was the democrat that great gentlemen always are in no way abated his grandeur... [His blend of elegance with compassion] adds up to true majesty." He left us with "nostalgia" that is "aching." His "enormous bulk" stands between us "and all prior history...endearingly exalted...splendidly eternal for romance," etc., etc. Roosevelt took such complete command that he "left social inquiry...a wasteland," so much so that "ten years went by before a Commerce Department economist grew curious about the distribution of income and was surprised to discover that its inequality had persisted almost unchanged from Hoover, through Roosevelt and Truman..." But that is only the carping of trivial minds. The important fact is that Roosevelt brought us "comfort...owing to his engraving upon the public consciousness the sense that men were indeed equal," whatever the record of economic reform and civil rights may show. There was one published reaction, by Noel Annan, who praised "the encomium that Murray Kempton justly bestowed on Roosevelt." Try as they might, the spinners of fantasy could not even approach such heights in the Reagan era.

Michael V. Namorato, Department of History, University of Mississippi ,ECONOMIC HISTORY, EH.NET BOOK REVIEW , July 1997, http://www.eh.net/bookreviews/library/0024.shtml, accessed May 1, 2002.

Finally, in his last chapters, Barber takes his argument through the later 1930s, World War II, and the immediate post-war era. Seeing Harry Hopkins' appointment as Secretary of Commerce as a turning point towards official acceptance of Keynesianism, Barber details how Hopkins brought in young academics sympathetic to this approach, how the president barely tolerated Thurman Arnold and his anti-trust movement, and how people like John K. Galbraith in the Office of Price Administration helped to mobilize America's wartime economy. In the end, however, individuals like Galbraith left the New Deal. In fact, Barber concluded that the Full Employment Act was more of a victory for the opponents of the Keynesian approach than one would have suspected. Still, Keynesianism took hold after 1945 only after it had infiltrated the universities (p. 171).
3. THE ECONOMISTS SHOULD GET THE CREDIT, NOT FDR

Michael V. Namorato, Department of History, University of Mississippi ,ECONOMIC HISTORY, EH.NET BOOK REVIEW , July 1997, http://www.eh.net/bookreviews/library/0024.shtml, accessed May 1, 2002.

Finally, Barber credits Roosevelt with so much in terms of providing economists with an opportunity to influence policy, but the president himself is seldom even mentioned, no less analyzed in terms of his own thinking on what these economists were telling him and his close advisors. Somehow, Roosevelt is lost amidst the intellectual environment that Barber has created.