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The Folly of FDR
#1
There is a well used 'old saw' that states a public person's Real Worth is not actually judged accurately until at least fifty years following that person's death. Generally, this is most accurate, since the passions and misconceptions have had time to settle out, and be washed away with the torrent of time.

Such is the case of FDR. Long set as the rock by Democrats of which all presidents should be judged, the veneer is beginning to wear off, and the Real FDR is beginning to come to light. And nothing exemplifyes this as much as FDR's economic policies and his attempts to combat the Great Depression of the 1930s. Once lauded as the man who defeated the Beast, the dam of his gloried accomplishments are beginning to spring many leaks, and they are becoming more numerous and larger as time progresses.

Perhaps the greatest indictment of his failed economic policies is the work, FDR's Folly, by Jim Powell. It is a scathing indictment of Good Intentions gone horribly wrong. Ronald Nash's article at FEE, Four Myths About America's Great Depression, is less than complimentary of FDR. Likewise Burton Folsome Jr, points out the president's mistakes.

And now comes another perspective from Amity Shlaes. And here is a review of this work by Arnold Kling, that goes into the book, highlighting some of the finer points. And then there is his followup. And here is the latest in his series.

As Jim Powell states in another article for the CATO Institute, we have learned some important lessons from the Folly of FDR and his administrtion:

Quote:Government cannot create sustained growth and productive jobs.
If government could do these things, then the New Deal would have ended double-digit unemployment and, for that matter, the Soviet Union wouldn't have disappeared from the map.



It's simplistic to imagine that government intervention in a complex economy will work as intended.
New Deal farm programs, for instance, enriched big farmers, did little for small farmers, burdened taxpayers, forced consumers to pay more for food and aggravated trade relations with other countries where New Dealers tried to dump subsidized farm surpluses.



Government jobs don't help people develop values and skills needed in the private sector.
Whatever the merits of New Deal projects for clearing forests, fixing roads and the like, these didn't help people prepare for private sector jobs. In a 1940 tune, Louis Armstrong and the Mills Brothers sang these lines about a New Deal "workfare" program: "I'm so tired, can't get fired, don't be a fool, working hard is passé."



Government spending, widely touted as a depression cure, doesn't come out of thin air.
It comes from current taxes or future taxes (that repay borrowing). So the presumed good some people get from government spending is offset by the harm other people suffer from government taxing.



Public works are no shortcut to recovery.
First of all, if the purpose is to help the poor, public works projects tend to hire skilled, better-off people, such as engineers and heavy equipment operators. Second, the more ambitious the public works project, the longer it's likely to take. New Deal dams, for instance, took years to complete. Efforts to avoid corruption can mean substantial delays, as happened under FDR's Interior Secretary Harold Ickes.



People tend to spend their own money more carefully than they spend somebody else's money.
Hence, there's always likely to be a lot of waste in government spending, undermining its effectiveness. FDR's largest welfare program, the Works Progress Administration, reportedly delivered only 59% of appropriations to the intended welfare recipients, the rest going for overhead.



Whatever the high-minded purpose of a government-spending program, it's likely to be allocated in ways that will help current office-holders win the next election.
Helping the advertised beneficiaries like the poor is a secondary consideration. New Deal spending and loan programs were concentrated in better-off western and eastern states where FDR had the most to gain in the next election, rather than in the poorest southern states where substantial majorities were already on his side.



Far from assuring more public control, government takeover of private enterprises tends to mean evasion of public control.
For instance, FDR established the Tennessee Valley Authority monopoly that forced private utilities out of business and is now reportedly exempt from about 130 laws and taxes. It's said to be the largest violator of the Clean Air Act.



Once a government program is established, it's almost impossible to reform or phase out, regardless of the problems.
This is certainly the case with FDR's Social Security which, together with LBJ's Medicare, are estimated to have unfunded liabilities of some $24 trillion. A crisis looms ahead as increasing numbers of people reach retirement age.

The last thing Americans need is another New Deal.

Indeed!
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#2
kudos
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#3
WmLambert Wrote:kudos
Ditto.

Glad to see you, Wm.
Solo~

When the people fear their government, there is tyranny; when the government fears the people, there is liberty. --Thomas Jefferson
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#4
Glad to be seen. Wireless is back up at my son's house where I am staying in Vegas, so hopefully I will have more opportunities to chat with all my friends.
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#5
What's the purpose of this thread? Justification for more tax cuts for the rich? It doesn't work without regulation by the government, because the companies would commit every crime imaginable for a few bucks more. Government control and government sector are the very democracy you are hailing.
"You know, Paul, Reagan proved that deficits don't matter." Dick Cheney
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#6
Sorry, Quadrat, but you have fallen prey to the incorrect history taught in most Western and U.S. schools during the 20th century that business is innately evil and left unchecked, injures the public for the sake of greed and profit. Totally untrue.

The Dickens' view of the Industrial Revolution as a dirty, exploitation of the weak and helpless in poor-houses and orphanages was a fabrication of a politician, who lied to the newspapers in hopes of pushing his personal agenda. Likewise the historical view of "Robber Barons" is also greatly unfair. They did far more to help mankind and save it from unscrupulous government programs.
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#7
Not here to comment on FDR, but on Mr. Nash's analysis of business cycles. In reality, empirical evidence proves that in the modern era (post-ww2) that peaks and troughs of the business cycle stayed a lot closer to potential output than they did prior to active government involvement in boosting or slowing-down the economy. Business cycles occurred more frequently and were much more volatile in the era before the Federal Reserve began active monetary policy. So if money manipulation by the government is what is causing the business cycle, why were there business cycles before the government manipulated money?

There are, in fact, much better explanations of the business cycle that Mr. Nash is conveniently ignoring.
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#8
Here is a nice interview, with Amity Shlaes, about her book "The Forgotten man". Well worth reading, and noting that the FDR economic myth is finally coming unglued.
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#9
Further reading of Burton Fulsome, Jr.'s work is recommended, especially his book debunking the myth of the "Robber Barons." One of the good things about good historians is their documentation of facts, and the subsequent bashing that disinformation gets. Too many people are conned by lies that sound reasonable, but are directly at odds with the actual witnesses of history. FDR was not very scholarly, but ask most people on the street, and their opinion would be that FDR was a scholar, and George W. Bush wasn't. Yet G. W. Bush actually earned the highest degrees of any President entering office. FDR's instructors were struck by his inability to learn, and his colleagues during his administration lamented his illogic and lack of basic knowledge. What I haven't read about is their appreciation of his charismatic leadership skills. After all, he had to have something to get him into office, and I hope it wasn't just saying whatever the public wanted tp hear.

He was a master of Public Relations, and G. W. Bush is not. Look at the difference. Bush actually understands the benefits of Free Enterprise, and his actions directly resulted in the reversal of the Clinton-Leavitt Recession, in spite of the hit the economy took after 9-11. FDR was an economic ignoramus, who argued the exact opposite of what needed to help the economy in his era.
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#10
If you read down into the interview above, the author states that his leadership skills were top of the line. He just had no knowledge in economics, and did not even have any interest in understanding how markets worked. And surprisingly, his leadership skills do not receive more praise than his 'supposedly' economic ones for 'supposedly' getting us out of the Great Depression. And most people don't realize that we actually went through TWO consequative depressions, the later directly caused by his total lack of economic skills.

Fortunately, the truth is coming out, and it's about time.
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#11
Just as an aside... my grandfather, who worked for the WPA, refered to it as "We Piddle Around"


It seems amazing to me that a man who couldn't turn around a depressed economy for a decade is hailed as such a great president.

I can only imagine it's because of WWII. Yet he got elected... three times? ('32,'36,'40 right?) before the war even started. He kept an entire country in deep, miserable poverty and threw them a few crumbs of Government Money and they loved him and loved him and loved him. It's almost like Stokholm Syndrome.
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#12
Pixiest Wrote:Just as an aside... my grandfather, who worked for the WPA, refered to it as "We Piddle Around"


It seems amazing to me that a man who couldn't turn around a depressed economy for a decade is hailed as such a great president.

I can only imagine it's because of WWII. Yet he got elected... three times? ('32,'36,'40 right?) before the war even started. He kept an entire country in deep, miserable poverty and threw them a few crumbs of Government Money and they loved him and loved him and loved him. It's almost like Stokholm Syndrome.

I suspect the main culprit is again the MSM. They went out of their way to portrait him as superhuman, and have never let up on this mystique that has been generated about him. Thankfully, it is coming down, and if you will note, the MSM is Still not responsible for letting it out. It is left up to scholars to do so, totally without the MSM.
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#13
Very astute observation, John. The MSM praises FDR relentlessly - so every one KNOWS he was a great president. The MSM hated J. Edgar Hoover, so the myth of him being a cross-dresser is also universally KNOWN.

To be effective, any world leader MUST have superior PR credentials, and know how to work the media. Reagan did and was tremendously effective, and beloved. Clinton did, was miserable - but still beloved. On that account, perhaps we should hope for a Fred Thompson candidacy.
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#14
Hopefully the internet will take care of the MSM in the coming decades. It seems Lincoln, FDR, JFK, and Reagan were the greatest men the world has ever known.
The shock and terror keeps me sane
Does anybody feel the same?

- Deron Miller
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#15
John,

I'm not sure this is accurate. Do a search of monetary growth under FDR. As it rises,economic activity follows,as it slows,so does economic activity in LAG.

Each time he decided to slow Keynsian spending,the economy went with the reduction in artificial spending. He would return to flooding the economy with Keynsian pump priming and the economy improved.

Not until after the war did the economy move forward w/o artificial stimulus. FDR really did not believe in state intervention,but every time he stpped it people went home from work.

I think we were in an abnormal era of massive product over supply globally and Keynes was right temporarily. Yea,I know,this doesn't square with you.
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#16
Palladin Wrote:John,

I'm not sure this is accurate. Do a search of monetary growth under FDR. As it rises,economic activity follows,as it slows,so does economic activity in LAG.

Each time he decided to slow Keynsian spending,the economy went with the reduction in artificial spending. He would return to flooding the economy with Keynsian pump priming and the economy improved.

Not until after the war did the economy move forward w/o artificial stimulus. FDR really did not believe in state intervention,but every time he stpped it people went home from work.

I think we were in an abnormal era of massive product over supply globally and Keynes was right temporarily. Yea,I know,this doesn't square with you.

What is LAG?
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#17
Yes and no, bringbackwigs. If you've noticed, the internet is unstoppable, but also unverifiable. Wikkipedia, for instance, is the internet encyclopedia - but based on mob rule, not on scholarship. In the entry on FBI Director J. Edgar Hoover, it disclosed the name of Anthony Summers, a British gossip author who gave the ridiculous gossip against Hoover the light of day, but never mentioned the source of the myth, Susan Rosenstiel, or her reasons for making up the story. It is easy for those who want to lend credence to a lie to conspire against the truth.

In every day forums, especially politically-based ones, like tends toward like. A 9-11 conspiracy whacko will seek out other whackos and post there, copying and pasting whacko speculation from other forums in a never-ending circular ring of reinforcing garbage, until the average internet observer sees an endless stream of reinforcing disinformation from multiple sources, with little ability to find out that instead of independent sources verifying some historic truth, it is just the same, tired myth, copied from one whacko to anorther with no attempt to verify anything.

Many news archives are based on bogus reporting. It IS possible to track down truth from fiction, but unless you are very patient, and willing to prove every least point along the way, correcting disinformation is nigh impossible. I urge you and all our other friends to do just that as often as possible. When you uncover disinformation, do what you can to shine a spotlight on it.
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#18
Advantages and disadvantages. I still see hope on the horizons of cyberspace.
The shock and terror keeps me sane
Does anybody feel the same?

- Deron Miller
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#19
Synonym for LATER,AFTERWARDS.
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#20
George Will talks about FDR's Brutal Economic Tactics. It's a lot easier to criticize now that over 50 years have passed. I can remember when growing up that NOBODY criticized FDR for ANYTHING short of being strung up and quartered. My how times have changed, and for the better, I might add.

Quote:DIVIDING AMERICA :FDR's Brutal Economics

By GEORGE F. WILL


July 8, 2007 -- SOME mornings during the autumn of 1933, when the unemployment rate was 22 percent, the president, before getting into his wheelchair, sat in bed, surrounded by economic advisers, setting the price of gold. One morning he said he might raise it 21 cents: "It's a lucky number because it's three times seven." His treasury secretary wrote that if anybody knew how gold was priced "they would be frightened."

The Depression's persistence, partly a result of such policy flippancy, was frightening. In 1937, during the depression within the Depression, there occurred the steepest drop in industrial production ever recorded. By January 1938 the unemployment rate was back up to 17.4 percent. The war, not the New Deal, defeated the Depression. Franklin Roosevelt's success was in altering the practice of American politics.

This transformation was actually assisted by the misguided policies (including government-created uncertainties that paralyzed investors) that prolonged the Depression. This seemed to validate the notion that the crisis was permanent, so government must be forever hyperactive.

In his second inaugural address Roosevelt sought "unimagined power" to enforce the "proper subordination" of private power to public power. He got it, and the fact that the federal government he created now seems utterly unexceptional suggests a need for what Amity Shlaes does in a new book. She takes thorough exception to the government he created.

Republicans had long practiced limited interest-group politics on behalf of business with tariffs, gifts of land to railroads and other corporate welfare. Roosevelt, however, made interest-group politics systematic and routine. New Deal policies were calculated to create many constituencies - labor, retirees, farmers, union members - to be dependent on government.

Before the 1930s, the adjective "liberal" denoted policies of individualism and individual rights; since Roosevelt it has primarily pertained to the politics of group interests. So writes Shlaes in "The Forgotten Man: A New History of the Great Depression." She says Roosevelt's wager was that, by furiously using legislation and regulations to multiply federally favored groups, and by rhetorically pitting those favored by government against the unfavored, he could create a permanent majority coalition.

In the process, says Shlaes, Roosevelt refined his definition of the "forgotten man." This man had been thought of as a general personality, compatible with the assumption that Americans were all in it together. "Now, by defining his forgotten man as the specific groups he would help, the president was in effect forgetting the rest - creating a new forgotten man. The country was splitting into those who were Roosevelt's favorites and everyone else."

Roosevelt implemented the theory that (in Schlaes' words) "spending promoted growth, if government was big enough to spend enough." In only 12 months, just one improvisation, the National Recovery Administration, "generated more paper than the entire legislative output of the federal government since 1789."

Before Roosevelt, the federal government was unimpressive relative to the private sector. Under Calvin Coolidge, the last pre-Depression president, its revenues averaged 4 percent of GDP, compared to 18.6 percent today. In 1936, for the first time in peacetime history, federal spending exceeded that of the states and localities combined.

Roosevelt said modern "civilization" has tended "to make life insecure." Hence Social Security, which had the added purpose of encouraging workers to retire, thereby opening jobs to younger people. Notice the assumptions of permanent scarcity, and that the government has a duty to distribute scarce things, such as work.

In 1938, Roosevelt attempted to enlarge the Supreme Court so he could pack it with compliant justices. He said Americans had the right to "insist that every agency of popular government" respond to "their will." He included the court among "popular," meaning political and representative, institutions.

His overreaching called forth an opponent whom Shlaes rescues from obscurity. Wendell Willkie, who would be Roosevelt's opponent in a 1940 election overshadowed by war, called upon Roosevelt to "give up this vested interest you have in depression" as the justification for a "philosophy of distributed scarcity."

War, as has been said - and as George W. Bush's assertion of vast presidential powers attests - is the health of the state. But as Roosevelt demonstrated and Shlaes reminds us, compassion, understood as making the "insecure" securely dependent, also makes the state flourish.
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