The specter of John Maynard (“If you’re stuck in a hole, just keep digging”) Keynes must be a regular sight in the Oval Office, offering posthumous advice in seances, which the current administration follows religiously, thereby postponing — or even canceling — an economic recovery.
The first New Dealer also tried the “command and control” approach, back when it was billions and billions (pace Carl Sagan) instead of trillions and trillions:
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.
And the same “economically unsound” approach is still being pursued today — along with the same politics:
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.
. . . 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.
— Burton W. Folsom, Jr., “Obama’s Giving Us the Same Raw Deal as His New Deal Hero, FDR”, Human Events
And we’re in the same predicament today. Obi-Franklin has taught them well.
Folsom knows whereof he speaks; he has written an entire book about FDR and the Great Depression, New Deal or Raw Deal?
His latest tome is FDR Goes to War.
