Sydney M. Williams
Thought of the Day
“New Deal Rebels by Amity Shlaes – Random Thoughts and Questions”
August 18, 2023
“…it is neither humanitarian nor Democratic nor American to indoctrinate the people
of the United States with the idea that it is the duty of the government to
support the citizen, rather than the duty of the citizen to support the government.”
Speech by John W. Davis, October 21, 1936
Democrat Presidential candidate 1924
Davis’ words in 1936 anticipated the penultimate sentence in President John F. Kennedy’s inaugural address twenty-five years later: “And so, my fellow Americans: ask not what your country can do for you – ask what you can do for your country.”
Davis’s and Kennedy’s words expressed a longing for a time when government was limited and the individual paramount, when Horatio Alger was honored, and when children were told success was up to them, that they could become whatever they wanted, as long as they were aspirant, focused, and diligent.
While the immediate aim of the policies and agencies created by FDR’s New Deal was to alleviate the suffering brought on by the Depression, the long-term consequence was to empower the State at the cost of personal freedom and choice. The result was the birth of the “nanny” State, where government is viewed as overprotective and interferes unduly with individual choice. Kennedy’s call in 1961 was for greater individual self-reliance. But his words went unheeded; LBJ’s “Great Society” boosted the role of government, offering more entitlements. The 1980s and ‘90s provided a respite in the rate of change, but the momentum toward bigger government persisted. Progressive candidate Barack Obama spoke in late October 2008: “We are five days away from fundamentally transforming the United States of America.” Just as the stock market crash of 1929, provided the impetus for a more heavy-handed government response, the credit crisis of 2008 gave Mr. Obama the same excuse. As Rahm Emanuel, President Obama’s future White House Chief of Staff, exclaimed after the election: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
When Roosevelt was inaugurated on March 3, 1933, the country was in the depths of the Great Depression. While the Dow Jones Industrial Averages were 30% higher than the summer of 1932, they were down 85% from their peak in 1929. Unemployment was close to 25% and real GDP was 26% lower than four years earlier. The Country was looking for a savior, and FDR appeared.
Once inaugurated in March 1933, Franklin Roosevelt took dramatic action. He declared a bank holiday, which shut down banks and the New York Stock Exchange for a week. In the interim, Congress passed a series of measures to ensure the integrity of the banks, including deposit insurance. When banks re-opened the immediate crisis passed. People re-deposited funds they had withdrawn, and the stock market opened higher. Over the next few years (like his successor seventy-six later with his “pen and phone”) FDR amassed power. In doing so, he created a plethora of agencies – “alphabet agencies,” as they were known. Among them: AAA (Agricultural Adjustment Administration), CCC (Civil Conservation Corporation), ERA (Emergency Relief Act), FDIC (Federal Deposit Insurance Corporation), NRA (National Recovery Act), PWA (Public Works Administration), REA (Rural Electrification Administration, TVA (Tennessee Valley Authority), and the WPA (Works Progress Administration) – all reporting to the Executive.
In 302 pages and over four dozen chapters, using material from dozens of politicians, economists, commentators, judges, and academics of the era, Amity Shlaes chronicles those who rebelled against Mr. Roosevelt’s response to the Great Depression. While some of the programs then created are still with us, like the FDIC and Social Security, others like the NRA inhibited free market forces, so delayed a return to pre-crash growth. Thus in 1938, nine years after the stock market crash that ignited the Great Depression, unemployment still stood at 19%, with real GDP only 2% higher than in 1929. Escape from the Depression came with providing armaments to the Allies (and our own preparation for war).
Quoting newspaper and magazine articles, texts of speeches, the Congressional Record, letters, Supreme Court concurrences and dissents, Amity Shlaes lets her New Deal rebels speak for themselves. Among the contributors are John W. Davis, Democrat New York Governor Al Smith (1923-1928), Associate Justice Benjamin Cardozo, Wendell Willkie (Republican nominee for President in 1940), Senators Joseph Bailey (R-NC) and Carter Glass (R-VA), John Maynard Keynes, Winston Churchill, Friedrich Hayek, and Alice Roosevelt Longworth. Ms. Shlaes writes in the introduction: “To travel with these critics through their time is to understand first of all there was nothing inevitable about the duration of the Great Depression.” The key word is “duration,” by which she meant ten years.
In the afterword of New Deal Rebels, William P. Ruger, president of the American Institute for Economic Research (AIER) which published this book, quotes Edward Crosby Harwood (1900-1980), economist and founder of the AIER: “It is never too late to substitute a realistic viewpoint and wisdom for muddling good intentions, and it is surely in the interest of the Country that this be done at the earliest possible date.”
But is it too late for us? As a country, we have piled on debt with little concern as to how it will be repaid. In the interest of centralizing and justifying power, we manufacture or exaggerate crises: climate change, accusations of racism and homophobia, pandemics, and perceived inequities. In the meantime, we must ask ourselves: Do we have the means and, more important, do we have the will to confront our true existential threat: Communist China and its pursuit of global hegemony? Progressives market themselves as guardians of democracy and the common man. Yet they employ undemocratic methods, like kangaroo courts to legally tie up opponents, and they use (and have used) public office for private gain, i.e., the Clintons, the Obamas, and the Bidens. Questions arise: Will our debts force a devaluation of the dollar? Will increases in productivity offset declining fertility rates? Will tried and true moral standards ever return? For two centuries the United States, has stood as a beacon of freedom and opportunity to the world’s oppressed. Is that still possible, without the freedom to speak out and the tolerance embedded in a Judeo-Christian ethic?
Appealing about the New Deal Rebels is its relevance, providing perspective for the optimist that past may be prologue, that we have been here before. But doubt remains: We have been divided into victims and oppressors. We are told our nation is inherently unfair, that racism dominates our history, and that answers lie with a benevolent government, run by Progressives who work to ensure fair and equitable outcomes.
Our Founders gave us a limited government, with three separate but equal branches, established of, by, and for the people – a government to serve the people, not the other way around. Yet today we have bureaucrats and lobbyists who move back and forth between the public and private sectors, so that three of the five wealthiest counties in the nation (Loudon, Falls Church, and Fairfax) are in the Washington metropolitan area. Harwood’s words, quoted above and published eighty-nine years ago in the Minneapolis Star-Tribune (and re-printed in Ms. Shlaes book) are as relevant today as when written. If only someone is listening.
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