All this talk by Democrats about 'infrastructure' spending and, along with it, 'green jobs,' is nonsensical.
You'd laugh, if you didn't want to cry, instead, at the hundreds of billions of taxpayer dollars about to be wasted by our New New Deal.
One of the basic lessons of even Keynesian economics one learns in the introductory macroeconomics course in college is that government fiscal policy rarely, if ever, counteracts a recession. Instead, it typically stokes inflation as, just when the natural cycle of the economy moves into expansion, all of the government-induced use of resources for infrastructure projects hit home, causing cost-push inflation.
I wrote here recently about how current evidence clearly shows the FDR New Deal programs to have failed at providing long term, meaningful jobs, or economic expansion, in the 1930s.
So, whether it's long term economic change, recessionary offset spending, or honest replacement of bridges and roads- the last, by the way, already the subject of large, recent years' outlays by Congress- this coming orgy of Obamanomics won't help the current natural economic recessionary cycle end any sooner.
But it will add to the deficit which, only a year ago, was the primary tool with which Democrats fought against Republican-sponsored tax cuts.
Oh, well. I guess fiscal responsibility was only desirable for Democrats when it kept Republicans from cutting taxes. Now that fiscal rectitude might impair the Democrats' newly-elected Messiah's plans to single-handledly save the Western economies, it'll have to go.
Showing posts with label New Deal. Show all posts
Showing posts with label New Deal. Show all posts
Tuesday, December 9, 2008
Tuesday, December 2, 2008
The Coming Democratic Spending Orgy
I wrote this post yesterday on my business blog to highlight liberal Democratic economist and recent Nobel Laureate Paul Krugman's nasty attacks on the current administration, as well as his attempt to deny Amity Schlaes' fact-based revelations on the failure of FDR's New Deal to lift America out of the Great Depression.
On this blog, I want to highlight the post because it is so relevant to the coming Democratic spending orgy.
On a similar note, here's a UCLA article concerning research done there which found FDR to be, not the cure for, but the source of the Great Depression.
"FDR's policies prolonged Depression by 7 years, UCLA economists calculate
By Meg Sullivan
8/10/2004 12:23:12 PM
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.
"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."
Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.
In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.
Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.
"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."
The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.
Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.
Roosevelt's role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century's second-most influential figure.
"This is exciting and valuable research," said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. "The prevention and cure of depressions is a central mission of macroeconomics, and if we can't understand what happened in the 1930s, how can we be sure it won't happen again?"
NIRA's role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.
"Historians have assumed that the policies didn't have an impact because they were too short-lived, but the proof is in the pudding," Ohanian said. "We show that they really did artificially inflate wages and prices."
Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.
The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.
NIRA's labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor's bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.
Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.
"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened." "
This is chilling reading, considering the bone-headed President-elect's insistence that he must spend hundreds of billions to 'create green jobs' and other nonsense.
When has the US Federal government ever created long term jobs which the private sector hadn't already determined were worthwhile?
Who says 'green jobs' are needed, or profitable? Why should anyone believe the Illinois rookie knows the first thing about how to, and which, jobs to create? With your money?
I guess there's a silver lining. If, and as, the rookie does this, he's simply going to grease his own way out of office, since his and his party's Congressional majority's grandiose spending plans won't work.
And, as they rack up huge deficits to no effect, Republican Congressmen Eric Cantor and Paul Ryan will be chortling and commenting from the sidelines.
2010 and 2012 may well yet be GOP years for making Congressional and, then, Presidential hay.
On this blog, I want to highlight the post because it is so relevant to the coming Democratic spending orgy.
On a similar note, here's a UCLA article concerning research done there which found FDR to be, not the cure for, but the source of the Great Depression.
"FDR's policies prolonged Depression by 7 years, UCLA economists calculate
By Meg Sullivan
8/10/2004 12:23:12 PM
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.
"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."
Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.
In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.
Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.
"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."
The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.
Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.
Roosevelt's role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century's second-most influential figure.
"This is exciting and valuable research," said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. "The prevention and cure of depressions is a central mission of macroeconomics, and if we can't understand what happened in the 1930s, how can we be sure it won't happen again?"
NIRA's role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.
"Historians have assumed that the policies didn't have an impact because they were too short-lived, but the proof is in the pudding," Ohanian said. "We show that they really did artificially inflate wages and prices."
Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.
The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.
NIRA's labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor's bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.
Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.
"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened." "
This is chilling reading, considering the bone-headed President-elect's insistence that he must spend hundreds of billions to 'create green jobs' and other nonsense.
When has the US Federal government ever created long term jobs which the private sector hadn't already determined were worthwhile?
Who says 'green jobs' are needed, or profitable? Why should anyone believe the Illinois rookie knows the first thing about how to, and which, jobs to create? With your money?
I guess there's a silver lining. If, and as, the rookie does this, he's simply going to grease his own way out of office, since his and his party's Congressional majority's grandiose spending plans won't work.
And, as they rack up huge deficits to no effect, Republican Congressmen Eric Cantor and Paul Ryan will be chortling and commenting from the sidelines.
2010 and 2012 may well yet be GOP years for making Congressional and, then, Presidential hay.
Thursday, January 3, 2008
Revisiting The New Deal, Employment & Private Investment
Monday's Wall Street Journal, the last edition of 2007, featured a wonderful editorial by Amity Shlaes entitled "The New Deal Jobs Myth."
She begins her article with these passages,
"Is a public-sector job really as good as a job created in the private sector? I've been wondering about this a lot lately, in part because I just finished a book about the period of the first great American experiment in public job creation, the New Deal. Critics have written that I failed to appreciate the value of New Deal emergency jobs. But the quality of government-paid jobs is also relevant because of the Democratic presidential candidates' interest in that 1930s experiment.
To hear the candidates talk, a repeat of 1930s-scale government job creation is dangerously overdue. John Edwards has proposed that government take the lead in creating types of jobs -- "green collar" and "stepping stone" -- to serve the two goals of protecting the environment and giving lower earners new skills. Dennis Kucinich is calling for a new green version of FDR's Works Progress Administration.
Academics are backing the politicians up. Bruce Katz of the Brookings Institution recently suggested that intelligent planning is the key to success: "smart policies and investments on infrastructure can foster productive growth in our economy, sustainable growth."
Given this Edifice Complex, the actual quality of New Deal spending, job creation and growth are worth a second look. The record is less impressive than the rhetoric implies."
This alone is rather scary. Schlaes documents several Democratic Presidential candidates alluding to the need for government-sourced infrastructure and/or jobs programs. Thus, her focus on whether or not the New Deal efforts were all they are now remembered as being.
I should note that even in my youth, during the mid-1960s, it was often acknowledged that Roosevelt's various New Deal programs didn't pull America out of the Depression- World War II did that. Back in post-Eisenhower America, Democrats were regarded as the party that took our country to war. Seems silly to write that now, but it was true- Wilson, Roosevelt, Truman, Kennedy, Johnson. But, I digress.
Putting her finger on the key aspect which differentiates most public and private sector employment, Schlaes writes,
"What was wrong with those public works jobs? Many created enduring edifices -- New York's Triborough Bridge, for example, the Mountain Theater of Mount Tamalpais State Park outside San Francisco, the Texas Post Office murals, which were funded by Henry Morgenthau's Treasury. But the public jobs did their work inefficiently. That was because the jobs were scripted to serve political ends, not economic ones."
Short term, politically motivated job creation might provide some temporary, albeit inefficient, ways of increasing demand by paying people for 'work.' But it can't, in more than the short term, help but become wasteful of a nation's resources. It's rather like throwing Ricardo's theory of comparative advantage into reverse, and pouring resources into things for all the wrong economic reasons.
But this waste wasn't limited to simply labor resources. Schlaes also points out,
"One could interject that such arguments do not take into account the context -- the paucity of other jobs, the dust storms, the deflations, the homelessness, the incomprehensible real privation of the period. But in the later part of the 1930s, the same model infrastructure projects did their part to prolong that privation. The private sector, desperate, was incredibly productive -- those who did have a job worked hard, just as our grandparents told us. But the government was taking all the air in the room. Utilities are a prime example. In the 1920s electricity was a miracle industry. There was every expectation that growth in utilities might pull the country through hard times in the future.
And the industry might have indeed done that, if the government had not supplanted it. Roosevelt believed in public utilities, not private companies. He created his own highly ambitious infrastructure project -- the Tennessee Valley Authority. The TVA commandeered the utility business in the South, notwithstanding the vehement protests of the private utilities that served that area.
Washington sucked up much of the available capital by selling bonds and collecting taxes to pay for the TVA or municipal power plants in towns. In order to justify their own claim that public utilities were necessary, New Dealers also undermined private utilities directly, through laws -- not only the TVA law but also the infamous Public Utilities Holding Company Act, which legislated many companies out of existence. Other industries saw their work curtailed or pre-empted by government as well.
At many points during the New Deal, net private investment was not merely low, but negative. Companies were using more capital goods than they were investing in.
All this tells us that while some companies were gunning their engines for the moment -- the industrial production -- they had little hope for productivity gains in the years ahead. Business no longer believed in business. Five years into the New Deal, companies across the country were mounting what Roosevelt himself described as a "capital strike.""
This is the socialism for which FDR is justly criticized. He inherently distrusted private enterprise, and granted sweeping powers to public utilities while crowding out the private, investor-owned ones. People in the current era seem to forget how rampantly socialist FDR was considered to be. To illustrate his father's economic conservatism, and the Midwest's distrust of FDR's socialist programs and interference with the market economy, my father has told me many times,
"I was thirteen before I knew Roosevelt's first name wasn't Goddam."
I've written elsewhere in this blog that it's unrealistic to believe that civil servants will ever, on average, be motivated to solve a major economic problem better or more quickly than private enterprise. Further, who among us knows of many intelligent, well-educated people who head for middle management jobs in federal cabinet agencies? I'd never trust career administrators in the federal government to solve economic or social problems better than the private sector.
Yet FDR's failed programs have now become a mis-remembered beacon to today's liberal leaders. Rather than budget for infrastructure projects and let contracts to industry, or allow industry to determine the types of jobs it needs, Kucinich and Edwards are busy planning to have taxpayers fund their own visions of new training programs and public works agencies. The faith that America has placed in its profit-driven, entrepreneurial private sector since World War II would soon be replaced by the American version of Soviet central planning.
Schlaes concludes by writing,
"The relevant points for today are simple. The famous "multiplier effect" of public spending may exist. U.S. cities do indeed need new highways, new buildings and new roads, maybe even from government. But these needs should be weighed against damage that comes when officials create projects and jobs for political reasons.
An emergency such as a Great Depression, a Sept. 11, a Katrina, can serve as a catalyst for an infrastructure project and for job creation too. But the dire moral quality of that emergency does not guarantee that the project undertaken in its name will be more efficient than your standard earmark.
In other words, candidates may want to be careful as they climb onto FDR's shoulders. The New Deal edifice may look solid, but it doesn't form a good basis for the American future."
One wonders how much more FDR could have done, had he used Congress to appropriate funds for his visions, but left industry to organize and implement them.
Let's hope we don't let today's liberal Democratic Presidential candidates attempt to repeat the worst features of FDR's multi-term reign.
She begins her article with these passages,
"Is a public-sector job really as good as a job created in the private sector? I've been wondering about this a lot lately, in part because I just finished a book about the period of the first great American experiment in public job creation, the New Deal. Critics have written that I failed to appreciate the value of New Deal emergency jobs. But the quality of government-paid jobs is also relevant because of the Democratic presidential candidates' interest in that 1930s experiment.
To hear the candidates talk, a repeat of 1930s-scale government job creation is dangerously overdue. John Edwards has proposed that government take the lead in creating types of jobs -- "green collar" and "stepping stone" -- to serve the two goals of protecting the environment and giving lower earners new skills. Dennis Kucinich is calling for a new green version of FDR's Works Progress Administration.
Academics are backing the politicians up. Bruce Katz of the Brookings Institution recently suggested that intelligent planning is the key to success: "smart policies and investments on infrastructure can foster productive growth in our economy, sustainable growth."
Given this Edifice Complex, the actual quality of New Deal spending, job creation and growth are worth a second look. The record is less impressive than the rhetoric implies."
This alone is rather scary. Schlaes documents several Democratic Presidential candidates alluding to the need for government-sourced infrastructure and/or jobs programs. Thus, her focus on whether or not the New Deal efforts were all they are now remembered as being.
I should note that even in my youth, during the mid-1960s, it was often acknowledged that Roosevelt's various New Deal programs didn't pull America out of the Depression- World War II did that. Back in post-Eisenhower America, Democrats were regarded as the party that took our country to war. Seems silly to write that now, but it was true- Wilson, Roosevelt, Truman, Kennedy, Johnson. But, I digress.
Putting her finger on the key aspect which differentiates most public and private sector employment, Schlaes writes,
"What was wrong with those public works jobs? Many created enduring edifices -- New York's Triborough Bridge, for example, the Mountain Theater of Mount Tamalpais State Park outside San Francisco, the Texas Post Office murals, which were funded by Henry Morgenthau's Treasury. But the public jobs did their work inefficiently. That was because the jobs were scripted to serve political ends, not economic ones."
Short term, politically motivated job creation might provide some temporary, albeit inefficient, ways of increasing demand by paying people for 'work.' But it can't, in more than the short term, help but become wasteful of a nation's resources. It's rather like throwing Ricardo's theory of comparative advantage into reverse, and pouring resources into things for all the wrong economic reasons.
But this waste wasn't limited to simply labor resources. Schlaes also points out,
"One could interject that such arguments do not take into account the context -- the paucity of other jobs, the dust storms, the deflations, the homelessness, the incomprehensible real privation of the period. But in the later part of the 1930s, the same model infrastructure projects did their part to prolong that privation. The private sector, desperate, was incredibly productive -- those who did have a job worked hard, just as our grandparents told us. But the government was taking all the air in the room. Utilities are a prime example. In the 1920s electricity was a miracle industry. There was every expectation that growth in utilities might pull the country through hard times in the future.
And the industry might have indeed done that, if the government had not supplanted it. Roosevelt believed in public utilities, not private companies. He created his own highly ambitious infrastructure project -- the Tennessee Valley Authority. The TVA commandeered the utility business in the South, notwithstanding the vehement protests of the private utilities that served that area.
Washington sucked up much of the available capital by selling bonds and collecting taxes to pay for the TVA or municipal power plants in towns. In order to justify their own claim that public utilities were necessary, New Dealers also undermined private utilities directly, through laws -- not only the TVA law but also the infamous Public Utilities Holding Company Act, which legislated many companies out of existence. Other industries saw their work curtailed or pre-empted by government as well.
At many points during the New Deal, net private investment was not merely low, but negative. Companies were using more capital goods than they were investing in.
All this tells us that while some companies were gunning their engines for the moment -- the industrial production -- they had little hope for productivity gains in the years ahead. Business no longer believed in business. Five years into the New Deal, companies across the country were mounting what Roosevelt himself described as a "capital strike.""
This is the socialism for which FDR is justly criticized. He inherently distrusted private enterprise, and granted sweeping powers to public utilities while crowding out the private, investor-owned ones. People in the current era seem to forget how rampantly socialist FDR was considered to be. To illustrate his father's economic conservatism, and the Midwest's distrust of FDR's socialist programs and interference with the market economy, my father has told me many times,
"I was thirteen before I knew Roosevelt's first name wasn't Goddam."
I've written elsewhere in this blog that it's unrealistic to believe that civil servants will ever, on average, be motivated to solve a major economic problem better or more quickly than private enterprise. Further, who among us knows of many intelligent, well-educated people who head for middle management jobs in federal cabinet agencies? I'd never trust career administrators in the federal government to solve economic or social problems better than the private sector.
Yet FDR's failed programs have now become a mis-remembered beacon to today's liberal leaders. Rather than budget for infrastructure projects and let contracts to industry, or allow industry to determine the types of jobs it needs, Kucinich and Edwards are busy planning to have taxpayers fund their own visions of new training programs and public works agencies. The faith that America has placed in its profit-driven, entrepreneurial private sector since World War II would soon be replaced by the American version of Soviet central planning.
Schlaes concludes by writing,
"The relevant points for today are simple. The famous "multiplier effect" of public spending may exist. U.S. cities do indeed need new highways, new buildings and new roads, maybe even from government. But these needs should be weighed against damage that comes when officials create projects and jobs for political reasons.
An emergency such as a Great Depression, a Sept. 11, a Katrina, can serve as a catalyst for an infrastructure project and for job creation too. But the dire moral quality of that emergency does not guarantee that the project undertaken in its name will be more efficient than your standard earmark.
In other words, candidates may want to be careful as they climb onto FDR's shoulders. The New Deal edifice may look solid, but it doesn't form a good basis for the American future."
One wonders how much more FDR could have done, had he used Congress to appropriate funds for his visions, but left industry to organize and implement them.
Let's hope we don't let today's liberal Democratic Presidential candidates attempt to repeat the worst features of FDR's multi-term reign.
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