Reconsidering Franklin Roosevelt

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Historian Jim Powell has been conducting a very interesting debate with publishing magnate and FDR biographer Conrad Black over at National Review. Black argues that Roosevelt got the U.S. out of the Great Depression. Powell disagrees:

High unemployment is the main reason that period is referred to as the Great Depression, and Black claims that FDR eliminated unemployment by putting as many people as possible in government jobs. (FDR probably emphasized government jobs over outright welfare to make recipients feel better about themselves, and to make taxpayers feel less resentful that welfare spending was a key reason that the New Deal tripled taxes.)

Hence all the time Black spends arguing that the Federal Emergency Relief Act, the Civil Works Administration, the Public Works Administration, the Works Progress Administration, and other New Deal agencies gave citizens "real" jobs; by Black's definition, that term means simply that people did work and were paid.

Call those government jobs whatever you want, but they were line items in the federal budget, paid for by current taxes, by borrowing (repaid from future taxes), or by inflation (a tax that works by devaluing dollar-denominated earnings and assets). When the FERA, CWA, PWA, WPA, etc., line items went away, those government jobs went away.

However impressive some of the government work might have been, it didn't involve things that people were willing and able to pay for. New Deal government jobs weren't self-sustaining. They weren't part of the ongoing private sector that involves people basically exchanging things they produce or services they provide for products and services they want from other people.

Read the rest here. Earlier this month at Reason.com, Powell explained why the Tennessee Valley Authority failed to help with the Great Depression. In 2004, I reviewed Powell's FDR's Folly and chronicled how the New Deal made life worse for African Americans.

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  1. I still can not phathom how people who are elected and supposed university grads can think that spending more is the way out of debt. A 10 year old can tell you that aint gonna work!

  2. It depends on what we spend the money on. If I am in debt and buy clothes I don’t need, bad idea. However, if I buy a lawnmower and a weedeater and use them to make money, then I have spent myself in the right direction. But meaningful productive work is required.

  3. It’s all about how you frame it.
    If government said that all working American MUST go out and buy a toaster immediately or else go to jail, people would be outraged.
    However if the government said that they’re going to take your money by force and go buy a toaster with it (which you may or may not get to use, depending on your proximitey to wherever the toaster ends up), people shrug and let it happen.
    Replace “toaster” with “frog museum”, or “repaving of 39th St” or “lead-based paint awareness literature”, etc.

  4. FDR did create effective makework programs for Federal Narcotics agents and concentration camp guards (among others).

  5. …publishing magnate and FDR biographer Conrad Black…

    Just in case, yes, it apparently is indeed him.

  6. It depends on what we spend the money on. If I am in debt and buy clothes I don’t need, bad idea. However, if I buy a lawnmower and a weedeater and use them to make money, then I have spent myself in the right direction. But meaningful productive work is required.
    ___________________________________________
    I will have to respectafully disagree. in your scenerio you are taking responsability for yourself and using your own money to buy the lawnmower. the goverment has no money. therfore every penny it spends comes from you and I willingly or not. and you can not right a nations ship by spending money. which in turn no matter what it is spent for, raisies taxes and lowers the GNP. while making the responsible, aka people like yourself who went out and got a lawnmower, you also have to pay for mine and his and hers. I know there is a better way to word that. but frankly at 5pm after 9 hours at the office, i just dont have it in me.

  7. I still can not phathom how people who are elected and supposed university grads can think that spending more is the way out of debt. A 10 year old can tell you that aint gonna work!

    A 10 year old would tell you that airplanes can’t fly because they’re heavier than air. Sorry, I trust our nation’s economy to people who have economic degrees and experience and Nobel Prizes and stuff, rather than some random guy on a blog who thinks he knows how economies work because he read half of a book by Hayek 20 years ago.

  8. Well then let’s all go out and break some windows so we can create jobs and get this nation working again!

  9. Seems like a roundabout way of saying government jobs aren’t real jobs.

    Even temporary jobs can provide long-term economic benefits. If we’re in a slump or depression, providing wages to people who otherwise wouldn’t have them will allow them to buy more widgets, boosting industry, which can then provide more “real” jobs, and so forth.

  10. Historians should not be debating the effectiveness of various fixes for the 1930s depression when Obama is hellbent on plunging us into a brand spanking new one to observe over the next few years. It’s like physicists arguing about Galileo’s experiment when they have a nice shiny lab available to replicate them.

  11. If we’re in a slump or depression, providing wages to people who otherwise wouldn’t have them will allow them to buy more widgets, boosting industry, which can then provide more “real” jobs, and so forth.

    Broken window, Tony. Taking money from productive people, thus preventing that money from being used by them in ways that boost the economy, and then handing it over to other people (after the government takes its vig) who may or may not do something that resembles work — that is your plan to invigorate the economy?

  12. Some government jobs are real jobs. If we employ a million people to build a space elevator, those are real jobs, assuming that the space elevator isn’t some fraud. If we hire them to dig holes, then fill them in, well, no, those aren’t real jobs. A lot of the New Deal jobs were the latter type.

    Incidentally, I wouldn’t be particularly happy with a space elevator jobs program, as much as I’d love the goal. There are more efficient ways than letting the government run a space program, that’s for damned sure. When did we last send men out of LEO? How much does it cost to get into orbit? Whose spacecraft will we be using to get to our insanely expensive space station between 2010 and 2015? And this is just one paltry example of a somewhat legitimate government jobs program.

  13. Yo, fuck FDR…

    Lame-legged bastard…

  14. prolefeed,

    You’re just articulating trickle-down theory which is pretty much in disgrace right now.

    Forget jobs. Just providing foodstamps creates more stimulus than letting the wealthy keep more money.

    And don’t talk to me about productive people. Rich isn’t the same thing as productive. The fact that we’ve had an economy entirely built on finance, and the only way to get truly rich is to play absolutely useless–not to say catastrophically destructive–games on wall street, should settle that forever.

  15. Does anyone else agree that the fundamental difference between the left and right-leaning sides on this blog seems to be a sort of reverse is/ought problem?

    For example, I keep hearing the left say “This ought to work, therefore it will.” and the right say “This ought not work, therefore it won’t.”

    Every once in a while someone throws out a very good argument or refutation, but it is mostly ignored and the “ought/is” claims resume.

    I’m getting sick of hearing various versions of “It’s nice, or good, or happy, or should, so therefore it makes sense and will be successful.”

  16. “Trickle down” was campaign rhetoric, not an independent economic theory. Now Keynesian thinking, that was totally discredited in economics, which is why our government is treating it like gospel now. . . .

    Kilroy,

    I’m more interested in utility than in forcing people to comply with my dreams, but I think free markets and limited government provide the most utility. Not perfection, just a better way of maximizing wealth and opportunity. And freedom, for that matter.

  17. Forget jobs. Just providing foodstamps creates more stimulus than letting the wealthy keep more money.

    Depends on what you mean by “stimulus”. If you mean “selling the foodstamps at a fraction on the dollar to go buy crack”, then, yes, that is one known outcome of food stamps.

    And if “wealthy” people KEEP money, rather than spend it, then they will almost certainly invest that money in things that will in the long run create jobs and prosperity.

    Basically, you’re parroting Obama’s redistributionist mantra, and ignoring the known economic effects of giving unearned free money to some politically connected people, and paying for it by taxing productive people.

  18. Pro Libertate,

    I agree with everything you just said, but it bothers me when people (not you) ignore perfectly good and specific arguments like “broken windows” and return back to sweeping generalizations based on subjective bias (good or bad) and perspective.

    Can’t someone either say “Hmm, broken windows, hadn’t considered that and I see your point.” or “Hmm, broken windows, I disagree that that applies here and let me explain why.”

  19. Yes! Tony, you’re articulate and clearly smart, here’s your chance . . .

    Prolefeed just made some great points, so how are you going to respond?

  20. After eight fucking years of FDR and his News Goddam Deal, unemployment was still >10%.

    Unemployment for Feb. 2009 was 8.1%.

    Yeah, let’s bring back the good ol’ days of the ’30s.

  21. Tony: By “trickle-down” do you mean “wealthy people, having bought something new, will often then sell it used”? Are you arguing that less than extravagantly wealthy people are worse off having the choice between buying something new or buying it used at a substantial discount?

    Or are you saying that Keynesian economics works better than any other alternative (the 70s stagflation being conveniently ignored), and labeling those who disagree with you and advocate free markets as “discredited”, and then applying a not-particularly applicable term that you intend as a pejorative?

  22. J sub, considering a 25% rate of unemployment when fdr took office, 10% would suggest some success with the NEW DEAL.

  23. J Sub D,

    Our unemployment rate is > 10% now. The U.S. government stopped counting chronically unemployed people who had given up looking for work as being unemployed about 13 years ago. Under the metric used during the Great Depression, the current u.S. unemployment rate is 12% according to ShadowStats.

  24. Depends on what you mean by “stimulus”. If you mean “selling the foodstamps at a fraction on the dollar to go buy crack”, then, yes, that is one known outcome of food stamps.

    Uh huh. Not to address “data” or “reality” or anything.

    And if “wealthy” people KEEP money, rather than spend it, then they will almost certainly invest that money in things that will in the long run create jobs and prosperity.

    Maybe so. It’s certainly not the most efficient way to create jobs and prosperity. And the argument can be made that it’s not the most moral way either.

    Basically, you’re parroting Obama’s redistributionist mantra, and ignoring the known economic effects of giving unearned free money to some politically connected people, and paying for it by taxing productive people.

    Are you suggesting the poor are more politically connected than the rich? What planet are you on?

  25. It smells like folk economics: there are these things called “jobs” that are the true measure of prosperity. If everyone has jobs, things are OK. Two and three apiece, even better. Jobs are like goods and services; they can be imported, exported, created, destroyed. But there’s a crucial difference: Politicians create jobs; entrepreneurs handle goods and services.

    The trouble in the Depression was that jobs simply vanished, like particles and antiparticles colliding, or like socks after going to the laundromat. And there weren’t enough to go around, so some people were depressed because they were without jobs. Roosevelt and Co., economic geniuses that they were, created very important jobs for people, like leaning on shovels, painting murals, and printing window stickers with pretty blue eagles on them. With the assistance of Hitler, Stalin, and Tojo, he created even more, fun ones in which people got to shoot at each other, sort of like capture the flag. And everyone had jobs, so nobody was depressed.

  26. It’s basically a semantic argument dressed up as an economic argument. Jim Powell says that any job that the government pays for is not a real job, so all the folks working in the WPA, etc. did not have real jobs and don’t count.

    First: Jim Powell is being capricious here. Every soldier, sailor, airman and Marine is being paid by the government. If it were up to the free market, would people freely pay for their services, including the less popular wars? Probably not — so should we count everyone in the military as unemployed?

    Second: Even if you grant his argument and say that all those people in the New Deal programs were unemployed, they still had income and were able to support themselves and pass that money on to grocers and salemen and such.

    That might not be worth doing normally, but during the Great Depression, in a time of financial panic and demand destruction and social unrest, you can argue that this had a helpful countercyclical effect. In other words, the WPA might have been helpful regardless of whether you call them “real jobs” or not.

  27. Tony,
    Are you seriously arguing that letting the government decide the distribution of wealth is the most efficient method of allocating resources? Because I have a few hundred years of history that beg to disagree.

    People investing in profitable industries would tend to lead to an efficient allocation of resources. After all, those industries tend to be profitable because people want the goods produced by those industries.

    As for whether it is the “most moral” system? Prove that the wealthy individuals in question gained their wealth by force and/or fraud, and you’ll get no argument from me. However, if you’re arguing that being poor or having a “need” for money necessarily imputes a moral right to it, then I must respectfully disagree.

  28. DannyK,
    Powell was arguing that spending money WITH NO OTHER JUSTIFICATION THAN CREATING JOBS is a bad idea. If all that our military did was stand around and drill, or invade foreign countries based on bad intelligence and outright deception, serving no useful purpose in and of itself except to provide employment, then yes, I would support its abolition.

    Re: Leftist commenter consistent broken-windows fallacy:
    *screams in anger, smashes window*

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