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Does Obama Have Any Idea Why New Deal Failed?
Human Events ^ | 08/23/2011 | Burton Folsom, Jr.

Posted on 08/23/2011 3:20:28 PM PDT by neverdem

The Great Depression dominated the 1930s, in large part because President Franklin D. Roosevelt’s New Deal programs failed to create jobs. In May 1939, shortly after learning that unemployment stood at 20.7%, Henry Morgenthau, the secretary of the Treasury, exploded: “We have tried spending money. We are spending more than we have ever spent before and it does not work.” Morgenthau concluded, “I say after eight years of this administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”

Why did Roosevelt’s New Deal fail so miserably? The larger problem is that federal spending can’t create jobs. It merely transfers wealth from taxpayers to central planners. But worse than that, most of FDR’s New Deal was driven by politics. It was economically unsound.

Take the National Recovery Act (NRA), for example, which was FDR’s program for industry. The NRA set the prices of thousands of products. Merchants who gave discounts to customers were subject to fines and imprisonment. For example, the fixed price to press a pair of pants was 40 cents. Jacob Maged of Jersey City, N.J., gave a 5-cent discount because his shop was far from the main shopping area. He needed to give discounts to attract customers and stay in business. “You can’t tell me how to run my business,” Maged insisted. Yes, they could, Maged discovered when he went to jail for charging his customers a nickel less. Neither FDR nor any of his New Dealers, however, could clearly explain why jailing merchants for giving discounts created jobs or made American industry more competitive.

FDR also supported the Agricultural Adjustment Act (AAA) for farmers. Granted, farmers suffered from low prices, but the AAA solution was preposterous—pay farmers not to produce on up to one-fourth of their land. Farmers would get instant cash, and also, because less land was being cultivated, prices for crops would go up. But of course those rising prices would make it harder for city dwellers to put food on the table. The farmer’s gain was the city dweller’s loss, and the AAA may have destroyed more jobs than it created.

Many New Deal programs were pure politics—targeting federal money to lure specific voting groups into the Democratic Party. For example, Social Security taxes, FDR confessed, “were never a problem of economics. They are politics all the way through.” Tie older voters to the Democratic Party.

In a similar vein, FDR funded the Works Progress Administration (WPA) with $4.8 billion to build roads, bridges and other infrastructure projects. But he targeted most of the road-building to favored Democratic congressmen. James Doherty, a New Hampshire Democrat, agreed with the President: “It is my personal belief,” Doherty announced, “that to the victor belongs the spoils and that Democrats should be holding most of these [WPA] positions.” After FDR and the Democrats trounced the Republicans in the 1936 presidential election, Sen. Carter Glass of Virginia said, “The 1936 elections would have been much closer had my party not had a four billion, eight hundred million dollar relief bill as campaign fodder.”

Republican Sen. Hiram Johnson of California, who voted for FDR in 1936, nonetheless agreed with Glass. He described FDR as going around the country saying, “I will allot a few million dollars to this particular place, and a few million dollars to some other.” Johnson concluded, “He starts with probably 8 million votes bought. The other side has to buy them one by one, and they cannot hope to match his money.”

Who paid for FDR’s federal campaign fund? The taxpayers. FDR gained revenue from taxes on cigarettes, alcohol, telephone calls, telegrams, cars, tires and bank checks. He also increased taxes on corporations and incomes. In 1932, the year FDR was elected, only one in 20 American families paid the income tax and the top rate was 25%. By FDR’s death in 1945, almost two in three American families paid income taxes and the top rate was 94% on all income over $200,000.

No wonder the Great Depression persisted. Entrepreneurs and businessmen had no incentives to create businesses or expand existing ones.

President Obama publicly admires and tries to emulate FDR. And Obama is experiencing two of FDR’s problems: expensive new programs that don’t work, and discouraged entrepreneurs who are saddled with much of the bill for taxes and new regulations.

Burton Folsom Jr., a professor of history at Hillsdale College, is author of New Deal or Raw Deal? and co-author (with his wife, Anita) of the forthcoming FDR Goes to War (Simon & Schuster, 2011).


TOPICS: Business/Economy; Culture/Society; Editorial; Politics/Elections
KEYWORDS: fdr; greatrecession; newdeal; obama

1 posted on 08/23/2011 3:20:32 PM PDT by neverdem
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To: neverdem

Obama doesn’t even know how the Sun comes up.


2 posted on 08/23/2011 3:22:20 PM PDT by jmacusa (Political correctness is cultural Marxism. I'm not a Marxist.)
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To: neverdem

He doesn’t have any idea that it failed.


3 posted on 08/23/2011 3:22:40 PM PDT by 9YearLurker
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To: neverdem

if the devil don’t get you, Roosevelt will.


4 posted on 08/23/2011 3:23:46 PM PDT by hsalaw
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To: neverdem

Mr. Obama has a VERY poor grasp of American history.


5 posted on 08/23/2011 3:24:04 PM PDT by SumProVita (Cogito, ergo...Sum Pro Vita. (Modified Decartes))
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To: neverdem

Send Zer0 to the re-education camp.


6 posted on 08/23/2011 3:24:56 PM PDT by Paladin2
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To: neverdem

bm


7 posted on 08/23/2011 3:27:01 PM PDT by Para-Ord.45
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To: 9YearLurker
Does Obama Have Any Idea Why New Deal Failed?

No. 0b0z0 doesn't believe he should know anything because he thinks he's a big deal.

8 posted on 08/23/2011 3:27:19 PM PDT by melancholy (Papa Alinsky, Enslavement Specialist)
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To: neverdem

Obama believes the only failure of the New Deal was a failure to spend enough money.


9 posted on 08/23/2011 3:28:31 PM PDT by YHAOS (you betcha!)
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To: neverdem

0bama thinks he is smarter than the central planners of the 1930’s.


10 posted on 08/23/2011 3:29:11 PM PDT by forgotten man (forgotten man)
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To: neverdem
I doubt that Obama and his handlers think the New Deal failed. They probably think it brought us out of the Great Depression and solved most of our problems.

They also probably think it took too long, and that with their genius (the advisors led by Obama), they can do a much better job this time.

Of course, you and I know that that's delusional, but that's probably what they believe.

11 posted on 08/23/2011 3:30:40 PM PDT by cc2k ( If having an "R" makes you conservative, does walking into a barn make you a horse's (_*_)?)
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To: neverdem

Of course he does!

But that was back in the day.

He needs to show us again so
all of us are sure it wasn’t
his fault.


12 posted on 08/23/2011 3:34:27 PM PDT by wita
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To: neverdem

I don’t wholly believe that it’s just a case of Stupid. No one could inflict, & Continue to inflict the Catastrophic Damage he’s saddled us with by being merely Stupid.

http://www.freerepublic.com/focus/f-chat/2767297/posts

The man’s just plain Evil. Think about it. EVERYTHING he’s touched, He’s Ruined.

The law of averages implies that if it were just Stupid, he’d have to have gotten at least Something right.

Nada, Zero, Absolutely Nothing.

You really have to Try to turn in His kind of Screw Ups.


13 posted on 08/23/2011 3:36:18 PM PDT by To-Whose-Benefit? (It is Error alone which needs the support of Government. The Truth can stand by itself.)
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To: neverdem

The larger problem is that federal spending can’t create jobs.

These people are actively working to destroy America with Communist solutions.

Photobucket

It was the Communist plan in 1934. It is 0bama’s Communist plan today.

14 posted on 08/23/2011 3:37:42 PM PDT by FatherofFive (Islam is evil and must be eradicated)
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To: hsalaw
Photobucket
“People get the government they deserve.” Joseph deMaistre.

And when people become THIS freaking STUPID and inattentive to their freedoms, THIS is the PRESIDENT they deserve.

1 minute satirical Obama video here:

http://www.youtube.com/watch?v=tR6b-kWncI4

Hurry before some diversity loving (RIGHT!) Obamaniac at YouTube pulls


15 posted on 08/23/2011 3:38:26 PM PDT by Dick Bachert (The 2012 election is coming. Seems we have MORE TRASH TO REMOVE!)
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To: neverdem

Morgenthau’s comments just seem to fly over the heads of dedicated Keynesians as they always come back with the refrain of how not enough money was spent for a long enough time.


16 posted on 08/23/2011 3:38:37 PM PDT by T-Bird45 (It feels like the seventies, and it shouldn't.)
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To: neverdem

Joe Biden says that the New Deal was a Big Fugin Deal.


17 posted on 08/23/2011 3:39:56 PM PDT by Riodacat (And when all is said and done, there'll be a hell of a lot more said than done......)
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To: neverdem
Roosevelt's reputation is based on our victory in WWII.

But for the war, his standing would be a lot lower.

Also, people expected less and put up with a lot more back in the 1930s.

That's what his fans now don't realize.

18 posted on 08/23/2011 3:42:40 PM PDT by x
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To: neverdem

He and his crew have one agenda. And that is National Socialist Democrat. They are well on the way and all they need now is a catastrophic event to implement it totally.

He already has his Krupp, his Goebels, and his brown shirts. They are taking over all the strategic industries such as Electric manufacturing and have the ability to trace anyone. They have a majority of population that would inform on the others if they are threatened.


19 posted on 08/23/2011 3:43:52 PM PDT by crz
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To: neverdem

The text books teach the kids that FDR was a hero, and they lap it up.

But the politicians of the time knew better and quickly changed the constitution to limit presidents to 2 terms after he was gone.


20 posted on 08/23/2011 3:43:57 PM PDT by TexasFreeper2009 (Obama = Epic Fail)
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To: cc2k

Exactly. The New Deal failed only in the sense that it didn’t go far enough. Obama is trying to take it the rest of the way. “Building America on a new foundation...”

See my tagline for a great FR article with a conservative booklet from 1939 about FDR and the New Deal. You can really see where Obama is using the same style, almost the same words, etc. as FDR did.

In one part an adviser to FDR puts in a speech something about reassuring people that while the Gov’t is increasing it’s role, it does not have any intention of taking over private companies. FDR strikes that part out of the speech, saying something to the effect of “let’s leave our options open”.


21 posted on 08/23/2011 3:45:09 PM PDT by 21twelve (Obama Recreating the New Deal: http://www.freerepublic.com/focus/f-news/2185147/posts)
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To: neverdem

I had the privilege of reading an advance copy of “FDR Goes to War,” and the economic sections are very good, completely exposing FDR.


22 posted on 08/23/2011 3:47:14 PM PDT by LS ("Castles made of sand, fall in the sea . . . eventually." (Hendrix))
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To: neverdem
Does Obama Have Any Idea Why New Deal Failed?

Biden told him it was because Roosevelt didn't get on television enough.

23 posted on 08/23/2011 3:49:32 PM PDT by x
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To: 21twelve; cc2k

http://www.freerepublic.com/focus/f-news/2185147/posts

Excerpt:
There are those who still think they are holding the pass against a revolution that may be coming up the road. But they are gazing in the wrong direction. The revolution is behind them. It went by in the Night of Depression, singing songs to freedom.......

Worse outwitted were those who kept trying to make sense of the New Deal from the point of view of all that was implicit in the American scheme, charging it therefore with contradiction, fallacy, economic ignorance, and general incompetence to govern.

But it could not be so embarrassed and all that line was wasted, because, in the first place, it never intended to make that kind of sense, and secondly, it took off from nothing that was implicit in the American scheme. It took off from a revolutionary base.....

Having passed this crisis, the New Deal went on from one problem to another, taking them in the proper order, according to revolutionary technic; and if the handling of one was inconsistent with the handling of another, even to the point of nullity, that was blunder in reverse.

The effect was to keep people excited about one thing at a time, and divided, while steadily through all the uproar of outrage and confusion a certain end, held constantly in view, was pursued by main intention.

The end held constantly in view was power.


24 posted on 08/23/2011 3:50:55 PM PDT by 21twelve (Obama Recreating the New Deal: http://www.freerepublic.com/focus/f-news/2185147/posts)
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To: neverdem

The reason that Europe had a Depression, but the US had The Great Depression, is that Europe didn’t have FDR.


25 posted on 08/23/2011 3:54:53 PM PDT by VRWCmember (If it wern't for double standards, liberals would have no standards at all.)
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To: To-Whose-Benefit?

What you said.

0bama and his handlers know full well why.

When they 1st came on the scene, apparently they were reading about the Weimar Republic. That ended well. /s


26 posted on 08/23/2011 4:01:07 PM PDT by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto.)
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To: neverdem

Obama’s failing will help get Republicans elected.

But how many Republican candidates *right now* are talking about what must be done to put to get the economy fixed?

Oddly enough, some of it does not fit into what typically conservatives think of when they want to fix an economy bollixed up by Democrats.

The best example comes with the simple idea that “all investment is not equal”. At the very high end of the investment scale, where literally tens of billions of dollars are invested, they are *not* invested in what most people would think are “serious investments”.

In fact, such investments are almost wholly unregulated, and they are not “risk/reward” based, but are much more like crude gambling. But with a twist.

If they win, they get to keep the money. But if they lose, it doesn’t cost them a thin dime. And such a simple, wrong thing as this threatens our entire economy. In one such gambling enterprise, called the “derivatives market”, gambling debts surpass the trillion dollar mark.

And they are unregulated. Completely unregulated.

Now while most Republicans are laissez-faire types, this is too much, and too dangerous, to continue to allow to exist. And I don’t mean it needs government regulation. I mean that it has to end.

Derivatives market delenda est. The entire market must be outlawed.

And they are not alone. The Securities and Exchange Commission are the equivalent of a small band of meter maids trying to control all vehicular traffic in a major metropolitan area. And they are failing miserably. And this likewise threatens to derail our economy.

And after that, the antitrust laws need to be updated, to tear apart any number of corporations that have become “too big to fail”. Simply put: “Too big to fail means too big to live”. If our entire economy could be thrown into recession by the failure of a single company, that company is too large and too powerful. It needs to be broken up.

Finally, only after all of this, can Republicans get back to fixing what is broken.

Slashing the size of the federal government by half. Wiping out vast amounts of federal overreach and regulation. Taxing only for what is needed, eliminating federal debt, and getting out of the way.


27 posted on 08/23/2011 4:03:20 PM PDT by yefragetuwrabrumuy
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To: Dick Bachert

LOL! The phrase “If the devil don’t get you, then Roosevelt will” was in a song by CW McCall - I can’t recall the name of the song, but the phrase was on a poster in a diner along with one that said: “The bank don’t serve no food and we don’t cash no checks.” CW McCall - good times.


28 posted on 08/23/2011 4:15:52 PM PDT by hsalaw
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To: neverdem
War Begets Poverty

Poverty Peace

Then People will Traffic

and Riches Increase

Riches Produceth Pride

Pride is War's Ground

War Begets Poverty

Thus We Go Round.

War World II created The Jobs that our government couldn't make.

OBAMA HAS THE POVERTY THING DOWN PAT!

So we go round!

29 posted on 08/23/2011 4:29:00 PM PDT by Young Werther (Julius Caesar said "Quae cum ita sunt. Since these things are so.)
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To: neverdem

bookmark


30 posted on 08/23/2011 4:29:09 PM PDT by GiovannaNicoletta ("....in the last days, mockers will come with their mocking...." (2 Peter 3:3))
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To: yefragetuwrabrumuy
Derivatives market delenda est. The entire market must be outlawed.

You're giving way too much power to a gubmint that's way too big already. The way to deal with too big to fail is to let them fail. They took the risk, then they take the loss. Break them up in bankruptcy.

There's nothing wrong with transparent derivatives sold as collateralized debt obligations. The ones peddled by Wall Street banks were not transparent derivatives. They bundled subprime loan mortgages with good twenty percent down mortgages, and then paid the ratings agencies to rate them AAA. The buyer needs to pay the raters, not the sellers, and the seller and/or rater needs to underwrite them.

Wall Street had nothing to do with the securities peddled by Fannie and Freddie. They needed no rating. They had the full faith and credit of Uncle Sam backing them already. Kill Fannie's and Fredddie's subprime business at least.

Don't kill credit default swaps because AIG was too big to fail. With transparent derivatives, they work as a futures market, IMHO.

31 posted on 08/23/2011 4:38:12 PM PDT by neverdem (Xin loi minh oi)
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To: neverdem

You could have stopped at “Does Obama Have Any Idea?”, Burton.


32 posted on 08/23/2011 4:42:00 PM PDT by DustyMoment (Go green - recycle Congress in 2012!!)
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To: YHAOS
"Obama believes the only failure of the New Deal was a failure to spend enough money."

Why does anyone believe that Obama thinks the New Deal failed? He merely regrets that Roosevelt didn't take advantage of the situation and establish the Marxist utopia they all covet.

33 posted on 08/23/2011 4:51:02 PM PDT by Thom Pain (ABO)
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To: Thom Pain

As much as FDR sucked, SOME of the programs had tangible results, like the Hoover Dam and the TVA which electrified many rural households. Obama’s jobs programs have “created” NOTHING. It just transferred trillions into union retirement funds.


34 posted on 08/23/2011 5:03:39 PM PDT by boop ("Let's just say they'll be satisfied with LESS"... Ming the Merciless)
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To: neverdem

Bookmark.


35 posted on 08/23/2011 5:18:15 PM PDT by Sergio (An object at rest cannot be stopped! - The Evil Midnight Bomber What Bombs at Midnight)
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To: neverdem

Tell that to Chrissy Matthews and any liberal and they will stick their fingers in their ears and hummmmmmmmm.


36 posted on 08/23/2011 5:25:26 PM PDT by therut
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To: neverdem

One thing that is unshakable as the Rock of Gibraltar is the lib belief that FDR brought us out of the depression. They’re totally unable to accept the fact that we, and much of the world, would have climbed out much sooner if not for FDR’s ruinous economic policies. Hoover didn’t help matters much either with his signing of the Smoot-Hawley tariff and a few other anti-business bills. (read Amity Shlaes “The Forgotten Man” to get a better picture of what went on.) Hoover and Coolidge did not get along at all. Coolidge is the prez who should have been elected for four terms. With Cal as prez, we would have climbed out about five or more years earlier.


37 posted on 08/23/2011 6:55:14 PM PDT by driftless2
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To: neverdem

Obama and the American people as a whole do belive wholeheartedly in the “success” of FDR, and I don’t think we can convince them of their error.


38 posted on 08/23/2011 7:12:33 PM PDT by Theodore R.
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To: neverdem

First world to 3rd world in 1 term.

Deliberate .


39 posted on 08/23/2011 8:03:48 PM PDT by TASMANIANRED (We kneel to no prince but the Prince of Peace)
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To: SumProVita

Mr. Obama has a VERY poor grasp of American history.

But a very good grasp of socialist marxist history, except for the part where it ALWAYS fails


40 posted on 08/23/2011 10:25:34 PM PDT by Nailbiter
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I smell a campaign ad. Who said:

We have tried spending money. "We are spending more than we have ever spent before and it does not work.” “I say after eight years of this administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”

41 posted on 08/24/2011 1:21:46 AM PDT by D-fendr (Deus non alligatur sacramentis sed nos alligamur.)
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To: Nailbiter

People who don’t know American history usually have a faulty knowledge of world history as well. They also usually lack in their understanding of philosophy and have never studied logic.


42 posted on 08/24/2011 4:25:12 AM PDT by SumProVita (Cogito, ergo...Sum Pro Vita. (Modified Decartes))
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To: boop
Obama’s jobs programs have “created” NOTHING

What's the difference between Obama's Jobs Creation Program and Kim Khardashian's wedding?

Kim Khardashian's wedding created jobs.

43 posted on 08/24/2011 9:14:01 AM PDT by pogo101
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To: pogo101

LOL!


44 posted on 08/24/2011 10:51:37 AM PDT by boop ("Let's just say they'll be satisfied with LESS"... Ming the Merciless)
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