|
|
|
Most people of a conservative bent have never bought the liberal fairy tale about the New Deal lifting the United States out of the Great Depression. But even they would profit from FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression, by Laissez Faire Books editor Jim Powell. This concise and well-documented history of FDR’s attempt to single-handedly remake the American economy is a treasure trove of research on what not to do the next time a severe economic crisis hits. As Powell shows, the Depression was largely a creation of government. The gross mismanagement of the money supply by the Federal Reserve turned a garden-variety contraction into the worst financial crisis in U.S. history. Untutored in economics and a creature of his times, Roosevelt believed with religious fervor in a planned economy of the sort that appeared successful in the Soviet Union. He had complete disdain for businessmen and put lawyers in charge of the economy. He issued 600 executive orders covering virtually every aspect of the economy – more than the total passed by all the presidents who came after him! Roosevelt railed against "economic royalists" and chatted a fireside line about helping the common man, but Powell’s careful research shows that everything FDR did was the result of a political calculation. Spending on New Deal projects, for example, had nothing to do with helping Americans at the bottom of the ladder. Money was spent in western states where FDR needed votes instead of in the much poorer South, where his support was solid. In hindsight, conservative objections to New Deal schemes are shown to be exactly right. Roosevelt drastically raised taxes, particularly on businesses and the investing class whom he blamed for the Depression. He tried to bludgeon businesses to join his NIRA scheme which amounted to fixing prices and cutting output. In one celebrated case, a garment cleaner was jailed for charging 40 cents to clean a pair of pants. The lawful amount was 35 cents. The Depression left more than bad memories. Through Roosevelt’s tinkering, the U.S. economy was saddled with an alphabet soup of meddling agencies, like the Civil Aeronautics Board, that continued to cause trouble long after it was obvious that they had done only harm in the first place. The hubris of this army of reformers was incredible. Not content with solving immediate problems, they tried to remake America into a socialist utopia. Social Security and Medicare were creatures of this fevered time. Powell shows that their proponents knew exactly what they were doing in setting up a "pension" plan presented as actuarially sound, but was actually a Ponzi scheme. The reader will be struck again with the audacity of the court-packing scandal, and with the arrogance of regulators like NRA head Hugh Johnson, who said that businesses that didn’t get with the program would get "a sock in the nose." The facts are clear: FDR’s policies lessened output, increased unemployment, encouraged destructive labor practices, and grossly expanded the power of government. It’s not a legacy that any conservative can applaud. (Crown Forum, 2003, 352 pages, $27.50) |
These errors were compounded by banking laws that prevented banks from branching and thereby achieving diversification and protection from locally ruinous conditions.
