The Corner

More New Deal

I just read Jonathan Alter’s The Defining Moment. It’s very well done–a brisk read, displaying a journalist’s eye for telling and memorable details. But regarding some of the thoughts Jonah has been posting in here on the New Deal, it has this extraordinary concession at the end, citing Jim Powell (who has popped into The Corner occasionally and whose FDR’s Folly is a devastating critique of the New Deal):

By 1940, the economy was headed up (before the boost in arms production), but unemployment did not move into single digits until factories began churning out war material. A modern-day conservative critic of FDR, Jim Powell, makes a good case that the Roosevelt Administration never figured out how to stimulate business with a strategy of incentives for growth.

In the short term, some of Roosevelt’s programs may have even delayed recovery. Although it was favored by many industries seeking to stifle competition, the NRA laid a heavy burden of regulation on business that discouraged investment. The introduction of a payroll tax to pay for Social Security arguably helped send the economy back down, with the money collected sitting idle in a reserve fund until the pay-as-you-go system was inaugurated in 1939. Had not war broke out in Europe late in 1939, Roosevelt would have left office in early 1941 having reduced unemployment from a quarter to a fifth of the workforce—and would likely have been viewed by historians as a far less significant president.

But to argue that the shortcomings of the New Deal undermine FDR’s achievements reflects a narrow view. It’s like saying that because the “polios” who went to Warm Springs were never fully cured, they should not have made the trip in the first place. There is no record of any patient with such regrets. Even marginal improvements in their physical conditions helped boost their confidence and their spirits were replenished.

This is a very stripped down case for FDR: His economic achievement comes down to making people feel better about marginal improvements.


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