Walter E. Williams
by Walter E. Williams: Ignorance,
Stupidity or Connivance?
beginning to compare Barack Obama's administration to the failed
administration of Jimmy Carter, but a better comparison is to the
Roosevelt administration of the 1930s and '40s. Let's look at it
with the help of a publication from the Mackinac Center for Public
Policy and the Foundation for Economic Education titled Great
Myths of the Great Depression, by Dr. Lawrence Reed.
first year of President Franklin D. Roosevelt's New Deal, he called
for increasing federal spending to $10 billion while revenues were
only $3 billion. Between 1933 and 1936, government expenditures
rose by more than 83 percent. Federal debt skyrocketed by 73 percent.
Roosevelt signed off on legislation that raised the top income tax
rate to 79 percent and then later to 90 percent. Hillsdale College
economics historian and professor Burt Folsom, author of "New Deal
or Raw Deal?", notes that in 1941, Roosevelt even proposed a 99.5
percent marginal tax rate on all incomes more than $100,000. When
a top adviser questioned the idea, Roosevelt replied, "Why not?"
other ideas for the economy, including the National Recovery Act.
Dr. Reed says: "The economic impact of the NRA was immediate and
powerful. In the five months leading up to the act's passage, signs
of recovery were evident: factory employment and payrolls had increased
by 23 and 35 percent, respectively. Then came the NRA, shortening
hours of work, raising wages arbitrarily and imposing other new
costs on enterprise. In the six months after the law took effect,
industrial production dropped 25 percent."
especially hard hit by the NRA. Black spokesmen and the black press
often referred to the NRA as the "Negro Run Around," Negroes Rarely
Allowed," "Negroes Ruined Again," "Negroes Robbed Again," "No Roosevelt
Again" and the "Negro Removal Act." Fortunately, the courts ruled
the NRA unconstitutional. As a result, unemployment fell to 14 percent
in 1936 and lower by 1937.
more plans for the economy, namely the National Labor Relations
Act, better known as the "Wagner Act." This was a payoff to labor
unions, and with these new powers, labor unions went on a militant
organizing frenzy that included threats, boycotts, strikes, seizures
of plants, widespread violence and other acts that pushed productivity
down sharply and unemployment up dramatically. In 1938, Roosevelt's
New Deal produced the nation's first depression within a depression.
The stock market crashed again, losing nearly 50 percent of its
value between August 1937 and March 1938, and unemployment climbed
back to 20 percent. Columnist Walter Lippmann wrote in March 1938
that "with almost no important exception every measure (Roosevelt)
has been interested in for the past five months has been to reduce
or discourage the production of wealth."
agenda was not without its international admirers. The chief Nazi
newspaper, Volkischer Beobachter, repeatedly praised "Roosevelt's
adoption of National Socialist strains of thought in his economic
and social policies" and "the development toward an authoritarian
state" based on the "demand that collective good be put before individual
self-interest." Roosevelt himself called Benito Mussolini "admirable"
and professed that he was "deeply impressed by what he (had) accomplished."
very own treasury secretary, Henry Morgenthau, saw the folly of
the New Deal, writing: "We have tried spending money. We are spending
more than we have ever spent before and it does not work. ... We
have never made good on our promises. ... I say after eight years
of this Administration we have just as much unemployment as when
we started ... and an enormous debt to boot!" The bottom line is
that Roosevelt's New Deal policies turned what would have been a
three- or four-year sharp downturn into a 16-year affair.
The 1930s depression
was caused by and aggravated by acts of government, and so was the
current financial mess that we're in. Do we want to repeat history
by listening to those who created the calamity? That's like calling
on an arsonist to help put out a fire.
E. Williams is the John M. Olin distinguished professor of economics
at George Mason University, and a nationally syndicated columnist.
To find out more about Walter E. Williams and read features by other
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