Jim Powell has returned to the charge about Franklin D. Roosevelt, accusing me of trying to avoid “embarrassing questions” about the New Deal and evade the chastisement I earned by writing a biography of Roosevelt, rather than an anthology of his favorite economists.
We went around this track before, in an exchange in the Wall Street Journal five years ago, which I referred to in my National Review Online piece, to which he replied in his “Conrad Black in Fantasy Land” a few days ago. He wrote that the TVA was a mistake and that it would have been preferable to starve the farmers into urban slums, where eventually they would have had higher standards of living. I believe I am as close to a pure capitalist as Powell, and it is piquant to be accused of being a hemophiliac bleeding heart, but — as I wrote — this is an agrarian-reform plan that would have put Roosevelt in the company of Stalin and Mao Tse-tung.
Powell even inflicts upon readers the feeble sophomorism of suggesting that I think public-sector spending is more useful and stimulating to the economy than private-sector spending. A cursory glance at anything I have written about politics or economics in the last 35 years, including my biography of FDR, shows that nothing could be farther from the truth.
I must remind Powell that I wrote that Roosevelt knew little of economics, but enough to distrust most economists and to realize that half of economics is psychology. I referred to the National Industrial Recovery Act as nonsense, a hodgepodge of conflicting measures attended by a ludicrous fanfare of Blue Eagles and parades, but noted that partsof it did increase employment and raise morale. I also pointed out that Roosevelt was almost relieved when the Supreme Court threw it out. (His concern with the Court was what else it might do.)
I wrote that the New Deal, as Alan Greenspan said to me, was a respectable pass on economics, but a near-perfect score on catastrophe avoidance. The cartelism, promotion of collective bargaining, and industry codes were unfortunate. And the pre-war tax increases and the rubbish about “malefactors of great wealth” and so forth were regrettable, but Roosevelt, whose political acumen has rarely been challenged, judged them necessary to stave off Huey Long and the other fringe rabble-rousers.
The core of the disagreement between Powell and me comes to four points. First, like other anti-Roosevelt writers, he refuses to acknowledge that those employed in the New Deal workfare programs — today called infrastructure spending, as well as conservation efforts — were as much employed people as contemporary Europeans and Japanese who were dragooned into the military and into defense-production industries. Why were they different, and why doesn’t Powell, or my esteemed friend Amity Shlaes, or any of the distinguished pro-Roosevelt historians (such as William Leuchtenburg and Doris Kearns Goodwin) who signed on to this myth, address this issue? These employees worked and were paid, indeed more generously than most German and Japanese and French draftees. Gene Smith in his excellent 2006 biography of Roosevelt took up the same point, and the revisionist myth-makers like Jim Powell are going to have to deal with it.
Second, the Powell school blithely ignores the fact that when Roosevelt was inaugurated, there were 17 million unemployed (in a country of 125 million), with no direct federal relief: about 33 percent of the workforce. (The figures are not precise, but it was more than the 25 percent that the anti-Roosevelt choristers seem to regard as the lowest unemployed percentage they can cling to with a straight face.) I agree with the Powell view that stimulating the private sector, while enlarging the money supply, reducing taxes, and reciprocally lowering tariffs, would have been the best way to proceed. But much of the country and half of FDR’s own party — including the malleable Henry Morgenthau, whom Roosevelt brought into the Treasury when he tired of debating with Dean Acheson — were neo-Hooverian budget balancers.
As I wrote, Roosevelt gave their option a try from 1935 to 1938, to preserve the unity of his political coalition. (He had made an expensive gesture to the bimetallists for the same reasons.) Quoting Walter Lippmann is as weak a reed as Powell could find: Lippmann faced in all four directions about Roosevelt over their 30-year acquaintance. As I also wrote — and Powell doesn’t dispute this — when the workfare participants are considered to be employed, Roosevelt did virtually eliminate unemployment within three years, and even when they are not included as employed, unemployment declined from 33 percent to 12.5 percent in the first three and a half years of his administration, and was completely eliminated before Pearl Harbor.
Third, as I wrote in my book and in the article objected to, the banking and stock-exchange systems had collapsed, millions of people were starving, tens of millions of people were threatened by eviction from their homes, and there wasn’t time to implement any economic policy that did not provide immediate emergency relief on a huge scale. David Kennedy was referring only to the “New Deal” up to 1938, and I certainly never suggested that that pastiche of measures was a recovery program.
Fourth, Powell seems to think the New Deal ended in 1935. He must be well aware of my view (shared by Roosevelt himself) that there were five New Deals: the 1933 Hundred Days; the Social Security, Labor Relations Act, etc. changes of 1935; the return to workfare in 1938; the big defense buildup from 1939 on; and the GI Bill of Rights, which took effect after Roosevelt died. His anti-isolationist foreign policy from 1937 to 1941 had an economic as well as a geopolitical rationale, as he made clear in the 1940 election campaign. While Roosevelt was president, unemployment declined from 33 percent to 0.5 percent. If he didn’t “lead the country out of the Great Depression,” who did, and why did the unrelievedly depressed country reelect him easily three times?