Clause 61: The Pushback Blog

Because ideas have consequences

Posts Tagged ‘New Deal

Bad History

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This picture came my way on Facebook. It was too bad not to hang on to.

.. when you did what?

.. when you did what?

What’s wrong with it? Well, let’s review.

Ending the Depression

Roosevelt did not end the Depression; World War II did. See this article for the actual unemployment data.

Unemployment was never under 10% from the time FDR took office until war spending began in earnest in 1940. The economy went into a relapse in 1937, as Roosevelt’s Second New Deal created uncertainty and investment slowed. Amity Shlaes summarized it this way:

The story of the mid-1930s is the story of a heroic economy struggling to do recuperate but failing to do so because of perverse federal policy.
— Shlaes, The Forgotten Man, p. 392.

This is not a story you will hear on PBS specials or read in a high school textbook. But both the statistics and the memory of the generation that lived through the Depression substantiate it. My mother and others of her age cohort used to say that wars were good for the economy. That is obviously untrue: in a war, you take wealth out into a field and blow it up. But that is the way their generation experienced relief from the Great Depression.

Creating the Middle Class

In what universe do people making minimum wage constitute the middle class? The middle class as we came to know it by 1970 was created by World War II and the economic boom that followed it.

At the end of the war, it was not clear at all that there would be economic prosperity. The outcome considered most likely was inflation once prices were free to rise and money earned in wartime production that could not have been spent during the war was loosed to bid up prices. This did not happen, and the fact that it did not was the accomplishment of Harry Truman and Federal Reserve Chairman Marriner Eccles.

Ending Elderly Poverty

I reckon that this claim is factual, as far as it goes. Over the next 80 years, Social Security did end elderly poverty — by transferring wealth from the young. If this scheme were managed by a private enterprise, it would be fraud; but since the government is in charge, everything is just dandy.

Was Roosevelt a Socialist?

Many of his opponents accused Roosevelt of being a socialist, but the evidence does not really stack up.

You know I am a juggler, and I never let my right hand know what my left hand does … and furthermore I am perfectly willing to mislead and tell untruths if it will help win the war.
— FDR to Henry Morgenthau, 1942. Quoted in Fleming, The New Dealers’ War.

Before the war, Roosevelt was willing to mislead if it would help perpetuate him in office. Even if he had left a body of political thought, it would be risky to put too much stock in it. Roosevelt has to be evaluated on his actions.

The actions of the Roosevelt administration were fundamentally corporatist. Under corporatism, government, business, labor, education and social organizations would work together to plan the economy and implement these plans. What’s wrong with that? For starters, plan the economy is a pleasant euphemism for plan your daily life.

At the time, the smart money believed that planned states had inherent advantages over liberal republics because the former could realize cohesive action. This was augmented by the work of Ferdinand Tönnies (1855-1936), one of the early thinkers in sociology. Tönnies distinguished between the Gesellschaft and the Gemeinschaft. To give a quick-and-dirty distinction, think of the Gesellschaft as a market town or bustling port, whereas the Gemeinschaft is closer to a rural village with deep traditions, where “everybody knows everybody, and everybody looks after everybody.” Also where everybody sticks their nose into everybody else’s business, but some people like that.

 The 1930’s are remembered as the Red Decade. Democracy itself appeared to be inadequate to the task of managing the modern nation. The idea of Gemeinschaft was in vogue, and in Italy, Mussolini appeared to be having success implementing his vision of corporatism — if you didn’t look too closely or ask what happened to people who didn’t get with the program.

The form of U.S. corporatism was thus gradual, incremental, societal corporatism, not the abrupt, authoritarian state corporatism of so many of the interwar European countries. And it was “loose”: pragmatic, piecemeal, nonideological, pluralist, with few sanctions or tight controls, and very American. It tended to be advisory rather than compulsory, but that changed over time.
— Howard Wiarda, Corporatism and Comparative Politics, p. 138.

Corporatism offered Roosevelt limitless avenues to expand his power. The government could sit as mediator and honest broker in disputes between two large industries, or between big business and big labor.

However, World War II permanently associated corporatism with fascism, and the National Socialist implementation of Gemeinschaft led to war and genocide. That did not mean the methods had to be abandoned, just that they needed to be rebranded and repositioned.

Why Don’t People Know This?

Why should children believe what they learn in American history, if their textbooks are full of distortions and lies? Why should they bother to learn it?
Luckily, … they don’t.
— James Loewen, Lies My Teacher Told Me, p. 297.

Very few people want to hear that FDR’s programs were not effective in defeating the Depression. In part, this is because Progressives have a preponderance of control of the education system and the media, but there is a more basic reason. If it took a global war to see off the Depression of the 30’s, what will it take to defeat the next one? The fact is that we don’t know how to cure a large-scale economic depression, which is why government policy has been focused on making sure another one does not happen.

Books about the Roosevelt administration typically concentrate on what historians call the First New Deal, which ended in 1935 with the Schechter decision that voided Title I of the National Industrial Recovery Act. Jonathan Alter’s The Defining Moment focuses on the first Hundred Days. Adam Cohen’s Nothing to Fear contains one chapter that covers the time after 1933; it summarizes the standard legislative achievements that are revered among Progressives, including the Social Security Act, but does not discuss their effectiveness. Only Amity Shlaes stands out as a historian of the entire Depression.

The reason why we need to get the history right is simple. If we don’t even understand the history, we have almost no chance of learning from past mistakes. If we tell ourselves that the actions were not really mistakes, there is nothing to learn from.

Written by srojak

June 5, 2016 at 12:34 am

Who Gets the Handouts?

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In the 1930s, we experienced an economic depression like nothing we had ever experienced before. As a result, Americans demanded an activist government that helped people — but not all people. The New Deal helped white industrial workers and farmers more than it did blacks and Mexican-Americans. In real estate, the New Deal reinforced segregation and introduced redlining.

There is general consensus that the elections of the 1930s realigned the electorate, introducing what is called the Fifth Party System. Here are the election results for 1936:

1936 Presidential Election results.

1936 Presidential Election results. From Dave Leip’s Atlas of U.S. Presidential Elections (http://uselectionatlas.org/RESULTS/).

There was a broad base of support for FDR, which is why he won four elections. The people who were advocating a reduced role of government were selling a product the majority of the electorate did not want.

In the 1960s, the Democratic Party shifted focus. It began advocating a more inclusive approach to government benefits. The largely white principal beneficiaries of the New Deal saw this and they didn’t like it, like it, no they did not. What did they do about it?

1968 Presidential Election results.

1968 Presidential Election results. From Dave Leip’s Atlas of U.S. Presidential Elections (http://uselectionatlas.org/RESULTS/).

This shows the Southern Strategy wasn’t that effective: four southern states broke for Wallace, while Texas remained loyal to the Democrats. But the historical base of the New Deal coalition was alienated. In 1980, many defected to Reagan.

2008 Presidential Election results.

2008 Presidential Election results. From Dave Leip’s Atlas of U.S. Presidential Elections (http://uselectionatlas.org/RESULTS/).

2008 is a picture of the Democratic coalition at about its strongest without an incumbent to support. Let’s take that result and back it off a bit (otherwise the Democrats would be winning all the elections, which is counterfactual) to find the base strength of the support for an inclusive program of aggressive government benefits.

The role of government is the key issue of our time. Everything else that is important flows from this. Laying 2008 over 1936, and attempting to adjust for changes in demographics over 80 years, this is what I get:

Educated estimate of the 2016 electorate.

Educated estimate of the 2016 electorate.

What can we learn?

  • There has been no realignment since the 1930s. The majority of the electorate still expects big government and benefits therefrom. The big fight is over who gets their promises kept and who has to go without.
  • In order to hold the line against dilution of their benefits, the favored groups of the New Deal — who I am calling the “White Big Government” group — often team up with the small government conservatives to block the extension of benefits to others, notably blacks and Hispanics, which threatens to dilute the benefits to which the former believe themselves entitled.
  • In a straight-up referendum in the current electoral climate, the big government side would trounce the small government side. Conservatives who believe otherwise are delusional.

What has happened this year in the Republican Party is really a hostile takeover. It is as if the Reagan Democrats had come over to the Republican Party in 1980 and nominated Jacob Javits (not that there is any comparison in terms of integrity or behavior between Sen. Javits and Donald Trump). But then,

All the noise about Donald Trump’s “hostile takeover” of the Republican Party misses a key point: Such takeovers only succeed when existing management has failed massively.
— “How the Republican Party Earned a Hostile Takeover”, New York Post (http://nypost.com/2016/03/02/how-the-republican-party-earned-a-hostile-takeover/)

The Trumpkins want to take the Republican Party away from the conservatives and the establishment pols who never deliver what the former consider really important. They feel abandoned by the Democrats, and are happy to return the favor. Why did 20,000 voters in Massachusetts stop being Democrats? It’s not a massive plot to undermine the Republican Party and elect Hillary Clinton. It is a hostile takeover. We’re going over here to get the candidate we want.

The Trumpkins are fed up with the standard shuck-and-jive, where candidates blow sweet nothings in their ears, then blow their interests off once elected. They don’t want a reduced role of government. They have enough common sense to realize that there is not enough wealth to keep all the promises that have been made by successive elected officials, and they don’t want to be the ones getting the shaft. Chasing after government handouts is at best a zero-sum game. In order for me to win, you have to lose. That is what all the anger is really about. All the rest is window dressing to them, and they are prepared to ignore it.

If you think this is ugly, we haven’t even got to the difficult part. Wait until the rest of the electorate cottons on to the fact that the entitlement cupboard is bare.

Written by srojak

March 6, 2016 at 1:06 pm