Amity Shlaes debunks the most common claims of the liberal-Left regarding FDR’s New Deal.
Roosevelt did famously well by one measure, the political poll. He flunked by two other meters that we today know are critically important: the unemployment rate and the Dow Jones Industrial Average. In his first inaugural address, Roosevelt spoke of a primary goal: “to put people to work.” Unemployment stood at 20% in 1937, five years into the New Deal. As for the Dow, it did not come back to its 1929 level until the 1950s. International factors and monetary errors cannot entirely account for these abysmal showings.
With regard to the main claim often posited by liberals such as the late Arthur Schlesinger, that Herbert Hoover was a right winger whose laissez-faire caused the 1929 Crash and the resulting Great Depression:
But a review of the new president’s actions reveals him to be a control freak, an interventionist in spite of himself. Hoover signed the Smoot-Hawley Tariff Act, which worsened a global downturn, even though he had long lived in London and understood better than almost anyone the interconnectedness of markets. He also bullied companies into maintaining high wages and keeping employees on their payrolls when they could ill afford to do so. Perhaps worst of all, he berated the stock market as a speculative sinner even though he knew better. For example, Hoover opposed shorting as a practice, a policy that frightened markets at an especially vulnerable time.
As to the claim that the “Brain Trusters” of the Rosevelt Administration who developed the alphabet New Deal programs were “moderate.”
In the summer of 1927, a group of future New Dealers, mostly junior professors or minor union officials, were received by Stalin for a full six hours when they traveled on a junket to the Soviet Union. Both Stalin’s Russia and Mussolini’s Italy influenced the New Deal enormously. The Brain Trusters were not, for the most part, fascists or communists. They were thoughtful people who wrote in the New Republic. But their ideas were wrong. Their intense romanticization of the concept of the economy of scale ignored the small man. One of the New Dealers from the old Soviet trip, Rex Tugwell, even created his very own version of Animal Farm in Casa Grande, Ariz. As in the Orwell book, the farmers revolted.
The third major claim is that Rosevelt inspired the American people and that his New Deal programs got America through the Depression.
Roosevelt’s radio voice may have inspired — yes. But the New Deal hurt the economy, and that mattered more. At some points Roosevelt seemed to understand the need to counter deflation. But his method for doing so generated a whole new set of uncertainties. Roosevelt personally experimented with the currency — one day, in bed, he raised the gold price by 21 cents. When Henry Morgenthau, who would shortly become Treasury Secretary, asked him why, Roosevelt said that “it’s a lucky number, because it’s three times seven.” Morgenthau wrote later: “If anybody ever knew how we set the gold price through a combination of lucky numbers, etc., I think they would be frightened.”
And the author concludes:
In the past half-century, we have learned that much of our capital comes from the private sector, not the public sector, and that most of our growth inheres in the private sector. After the 1980s and 1990s we know that markets can do much of the work that Roosevelt believed only government capital could do.
If only today’s Big Government Democrats(and even some purported conservative Republiacans) would learn what we now know(and have known for many years) that Rosevelt’s New Deal Programs only exacerbated the Grat Depression and that the best way to generate economic growth is not via government socialist entitlement programs but via low taxes, regulations, and the competitive free market.