Defending the New Deal Watch

After the Great Depression, a large portion of our population understood that FDR’s policies of government spending to stimulate the economy actually worked. It was Keynesian economics, in which the government in times of economic downturn becomes the employer of last resort. FDR created programs to put people to work, building infrastructure (dams, roads, electric power plants and grids) and doing just about every other damn thing under the sun. Painting murals. Maintaining hiking paths. Halting soil erosion.

From the beginning, the business and moneyed interests in this country hated the New Deal and its works programs. They began and continue to this day to employ a disinformation campaign that has left the current American public of today not knowing if the New Deal was a good thing. This ignorance never would have worked on the public in the 40s and 50s, when people understood exactly what the stakes were to Hoover’s “continue to do nothing” strategy (there are still idiots in the same mode today). They understood because FDR explained it to them. He told them that his programs were going to end the Depression, and that his opponents had done nothing and didn’t care about them. How horribly rude and partisan his speeches seem in today’s climate, when merely giving the GOP the richly deserved blame for the financial crisis gives our media the vapors.

Any analysis of economic health from the era shows that the recovery was slow, but after a few years the economy was back about where it was when the downturn began during Hoover’s administration. But the economy didn’t start to boom until WWII. The difference was that before the war, FDR didn’t have the political capital to really spend and employ his way out of the Depression the way he wanted to. His opponents watered down his spending proposals, demanded that he try to balance the budget, hindered him. When it comes to killing people, though, no expense is too large for the US of A. (and, to be fair, Japan and Germany did present a real risk to our nation and to our European allies). Once in the war, the government could deficit spend to its heart’s content, put people to work, etc. And it worked like magic.

Today people say “the New Deal didn’t work” or they say that the New Deal failed and it was only WWII that worked to really end the Depression. I’ve even heard people say that FDR’s policies actually prolonged the Depression and that Hoover’s “do nothing” strategy would have worked faster. But the proof is in the pudding: the government employing people on a massive scale really boosts the economy.

But, I hear you object, that was the war, not the New Deal. Pretending that there is some qualitative difference to war spending and other stimulative spending is the real fallacy.

Corporatists and conservatives weep and gnash their teeth about the government paying people to paint murals or build roads (in the current go-round, the GOP has objected strenuously to money for the Park Service to maintain the National Mall). And so they pretend to scrutinize every penny to judge its stimulative effect. The truth is, anything that employs someone to do anything is stimulative, and highly so.

In the Keynesian spending to fight WWII, we employed a huge number of people to build battleships, fighters and bombers, munitions, aircraft carriers, supplies,etc. And where did all of that stuff go? Most of it is at the bottom of the sea, rusting and poisoning the environment. Yet, the stimulative effect was very high. We could have had people building ships and sending them to the bottom of the sea ourselves in the absence of Japan, and it would have had the same effect. What’s the difference? Just that in the case of making weapons everyone can see that it is a smart thing to do when you have an enemy.

So, you can employ people to do anything and boost the economy doing it if you employ enough of them. The smart thing is to have them do something useful, or beautiful, or necessary, or leaving you with something valuable afterwards, like a greatly improved infrastructure. But WHAT they do isn’t what boosts the economy, as the GOP wise men who rub their chins now like they know something would like to pretend. Only THAT they do it, and get paid, and get that money circulating.

My advice for the Obama team? Fashion a bill that employs a huge number of people, spending a vast amount of money on our infrastructure, and EXPLAIN what you are doing to the American people, so that they aren’t left wondering if more tax cuts (god forbid) would have been better.