The New Deal = A Bad Deal

The Real Story About What Ended the Great Depression (Hint: It Wasn’t the New Deal)

The Great Depression. Unemployed men queued outside a soup kitchen opened in Chicago by Al Capone. The storefront sign reads 'Free Soup, Coffee and Doughnuts for the Unemployed.' Chicago, 1930s (Newscom TagID: evhistorypix027753.jpg) [Photo via Newscom]

The Great Depression. Unemployed men queued outside a soup kitchen opened in Chicago by Al Capone. The storefront sign reads ‘Free Soup, Coffee and Doughnuts for the Unemployed.’ Chicago, 1930s

For years, we have heard politicians and revisionist historians continually tell us that Franklin Delano Roosevelt’s “New Deal”ended the Great Depression.This lie was recently embellshed and retold by PBS docudrama producer Ken Burns in his series “The Roosevelts”.

Over the years, I have contended just the opposite, proclaiming that the so called “New Deal” did not end the depression but actually prolonged and intensified it. Indeed I feel that most of our current economic problems are actually a result of the continuation of Roosevelt’s economic philosophies and programs.

Nobody took me too seriously. After all what were my credentials? I was simply a businessman who had earned an under graduate degree in economics way back in 1959.

Well, maybe I have been validated. Several weeks ago Stephen Moore a renowned economist – formerly a lead economist for the Wall Street Journal and currently a Fellow at the Heritage Foundation and a Fox News contributor published the following commentary hat supports my long-held opinions re the depression.

 

COMMENTARY BYs moore4

Stephen Moore@StephenMoore *

My seventh-grade son recently wrote a U.S. History paper extolling the virtues of President Franklin Roosevelt’s New Deal. “It ended the Great Depression,” he wrote with great certainty. He’s only 12 and parroting what the history texts and his teachers told him.

That’s his excuse. What’s Ken Burns’?

Mr. Burns’ docudrama on the Roosevelts—for those who weren’t bored to tears—repeats nearly all the worn-out fairy tales of the FDR presidency, including what I call the most enduring myth of the 20th century, which is that FDR’s avalanche of alphabet-soup government programs ended the Great Depression. Shouldn’t there be a statute of limitations on such lies?

Ask nearly anyone over the age of 80, and they will say that FDR cared about the working man and “gave the country hope,” a point that Mr. Burns emphasizes. Roosevelt exuded empathy, which isn’t a bad thing—remember Bill Clinton’s memorable line “I feel your pain”?—but caring doesn’t create jobs or lift gross domestic product.

Nor does spending government money revive growth, despite the theories put into practice by the then-dean of all economists, John Maynard Keynes. Any objective analysis of these facts can lead to no other conclusion. U.S. unemployment averaged a rate of 18 percent during Roosevelt’s first eight years in office. In the decade of the 1930s, U.S. industrial production and national income fell by about almost one-third. In 1940, after year eight years of the New Deal, unemployment was still averaged a god-awful 14 percent.

Think of it this way. The unemployment rate was more than twice as high eight years into the New Deal than it is today, and American workers now are angry as hornets. Imagine, if jobs were twice as scarce today, the pitchforked revolt that would be going on. This is success?

Almost everything FDR did to jump-start growth retarded it. The rise in the minimum wage kept unemployment intolerably high. (Are you listening, Nancy Pelosi?) Roosevelt’s work programs like the Works Progress Administration, National Recovery Administration and the Agricultural Adjustment Administration were so bureaucratic as to have minimal impact on jobs. Raising tax rates to nearly 80 percent on the rich stalled the economy. Social Security is and always was from the start a Madoff-style Ponzi scheme that will eventually sink into bankruptcy unless reformed.

The cruel irony of the New Deal is that the liberals’ honorable intentions to help the poor and the unemployed caused more human suffering than any other set of ideas in the past century.

The most alarming story of economic ignorance surrounding this New Deal era was the tax increases while the economy was faltering. According to economist Burt Folsom, FDR signed one of the most financially devastating taxes: “On April 27, 1942, he signed an executive order taxing all personal income above $25,000 [rich back then] at 100 percent. Congress balked at that idea and later lowered it to 90 percent at the top level.” The New Dealers completely ignored the lessons of the 1920s tax cuts, which just a decade before had unfurled an age of super-growth.

Then there was the spending and debt barrage. Federal spending catapulted from $4.65 billion in 1933 to nearly $13.7 billion in 1941. This tripling of the federal budget in just eight years came at a time of almost no inflation (just 13.1 percent cumulative during that period). Budget surpluses during the prosperous Coolidge years became ever-larger deficits under FDR’s fiscal reign. During his first term, more than half the federal budget on average came from borrowed money.

The cruel irony of the New Deal is that the liberals’ honorable intentions to help the poor and the unemployed caused more human suffering than any other set of ideas in the past century.

What is maddening is that thanks to this historical fabrication of FDR’s presidency, dutifully repeated by Mr. Burns, we have repeated the mistakes again and again. Had the history books been properly written, it’s quite possible we would never had to endure the catastrophic failure of Obamanomics and the “stimulus plans” that only stimulated debt. The entire rationale for the Obama economic plan in 2009 was to re-create new New Deal.

Doubly amazing is that at this very moment, the left is writing another fabricated history — of the years we have just lived through. The history books are already painting Obama policies as the just-in-time emergency policies that prevented a Second Great Depression. I wonder if 80 years from now, the American people will be as gullible as they are today in believing, as my 12-year-old does, that FDR was an economic savior.

*Stephen Moore grew up in New Trier Township, Illinois. He attended Saints Faith Hope & Charity School in Winnetka and graduated from New Trier High School in 1978.[5] He received a B.A. from the University of Illinois at Urbana-Champaign and an M.A. from George Mason University in economics.[

From 1983 through 1987, Moore served as the Grover M. Hermann Fellow in Budgetary Affairs at the Heritage Foundation. In 1987, Moore was research director of President Reagan’s Privatization Commission. and spent ten years as a fellow of the Cato Institute, a libertarian think tank. Moore was the senior economist of the U.S. Congress Joint Economic Committee under Chairman Dick Armey of Texas, where Moore “was instrumental in creating the FairTax proposal”.

Moore founded the Club for Growth in 1999. Moore was ousted by the group’s board in December 2004, and subsequently announced his resignation.  After his ouster from the Club for Growth, Moore founded the 501(c)(4) Free Enterprise Fund with other former Club for Growth members including Arthur Laffer and Mallory Factor.[10] In 2005, Moore left the Free Enterprise Fund to serve on the editorial board of the Wall Street Journal.[9] Moore is a partner in the econometrics firm Arduin, Laffer & Moore Econometrics.[ On January 21, 2014, the Heritage Foundation announced that Moore would rejoin the think tank as chief economist.[12] Moore is a contributing editor for National Review. 

In May 2015, Moore cofounded the Committee to Unleash American Prosperity with Arthur Laffer, Larry Kudlow, and Steve Forbes with the stated mission of, “persuading the presidential hopefuls in both parties to focus on the paramount challenge facing our country: slow growth and stagnant incomes”.

BY: Stephen Moore 8/2016

Republished By: The Crusty Conservative   9/7/2016


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