Desperate to change their miserable present, Republicans are traveling back in time to rewrite the past. And so it is with President Franklin Roosevelt and the New Deal. Hoping to block President Obama's stimulus program designed to prevent the next Great Depression, right-wing authors, pundits, and politicians insisted FDR failed to cure the first one. Now, Glenn Beck tells us, Americans reacted to the death of the man who led America back from economic collapse to victory in World War II by claiming with relief, "I'm glad he's dead."
On his Friday show, Beck featured regular guest Burton Folsom Jr. to peddle his book proclaiming the New Deal a failure. (Citing the thoroughly debunked work of Amity Shlaes, GOP leaders like John McCain and Mitch McConnell in 2009 similarly called he New Deal a bust, while Ohio Rep. Steve Austria amazingly declared that FDR "put our country into a Great Depression") After Folsom praised the Republican Roaring Twenties for producing Scotch Tape and zippers, Beck summed up his feelings for Roosevelt:
BECK: Roosevelt...Am I wrong by saying there was a good portion of people that thought, "Holy cow, I'm glad he's dead. He was turning into a dictator."
FOLSOM: Well, there were a lot of people who thought that. As you pointed out, we immediately had a constitutional amendment to prevent any other president from serving longer than two terms...It had not worked well with four terms under Franklin Roosevelt.
Of course, Roosevelt's death on April 12, 1945 brought shock, disbelief and national mourning. And he was wildly popular. His approval rating, which reached 84% in 1942, never dipped below 48% (in 1938). His passing on the eve of victory in Europe stunned Americans, whose approval of him topped 70%.
And with good reason. He had been overwhelmingly elected in 1932, 1936, 1940 and 1944. (He never won less than 36 states and 432 electoral votes.) Even before the onset of World War II, FDR slashed unemployment by more than half and largely restored industrial production and GDP growth. (Only when Roosevelt wavered in the face of conservative pressure in 1937 did his New Deal temporarily falter.)
Among FDR's ardent backers were the Schecter brothers, whose 1935 Supreme Court challenge to his National Recovery Administration struck down much of his New Deal regulatory program. As David Leonhardt wrote in the New York Times review of Amity Shlaes' book:
Among Roosevelt's supporters, evidently, were a family of chicken butchers in Brooklyn named the Schechters. "Their major political concern in the 1930s was anti-Semitism," Shlaes's appendix quotes one of their descendants as saying. "They believed that if Roosevelt had not solved the problems of the Depression, the U.S. could have gone the way of Nazi Germany." The Schechters apparently voted for Roosevelt every time he ran.
Here's another discredited story that won't die: the rumor that Obama created the post of "National Coordinator of Health Information Technology" in his stimulus package, presumably to steal your most personal secrets. (The position was actually created by President Bush in 2004, with broad bipartisan support.)
The latest appearance of this folktale - call it "Obama's Health Big Brother" - comes in a Bloomberg News editorial by Amity Shlaes that boldly goes where no metaphor has gone before. "Barack Obama has dropped us all into The Matrix," writes Ms. Shlaes, adding:
In the Obama Era, it seems, we all pick our way through anxious lives that have something to do with software. Like Keanu Reeves' Neo, we realize hour-to-hour that we are being manipulated by a system that has its own larger plan.
If only we keep a cool head, we tell ourselves, our powers of logic will help us escape the web. But each move we make, even the one that feels independent, takes us deeper into the Matrix ...
President Obama's $634 billion, 10-year health-care plan undoubtedly appeals to would-be Neos out there ... As in "The Matrix," freedom is a mirage ... and there's no escape.
Freedom's a "mirage"? I thought it was "just another word for nothing left to lose." But if she seems to be pushing her Matrix metaphor a little too hard in these paragraphs, wait until she compares Peter Orszag to Agent Smith. America reads this and wonders: Do I take the blue pill or the red pill?
(Think I'll take a Tylenol. It's blue and red.)
There's a pattern developing here, a new "scare 'em with spooky computers" approach that's gaining ground in the right-leaning commentariat. Why pick on the "national coordinator for health information technology"? Maybe because it brings up memories of all those computers-are-taking-over movies from the seventies. In this new conservative meme, anything with "computers" or "information" in it is sinister and dehumanizing.
The person who's the point person for the wingnuts on the "FDR's actions made the Great Depression worse" meme actually has an op-ed piece in today's Washington Post. (I know you're shocked!)
The former member of the Wall St. Journal's editorial board (a body known for free-market, fantasy-based editorials that openly contradict their reporters' own fact-based stories) is flogging her book on said topic, and says some pretty wacky things about how we should handle the Current Economic Unpleasantness:
What about spending? The Depression tells us that public works are probably less effective than improving the environment for entrepreneurs and new companies. The president has already put forward a big tax cut for lower earners. He might offer a commensurate one for higher earners. He might expand the tax advantages he is currently offering to companies -- wider expensing of losses, for example -- and make them permanent. A discussion that permits the word "trillion" might also include the possibility of bringing down U.S. corporate taxes, taxes on interest, dividend and capital gains -- again, permanently. The cash that a relatively competitive United States draws from abroad will move the country forward faster than any stimulus.
So the Depression and the New Deal are both worth going back to, but for different reasons than many suspect. We may rely on the best of the New Deal, the matter-of-fact bravery our parents and grandparents showed then, to help us through today's unexpected challenges. But we don't have to repeat New Deal stimulus experiments, because we know that they didn't work.
You can read the mandatory rebuttal from Paul "Unlike Right-Wing Hacks, I Actually Won A Nobel Prize for Economics" Krugman here (I know, it's silly and old-fashioned of me to think Krugman might actually know more about the subject matter):
Net stimulus of around 3 percent of GDP — not much, when you’ve got a 42 percent output gap. FDR might have been more of a Keynesian if Keynesian economics had existed — The General Theory wasn’t published until 1936. Note in particular that in 1937-38 FDR was persuaded to do the “responsible” thing and cut back — and that’s what led to the bad year in 1938, which to the WSJ crowd defines the New Deal.
Implications for Obama: be inspired by FDR, but don’t imitate him slavishly. In particular, your economic policy should be bolder, not more cautious.
When you hear claims that the New Deal made the depression worse, they often come directly or indirectly from the work of Amity Shlaes, whose misleading statistics have been widely disseminated on the right.
So on the numbers, the U.S. economy improved briskly during the New Deal. Things that are moving quickly and in the right direction, but still haven't reached their destination after a while, are things that have a long way to go—which is true of the U.S. economy recovering from 1932. Historians disagree on which part of the New Deal most encouraged economic growth, but at the least the New Deal did not prevent this recovery.
Shlaes makes a different argument about numbers, because she uses different numbers. She starts each chapter with a rat-a-tat of just-the-facts, but instead of GDP, which represents the overall economy, she quotes the Dow Jones Industrial Average, which represents the maybe 10 percent of Americans who owned stock. And though she quotes an unemployment number, she doesn't quote the figures I've just mentioned. Instead she chooses different estimates of unemployment that (she acknowledges) show a much larger share of Americans out of work during the New Deal.
If you want to know how the New Deal treated ordinary Americans, this choice really matters. Let's look at a figure Shlaes gives twice in her book and again in her Wall Street Journal editorial: She has unemployment at 20 percent in the 1937-38 recession. That's appalling—almost as bad as 23 percent in 1932. Based on such a statistic, you could think the New Deal wasn't alleviating the Great Depression. But that number hides something: A third of the people Shlaes counts as unemployed had a job that the New Deal gave them through its relief programs.
Now, you may say, wait: Those people really shouldn't count as employed—we're not interested in government make-work, we're interested in the real economy. Fair enough—and if you look again at Historical Statistics of the United States, you'll see another measure of unemployment—private, nonfarm unemployment—measuring the real, industrial economy. And on that measure, unemployment again runs markedly lower under Roosevelt than under Hoover. John Maynard Keynes might have explained that the New Deal wasn't just offering make-work, it was stimulating the economy—and Shlaes in fact at one point says the same: "[I]t functioned as Keynes ... hoped it would." Yet of all the possible ways to measure unemployment, Shlaes chooses the only way that hides the effect of New Deal relief programs and makes it look as though the economy performed as poorly under Roosevelt as under Hoover.
The private sector is a better job creator than the public sector. The Internet was not created by executive order — it was private industry.
I mean, come on - that's one's so widely known, most reasonably bright high school students would know that the federal government actually created the basis of what is now known as the internet.
And finally, Ms. Shlaes puffs up her own academic credentials (she doesn't even know the definition of a recession)- because, you know, she's a right-wing hackpushing an agenda, and not someone who's learned to achieve within the academically-rigorous free market of ideas (you know, the one not propped up financially by free-market foundations). I'm not surprised to find out that she's an English major with no formal training in history or economics! I mean, neither do I - but I haven't set myself up as an economic expert, either.
Don't write her off, or ignore the possible impact she may have on the stimulus package. After all, you know how people believe what they see on the teevee, and she's all over the place in our fair-and-balanced media.
