FDR: Foolishness Done Repeatedly

Last month, I noted some recent examples of liberal policy failing over, and over, and over again. For those on the Left, however, suggesting that those policies are the problem is ludicrous, because of course state intervention and regulation work! Just look at the Golden Age of Liberalism, FDR's New Deal! Hmmm. Let's do that, shall we?

Now I don't want to bash too much on our 32nd President. He did lead us through World War II, partly by projecting a constant image of strength and determination, and I've got a lot of respect for him for that. And it must be said that he didn't intend to create the massive welfare state we know and loathe today--Social Security, for instance, was never meant to become so extensive. Yet, if we take a good hard look at the data, one cannot conclude that his domestic leadership did anything to save the nation, or even to keep things from getting worse.

There's more to the failure of the New Deal, it should be noted, than simply that the Depression continued to go on well after 1933. Even your average liberal professor will admit that. What they won't do is discuss the reasons for it.

For one thing, FDR's policies failed to strengthen the economy in one of the most elemental ways: they did not provide the stability and consistency necessary for a market to operate. I doubt I'm surprising anyone here with this, but investment, production, and the exchange of goods tend to work best when the rules are constant and known to all. The New Deal not only did not bring or maintain such stability, it went in the opposite direction. As just one example of how this happened, consider the incoming president's approach to the monetary system. One of the first things Roosevelt did in 1933 was to issue an executive order (an illegal executive order, but I digress) confiscating all privately held gold in the country. Once this had been accomplished, the government set the price of gold for sale on the world market, and then continuously raised the price to increase revenue.

This was bad enough, of course, but what made it much worse was the fact that these increases occurred without reason or rhyme, as gold prices were set according to what the POTUS, by common consent an intellectual lightweight, thought they should be. One nearly unbelievable example of how this could work came when FDR informed his Treasury Secretary that he had decided to raise the price by 21 cents--because 7 is a lucky number and 7 times 3 is 21. Not only did this open the door to rapid inflation, it played havoc with banking and the rest of the finance sector. As one writer noted,

One effect [of this rise in gold prices] was that private borrowing and lending, except from day to day, practically ceased. With the value of the dollar being posted daily at the Treasury like a lottery number, who would lend money for six months or a year, with no way of even guessing what a dollar would be worth when it came back paid?

No wonder that the stock market did not fully recover until the 1950s, that the GDP did not reach 1929 levels until the early 1940s, or that unemployment remained in double digits until World War II.

Not that a more academically accomplished President might have done any better. The supposed wonder boys of FDR's administration, the so-called "Brain Trust," were just as capable of making a bad situation terrible. For example, you may remember from history class the New Deal's Agricultural Adjustment Administration (AAA), which mainly distinguished itself by paying farmers to destroy their crops and livestock in the midst of starvation. The theory behind this waste was that by limiting the supply of produce, demand and therefore price would be driven up. This interference accomplished less than nothing, at least from the standpoint of the farmers themselves. A review of farm prices in 1939--after six years of market interference by the nation's "best and brightest"--revealed that prices for nearly all agricultural products, whether corn, cotton, wheat, or pork, were still only one-half to two-thirds of what they had been a decade before. The AAA failed to help farmers, and it made the misery of non-farmers worse, as the destruction of crops had such an effect that, by 1935, economists were predicting the U.S. would have to become a net importer of wheat for the first time ever.

But hey, at least the government did something for the little guy, right? Didn't those wonderful liberal civil servants make sure the poor were protected from the rich? Well, not exactly. What no one likes to admit about New Deal regulation is that it was created by and for the wealthy. The NRA (not that NRA--the National Recovery Administration), the key business regulatory agency created by the New Deal, came up with its codes the best way the Brain Trust knew how: the leaders of the largest businesses were brought in to write and/or review them. In other words, Big Business wrote the regulations that only businesses with sufficient money could easily comply with. Anyone see where this is going?

The resulting situation was one not unlike the medieval guild system, one where a tailor could be sent to jail for pressing a suit of clothes for five cents less than the NRA codes allowed (no, seriously, that happened). Small businesses across the country went under, which was just as the corporations friendly to the government had planned. And to save space, I'll avoid going into detail about how unions and businesses alike played the regs to exclude minority employment where they could, as did many Southern farmers to drive off black tenants.

Oh dear, this has gotten too long. So why am I bringing all this up? Because, as we are all painfully aware, the New Deal is in many ways the foundational myth for the modern Left. It is proof for liberals that government intervention in the economy works, that an active government saved the country just when laissez-faire conservatism was about to take it down. And thanks to leftists in the media and academia, this belief has been repeated endlessly, so that whenever small-government advocates try to push back against the welfare state, they are forced to "explain" the success of the New Deal. Well, consider it explained. It wasn't a success.

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Should All Nominees Be Supported?

Should a political party’s nominee always be supported? Generally, the answer is yes. A political party is a collection of people whose views overlap enough to give them a common interest in getting each other elected. To that end, they form a party with the implicit agreement that they will compete with each other to represent the party and then will support the nominee regardless of the outcome of the competition. Thus, the nominee should be supported. But there is an exception.

This exception arises when (1) the nominee’s views are well outside the range of common interests which hold the party together, and (2) there is a legitimate belief that supporting this nominee will harm the long term goals of the party.

On the first point, Reagan famously said that he could support anyone with whom he agreed on 80% of the issues. Reagan was making the point that it is foolish and counterproductive to require 100% agreement with a nominee before you can support them. Indeed, 100% agreement is probably impossible. Hence, this is the reason moderates should support conservatives and conservatives should support moderates and libertarians should support social conservatives and vice versa.

But Reagan’s point also contains the implicit understanding that at some point (possibly below 80% using Reagan’s formula) there is no obligation to support the nominee. Why would this be? For that, we need to look at the question of harm.

Companies spend hundreds of millions of dollars each year to ensure their products remain consistent. They want to make sure you find the exact same amount in each cereal box, that every batch of Mac and Cheese tastes the same, that every sock has the same number of stitches, and that every Acura uses only Acura parts. Why? Because having a consistent level of quality affects how people perceive their brands. People want to know exactly what they are getting when they make a purchase and branding achieves that -- whereas failing to maintain that consistency damages the brand because people will no longer know what to expect from their purchase.

Whether we like the idea or not, a political party is nothing more than a company, and its product or brand is an ideological range. Choosing a nominee from outside that range blurs the identity of the party and damages its brand.

How? For one thing, this will alienate supporters. Supporters expect nominees to be within the ideological range. When they aren’t, the party has violated the contract under which it claims a right to the individual’s support. It is the equivalent of McDonalds selling you a Big Mac container but including a ham sandwich rather than a burger. This is a violation of trust.

Moreover, this confuses voters. When a person represents a party or ideology, their views become associated with that party or ideology and their successes/failures taint the ideology. In other words, the nominee redefines how the public views conservatism or liberalism, and their meanings change. Hence, conservatism and Republicanism came to be associated with Nixon’s views in 1968, Reagan’s views in 1980, and Bush Jr.’s views in 2000 -- I exclude Bush Sr. because he claimed to be a moderate. Liberalism, by comparison, came to be associated with FDR, LBJ, Carter, and now Obama. Clinton called himself a moderate.

Prior to LBJ, the majority political view of the nation was FDR-liberalism. This could have continued indefinitely, except LBJ disgraced liberalism. His errors in Vietnam and his monstrous Great Society wiped out the Democratic party in the South and set the stage for a conservative resurgence. Jimmy Carter finished liberalism off by proving that Democrats are reckless spenders, incompetent managers of the economy, and militarily inept and cowardly. This set the stage for Reagan.

Reagan’s success revived conservatism while also redefining it back to its roots -- away from the big-government conservatism of the Nixon years. By the time Reagan left office, conservatism had become the natural ideology of the country and 60% of the public believed it.

This could have lasted for generations, except along came George Bush Jr. He wrapped himself in the conservative label and set about running a big government, civil-liberties-crushing, crony-capitalism, foreign-adventuring administration which so thoroughly discredited conservatism that in 2008, the voters were more radically liberal and more willing to accept liberalism than they had been at any time since LBJ. The ONLY THING THAT SAVED CONSERVATISM was the election of Barack Obama. If Obama hadn’t proven to be such a disaster, conservatism would be dead today. But Obama was a disaster and he caused a massive backlash which took the form of the Tea Party.

The lesson here is simple.

Ideologies get defined by their leaders and they get punished for the sins of their leaders. If a nominee calls himself conservative but acts like a liberal, the public doesn’t blame liberalism for his crimes and failures, it blames conservatism even if that person never once acted like a true conservative. Thus, Bush and Nixon, neither of whom could be called conservatives, discredited conservatism. LBJ/Carter/Obama, each of who were progressives and not liberals, discredited liberalism. And in each case, the only thing to save conservatism/liberalism was pure luck that someone worse came along to discredit the other side. If Moderate Joe Democrat had come along after George Bush Jr., we could well be looking at an America that views liberalism as the natural order of things and sees conservatism as meaning reckless spending, bad economic management, and cronyism.

Moreover, the nominee need not even be as disastrous as a Bush/Obama to harm the ideology. The goal of politics is to effect long term change in the country. That is simply not possible when the person representing your ideology holds views that are inconsistent with the ideology. This muddies the ideological waters and confuses the differences between the parties. In other words, when the Republicans and the Democrats both push the same solutions to the same issues, voters will come to believe there is no difference, and they will either stop voting or they will pick the party that promises them the most loot -- advantage Democrats.

This is what happens when you pick someone who is far outside the acceptable ideological range for the party or who happens to be insane. I’ll leave it up to you to decide if Newt or Santorum or Romney or Paul are so far outside the bounds that you should not support them, but ask yourself: “how bad would it be for the party, for my beliefs, and for the country if conservatism came to be defined in the way ____ sees it?”

Winning elections is important, but you don’t want to sacrifice the future to win a single election.


By the way, there's an interesting poll out which shows that 33% of Republicans want a new candidate to jump into the race. This is down from 68% only two months ago. I think the field is set.

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More Proof That Liberals Are Insane

Liberalism truly is a mental condition. Time and again, liberal policies lead to disaster and yet liberals absolutely refuse to see that. If at first you don’t succeed, just keep doing the same thing over and over until you get a different result. . . and don’t you dare try to fix any problems that may arise. Consider these examples.



1. Food Stamps For Rich College Kids Liberals believe in food stamps as a way to help poor people who “don’t earn enough to survive.” So you would assume liberals would want to stop rich and middle class moochers from exploiting the food stamp program? Apparently not.



Unlike other states, Michigan allows college kids to get food stamps. Federal law forbids this, but Michigan liberals got around that by classifying college as an “employment training program.” They also check eligibility for food stamps on the basis of income only without regard to assets. Hence, someone with a ton of money but no actual income can qualify for food stamps. . . someone like Leroy Fick, who won the state lottery but remained on food stamps.



Michigan is now changing its rules. College kids can now only get food stamps if they are single mothers or if they work more than 20 hours per week and still fall within income restrictions (assets will be considered as well). This change will kick 30,000 college kids off the program and save the state $75 million per year in food stamps.



Liberals should be thrilled. These middle class to rich moochers living comfortably on parental support and federal student loans, most of whom have better job prospects upon graduation than 90% of taxpayers, were robbing taxpayers (including “the working poor”) and draining the system, which prevented the money from reaching people who really needed it. But liberals aren’t outraged at the moochers, they’re outraged at the conservative governor who has made the change. Their reasoning? A change in the law to prevent the rich from taking money meant for the poor “will be unfair to the poor.”



Stupidity or insanity?



2. Stimulus Failure (redux): The evidence is indisputable that government spending to boost an economy in the short term is a disaster. I do believe careful spending in certain types of infrastructure can lead to long term growth. For example, the creation of a highway or getting electricity to people can create a wealth of opportunities as consumers and businesses make use of those services to reach each other. But you can’t boost an economy just by hiring people to build something.



History has shown this over and over. In fact, the biggest ignored lesson of the Great Depression came from FDR’s own Treasury Secretary Henry Morgenthau, who wrote this in his diary about their efforts to stem the recession:

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

Sound familiar? Now the Democrats want to go for another stimulus bill. . . a fifth under Obama. The others all failed, yet they think this one will work. That’s Albert Einstein’s definition of insanity: repeating the same action over and over, but expecting a different result. Hence, liberals are insane.



3. CAFE Standards Obama just introduced new fuel efficiency standards (CAFE) for trucks. Raising CAFE standards makes cars more expensive, driving down demand and keeping poor people in older, less-safe vehicles longer. What’s more, the one type of vehicle in which American car companies still dominate is the truck. This will hurt Detroit. I guess Obama’s slogan for 2012 will be, “The GM bailout was so successful, I want to repeat it in 2014!”



4. Obama Strong Warlord The last Democrat with any sense of how to win a war was Harry Truman, and he seemed to lose that by the time Korea came along. Since that time, the Democrats have become a party of pacifists, cowards and military incompetents. Obama looks to continue this ignoble tradition by tucking his tail in Afghanistan and Libya. But the Democrats want to portray him as a big tough killer. What to do? What to do?



Oh, I know. Let’s have Hollywood make a movie about Obama’s dithering over the killing of Osama bin Laden to prove his resolve of steal (hmm, is that spelled right?).



Here’s the catch. When Obama was thumping his chest after the military killed bin Laden, he got all of a three point bounce, which vanished again before the first shark took a bite out of bin Laden’s body. Obama got no bounce form running away in Iraq or cowering before Iran or Honduras. He got no bounce from the surge in Afghanistan. He got a negative bounce from bombing Libya. And Americans have stayed away in droves from every war film Hollywood has produced about the war on terror. Hmmm. So what makes liberals think this will help the man of steal? Insanity.



5. London Violence London police killed some gangbanger. According to liberals, it is outrageous that anyone should ever be killed and violence is unacceptable. So what do liberals do to protest? They start rioting in London, burning buses with people in them, beating people with baseball bats, etc. In other words, they have turned to massive, random violence to protest a single instance of probably justified violence. Nice.



As an "interesting" aside -- at least it will be interesting for most liberals (possibly even mind-boggling) -- the rioting stopped in London once the police threatened to use rubber bullets. The rioters moved on to other cities at that point. As a further aside, they don't riot in my neighborhood because we don't waste our time with rubber bullets.



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It's Just History Repeating. . .

History loves irony, and right now the Democrats are giving it off in spades. They are repeating obvious mistakes that millions of others before them have made. Yet, like so many Wiley E. Coyotes, they’re shocked that things aren’t turning out the way they expected. In fact, they spent the weekend whining about the unfairness of it all.

Consider the following four issues: the stimulus, the TARP, Obama’s dictator-appeasement plan, and Obama’s mortgage rescue plan. Each is blowing up in their faces like an ACME explosive.


• DeStimulus: The Democrats spent the weekend freaking out both on and off the record that despite all the money they poured into the stimulus, unemployment remains higher than it was before the stimulus began. What’s worse, they think they are now being unfairly blamed by ungrateful taxpayers for running the deficit/debt to dangerously high levels.

But of course, they aren’t the first to do this. Indeed, consider the case of FDR’s Treasury Secretary Henry Morgenthau. Here is what Morgenthau wrote in his diary about their efforts to combat the Bush. . . er, Hoover Recession:

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

Sound familiar? Despite FDR’s mega-stimulus, unemployment fluctuated between 14% and 20% during his first eight years, with the 20% coming later, not earlier. You would think somebody (**cough cough** Obama **cough cough**) might have considered this before they acted, but maybe that’s too much to ask.

Interestingly, FDR raised the top income tax rate so he could keep spending, causing unemployment to spike. The top rate went from 24% under Hoover to 63% to 79% to 90%. In 1941, FDR even proposed raising it to 99.5% on all income above $100,000 -- probably would have worked better if he’d said $250,000. All this did was bring unemployment to an all time high and stretch out the Great Depression an extra 15 years. FYI, Obama wants to raise the top income tax rate so that he can keep spending. Obama’s rates are not as bad, he’s aiming for something in the 50% rate, but the effect will be the same. Geithner’s diaries should make for fun reading someday.


• TARP Monster: Do you remember how the TARP was supposed to save the banking system from the folly of the banks who were too big to fail? Well, it turns out the TARP put the banking system at the mercy of those very banks. Indeed, a recent report from the government’s own TARP watchdog reports that the TARP has hurt smaller banks, who are having trouble repaying the money, and they are now vulnerable to being taken over by the very same too-big-to-fail banks that caused the crisis. Soon, those too-big-to-fail banks will be too-bigger-to-fail.

By the way, the historical parallels to this are legion. For example, every time socialism has been put in place to help the common man or a dying industry, it ended up making living conditions worse, and it ended up wiping out small firms in favor of the large firms that caused the competitiveness problem in the first place. Similarly, for you history buffs, the US government’s attempts to fix (read: “bailout”) abusive and negligent railroads which were putting the whole economy at risk resulted in those same railroads consuming vast numbers of other industries who found themselves at the railroads’ mercy.


• Appeasement: You would think by now that people would understand that you can’t negotiate with dictators from a position of weakness. But the cornerstone of Obama’s foreign policy has been appeasement. He begged forgiveness of Muslims and got only contempt. He surrendered our friends in Eastern Europe to the Russians to get help with Iran. . . the same Russians who will start fueling Iranian reactors this week. And he begged the Chinese to go along with the harshiest, most-non-cuddly sanctions yet on Iran, only to have them flip him the bird and announce last week that they would start buying Iranian oil. His bended-knee effort to get the Iranians to behave appears to have made war inevitable. His kowtowing to North Korea has brought us closer to war with them than we’ve been at any point since the 1950s. And don’t get me started on Cuba, Venezuela, Brazil, Sudan, etc. The fact that begging for respect has never worked, never once crossed Team Obama’s minds.


• Mortgage Failure Program: Finally, do you remember Obama’s mortgage rescue plan, which was supposed to help homeowners by stopping the flood of foreclosures and thereby stabilizing the housing market? It’s not working. According to a special inspector general for the bailout programs, the mortgage plan has not “put an appreciable dent in foreclosure filings” and foreclosures have hit an all time high. In other words, it turns out that giving second chances to irresponsible people does not suddenly make them responsible. And this is forcing down home prices, further hurting the housing industry, and delaying the resolution of millions of inevitable foreclosures, all of which puts more homeowners at risk.


One definition of insanity involves trying the same things over and over but expecting different results. Interestingly, if you add in a little self-pity to that definition, then it seems you’ve defined the Democratic Party.


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