Deuce of Clubs Book Club: Books of the Weak

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I'm a Lebowski, You're a Lebowski

Guy Debord: Revolutionary

No Place to Hide

Command of Office

The Christ-Myth Theory And Its Problems

The Christian Delusion

Lincoln's Wrath

How to Do Nothing with Nobody All Alone by Yourself

The Sexy Book of Sexy Sex

Bossypants

Zombie Spaceship Wasteland

Catching the Big Fish

Dig Infinity

The True Adventures of the Rolling Stones

Crazy for God

Basin and Range

Anarchy Evolution

The File

John Ringo

The Supremes

End the Fed

Burning Book

The Hohokam Millenium

God's Middle Finger

Narcocorrido

In Heaven Everything Is Fine

The Shunning

Wisdom Sits in Places

The Marvelous Country

Hamilton's Curse

The Secret Life of Houdini

The Trouble with Being Born

Schulz and Peanuts

First Into Nagasaki

Joe Miller's Jests

Human Smoke

Dirty Tricks Cops Use

A Futile and Stupid Gesture

All For A Few Perfect Waves

Systemantics

Death in the Desert

American Signs

Secret Proceedings and Debates of the Constitutional Convention

Secrets Of A Stingy Scoundrel

The Self-Made Tapestry

A Constitutional History of Secession

The Neurotic's Notebook

Interrogation Machine

Monster Midway

The Harlot by the Side of the Road

Forced Into Glory

Imperial Life in the Emerald City

J. G. Ballard: Quotes

The Compleat Practical Joker

Laugh with Hugh Troy

Pranks!

A Liar's Autobiography

Cobb

Chasing Rainbows

Letters from Tucson, 1925-1927

The Five Fosters

The Giant Cactus Forest and Its World

How to Cheat Your Friends at Poker

World Famous Cults & Fanatics

That's Not All, Folks!

God's Problem

Will Christ Return By 1988?

Fragments of an Anarchist Anthropology

The Whiskey Rebellion

FDR's Folly

Wilson's War

Bully Boy

[If] I Did It

The Dark Side

Secret Origins of the Bible

Godless

The End of Faith

Why I Became An Atheist

"Life's Calendar for 1922"

Churchill, Hitler, and the Unnecessary War

The Negro Cowboys

EXPECT RESISTANCE

Monty Python Speaks

Baseball Between the Numbers

The Psychopath's Bible

Satisfaction

J. G. Ballard: Conversations

Days of War, Nights of Love

Gospel Fictions and Who Wrote the Gospels?

The Real Deadwood

Deadwood

The Revolution: A Manifesto

45

The Secret Man

Stormin' Mormon

From Psyche to Soma

I'll Gather My Geese

The Osama bin Laden I Know

Alias "Paine"

A Man Without Words

The Wild Trees

The World Without Us

Arizona's Changing Rivers

The Phoenix Indian School

Realm of the Long Eyes

John Dillinger: The Life and Death of America's First Celebrity Criminal

Buckey O'Neill: The Story of a Rough Rider

Thanks For Tuning In

Adventures in the Apache Country

Waylon: An Autobiography

My Life: Sunrise to Sunset

Mimes and Miners: A Historical Study of the Theater in Tombstone

The First 100 Years: A History of Arizona Blacks

Enter Without Knocking

City in the Sun: The Japanese Concentration Camp at Poston, Arizona

House by the Buckeye Road

Vanished Arizona

The Big Con

The Astronomy Cafe and Back to the Astronomy Cafe

A Handbook on Hanging

The Sinner's Guide to the Evangelical Right

A Mind Restored

Mr. Show: What Happened?!

Reclaiming the American Revolution

Stumbling On Happiness

Treasure Maps of the Superstitions

Sunny Slope

Did Genesis Man Conquer Space?

Look Homeward, America

Radicals for Capitalism

Kayaker's Little Book of Wisdom

God Is Not Great

The Echoing Green

The Secret Life of the Lonely Doll

K Foundation Burn a Million Quid

The Facts of Life and Other Dirty Jokes and The Tao of Willie

Just Six Numbers and Our Cosmic Habitat

Wild Goose Chronicles

Behind Bars: Surviving Prison

Silent Night: The Story of the World War I Christmas Truce

The Gang They Couldn't Catch

Manhunt

A History of the End of the World

Al Sieber: Chief of Scouts

Apaches & Longhorns

Deep Survival

Captured

DINO

Sock

Bo: Pitching & Wooing

You Are Worthless

You And Your Hand

Access All Areas

Field Guide to the Apocalypse

The War on Terrorism

Those Idiots From Earth

September 11: An Oral History

Mortal Questions

The Heresy of Self-Love

The White Flag Principle

Medieval Panorama

An Honest President

Those Words

À rebours

Peterson's Incident Report Book

Boo! Culture, Experience, and the Startle Reflex

Victory Denied

Nothing, Arizona

A Porcine History of Philosophy and Religion

O Holy Cow!: The Selected Verse of Phil Rizzuto

DOME COMPENDIUM OF TOPICAL TREATMENT IN PROCTOLOGY

¿Hablas conmigo

Thirty-three Candles

Black Monk Time

Men of Distinction

Alexander the Corrector

Space Viking

Mark These Men

Hallucinogenic Plants

Prohibition: An Adventure in Freedom

JESUS! He's Our President

LOVE

How to Watch Football on Television

Merrill Markoe's Guide to Love

Lincoln: The Man and The Car

Whatever Men Know About Women

Biographies of Italian War Heroes

ABC of Espionage

Art Colony Perverts

Devil-ution

Starting Right with Bees

Planet Earth is a Cult

Baseball Letters

Fetish

Dopey Doings

Democracy: The God That Failed

Handgrenade Talk

Hi, How Are You?

het zingen van het ijs

The Museum of Jurassic Technology Jubilee Catalogue

The Rector and the Rogue

Colorful Cacti of the American Deserts

Odd Jobs: The World of Deviant Work

The Hungry Man's Outdoor Grill Cookbook

How to Get Invited to the White House

How to Work for a Jerk

Never Work for a Jerk!

The Mentality of Apes

Your Vigor for Life Appalls Me

Dr. Strange: Sorceror Supreme

Nautical Notions for Nibbling

A Short Introduction to the History of Human Stupidity

The Fake Revolt

Coup D'Etat

History of the Town of Felicity

Hood of Death

Dolls' House Bathrooms: Lots of Little Loos

Border Security / Anti-Infiltration Operations

Living on Light

God is for Real, Man

Did the Apostle Paul Visit Britain?

Twin Peaks

2001

Power Phrases

The Truth About Wagner

The Life of the Bee

Tombstone

Science Looks at Smoking

The Chiricahuas

The New Dark Ages Conspiracy

The Big Question

Everybody's Book of Epitaphs

The Death of the Fuhrer

Mindfuckers

Gorbachev! Has the Real Antichrist Come?

The World's Worst Poet

Alyssa Milano: She's the Boss

Home is the Desert

Nine Lives: From Stripper to Schoolteacher

How to Start Your Own Country

How to Found Your Own Religion

Sex Objects in the Sky

Indian Oratory

Bastard Without Portfolio

The Bedside Book of Bastards

Hopeless -- Yet There Is Hope

Bible in Pocket, Gun in Hand

Margie Asks WHY

Death of a Hippie

Wake Up or Blow Up

Feeling and Form

Guilt

A Mile in His Moccasins

Mojave Desert Ramblings

Passing of the Outhouse

This Way to Happiness

The Happy Life

Young Only Once

The Monkey Gland Affair

Bert Bacharach's Book for Men

The Two Babylons

For Good and Evil: The Impact of Taxes...

Why Christians Crack Up!

Why Do Christians Break Down?

Hava Nagila!

Beethoven or Bust

How to Abandon Ship

Livin' in Joe's World

The Last Democrat

Salvation Mountain

The Varmint and Crow Hunter's Bible

Love in the Western World

Jack the Ripper: Light-Hearted Friend

Little Men of the NFL

No One May Ever Have The Same Knowledge Again

The Secret Museum of Mankind

James Bond's World of Values

We Did Not Plummet Into Space

The Boy Who Didn't Believe IN CHRISTMAS

The Great Escape From Your Dead-End Job

All About Tipping

My Loser Godfrey

A Haircut in Horse Town

Mucusless Diet Healing System

Jefferson Returns

Lincoln Returns

Churchill Returns

Corporation Freak

Null Bock auf DDR

So You're Going on a Mission?

Nudes in My Camera

Why I Hate the Nazis

Flesh, Metal & Glass

The James Beard Cookbook

Mortal Refrains

Deadbolt

Amy Grant: A Biography

The X Cars

We Were Five

Mr. Wilson's Cabinet of Wonder

Hello ... Wrong Number

I'll Kill You Next!

Murder in Vegas

Did MAN Just Happen?

Terror at the Atlanta Olympics

Criswell Predicts

Your Next Ten Years

They Pay Me to Catch Footballs

The Phantom Menace

Just For Fellows

The Lopsided Gal

Astrology and Horse Racing

The Cokesbury Stunt Book

The Origin of Things

Remarks on the History of Things

U.S. Government Sewing Book

Funeral Tributes II

Blinky, the Friendly Hen

The Serbs Choose War

My Mystery Castle

Iggy

Funeral Customs the World Over

The Right to be Let Alone

Mormonism and the Negro

The Church and the Negro

Preacher with a Billy Club

Fighting Parson of the Old West

Invisibility: Mastering the Art of Vanishing

How to Disappear Completely

The Gentle Art of Making Enemies

How to Catch a Man, How to Keep a Man, How to Get Rid of a Man

Langenscheidts Konversationsbuch

Marlene Dietrich's ABC

The Bible in the Hands of Its Creators


FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression

Jim Powell (2003)

 

Many "progressives" visited the Soviet Union and came away more convinced than ever that a government-run economy, offered the best solution. Stuart Chase wrote A New Deal (1932), in which he said that communists didn't need "further incentive than the burning zeal to create a new heaven and a new earth." Chase closed his book by asking, "Why should Russians have all the fun of remaking a world?" (2-3)

FDR, who embraced "progressive ideas," certainly wasn't a thinker. "Roosevelt responded less to principles than to personalities, and these could be presented best in conversation," observed historian George Martin. Indeed, FDR appeared to be utterly ignorant of economics. He seemed willing to try practically anything as long as it involved more government control over the economy. He was apparently unaware that such policies had been tried before in many other countries—and failed. (5)

On June 17, 1930, Hoover signed the Smoot-Hawley tariff, which raised import duties an average of 59 percent on more than 25,000 agricultural commodities and manufactured goods. The U.S. stock market plunged, and more than sixty countries retaliated , with restrictions against whichever products would inflict the worst losses on Americans—typically products very different from those affected by Smoot-Hawley. In this way, the tariff led to random damage to economies everywhere. (43)

The best-documented tax revolt was in Chicago. On a single day, November 29, 1930, some 4,000 taxpayers filed protests with the Board of Review. Tax collections were suspended for two years, but it proved difficult to get people back in the habit of paying. (50)

Title II of FDR's Emergency Banking Act gave considerable discretionary power to the comptroller of the currency, who, as conservator of national banks, could reorganize banks without going through established bankruptcy proceedings. The Emergency Banking Act also authorized the printing of Federal Reserve notes backed not by gold but by government bonds, which meant that the government could print as much money as it wanted and wouldn't be limited by the amount of gold available. In addition, the Emergency Banking Act authorized the Fed to lend banks money against a wider range of bank assets. (54)

FDR was under considerable pressure to pursue inflation, especially from farmers who wanted higher agricultural prices. But inflation was difficult as long as the United States remained on the gold standard. The U.S. Treasury was obligated to give anybody as much gold as they wished at $20.67 per ounce. If the federal government began inflating the supply of paper dollars, people would naturally anticipate devaluation and begin turning in dollars, hoping to get as much gold as possible before the price went up. (66)

In Presidential Proclamation 2039, March 6, 1933, which declared the national "bank holiday," FDR asserted that gold "hoarding" was "unwarranted" and had brought on the "emergency." The proclamation claimed the legal authority of the Trading with the Enemy Act (October 6, 1917), which provided fines of $10,000 or as much as ten years in prison for anyone convicted of doing business with an "enemy" of the United States. A subsection of the Trading with the Enemy Act authorized the president "under such rules and regulations as he may prescribe" to ban "any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency ... by any person within the United States." Presidential Proclamation 2039 made it against the law until March 9 for any bank to "pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever of any gold." Thus did FDR make outlaws of ordinary citizens whose "crime" was to protect their assets with gold. (66)

Less than -a month later, on April 5, 1933, FDR issued Executive Order 6012, which expropriated privately owned gold. He ordered Americans to surrender their gold to the government by May , 1933. Violators would be subject to a $10,000 fine or as much as ten years in prison. (67)

What about existing contracts that people had voluntarily agreed to, specifying payment in gold? FDR persuaded Congress to overturn those contracts and wipe out the gold clause. (68)

FDR imagined he could fix the world gold price from his bedroom. Morgenthau reported that when he visited FDR on Friday, November 3, he suggested a 10- or 15-cent rise from the previous day, and FDR decided on a 21-cent rise. Morgenthau asked the rationale for 21 cents, and FDR reportedly replied that "three times seven" is a lucky number. (71-2)

Even though his gold-buying scheme failed, the government kept all the gold it had taken from private individuals. FDR ranked among history's biggest hoarders, with an estimated 190 million ounces of gold worth $7 billion after the dollar devaluation. FDR undoubtedly hoarded gold for the same reasons that the mercantilist kings of the sixteenth, seventeenth, and eighteenth centuries hoarded it: Gold was the ultimate money, and for a ruler money meant power. (74)

[National Recovery Administration Director Hugh] Johnson, Richberg, and their cohorts occupied offices in the Department of Commerce Building where Herbert Hoover had once worked. Johnson described his quarters as "the worst-planned and least efficient modern office building in the world." It was curious that Johnson didn't wonder how the very same government, which he believed could save the world, couldn't even get a building right. (116-17)

There were some 1,400 NRA compliance enforcers at fifty-four state and branch offices. They were empowered to recommend fines up to $500 and imprisonment up to six months for each violation. On December 11, 1933, for instance, the NRA launched its biggest crackdown, summoning about 150 dry cleaners to Washington for alleged discounting. In April 1934, forty-nine-year-old immigrant Jacob Maged of Jersey City, New Jersey, was jailed for three months and fined for charging 35 cents to press a suit, rather than the 40 cents mandated by the NRA dry cleaning code. (121)

During the 1920s, farmers had tried a number of schemes aimed at raising their incomes. They formed cooperative associations that would control the marketing of their crops in hopes of realizing higher prices than they would expect on their own, but these associations invariably failed. There were always mavericks who could make more money selling outside the associations. What farmers wanted was compulsion, some way of limiting what everybody produced, to force prices above market levels. (130)

[U.S. Supreme Court associate justice James Clark] McReynolds's opinions focused on protecting private property, freedom of contract, and freedom of speech. In Meyer v the State of Nebraska, 262 U.S. 390 (1923), he struck down a law that made it illegal to teach a foreign language prior to the ninth grade. In Farrington v T. Tokushige, 273 U.S. 284 (1927), McReynolds overturned a law that banned the teaching of the Japanese language. He was horrified at the policies of FDR, whom he called an "utter incompetent." (155)

The next big Supreme Court case involved the Agricultural Adjustment Act, which New Dealers considered as important for reviving agriculture as the National Industrial Recovery Act was thought to be for industry. As noted in chapter 10, the idea was to tax food processors and channel the proceeds to farmers who destroyed crops, thereby reducing supplies and maintaining farm prices. Raising farm prices was viewed as the way to raise farmers' income, much as high wage rates were supposed to raise the incomes of industrial workers. (168-9)

The Roosevelt administration claimed that the tax was just another tax, and taxpayers couldn't refuse to pay because they disagreed with the way it was spent. But Justice Roberts, in his majority opinion, observed, that he sole purpose of this tax was to pay farmers who reduced their cultivated acreage and destroyed crops, which meant it wasn't a legitimate tax: "A tax, in the general uderstanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government. The word has never been thought to connote the expropriation of money from one group for the benefit of another."
Roberts continued, "The question is not what power the Federal Government ought to have, but what powers, in fact, have been given by the people. . . . The federal union is a government of delegated powers. It has only such as are expressly conferred upon it and such as are reasonably to be implied from those granted. In this respect, we differ radically from nations where all legislative power, without restriction or limitation, is vested in a parliament or other legislative body subject to no restrictions except the discretion of its members."
Did the Constitution delegate to the federal government power over agricultural production? Since agricultural production was a local activity, it couldn't be covered by the commerce clause. Nor was such power implied in the clause about enacting taxes for the "common Defense and general Welfare of the United States." The phrase "general welfare" couldn't reasonably be invoked when a tax benefits particular people (like farmers) rather than the general population. Roberts insisted that if "general welfare" were applied to whatever the government wanted to spend money on, it would gain unlimited power, and the primary purpose of the Constitution was to protect liberty by limiting government power. (169-70)

Roberts concluded: "From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited. None to regulate agricultural production is given, and therefore legislation by Congress for that purpose is forbidden." (170-71)

[Justice] Cardozo acknowledged that Social Security wasn't legitimate insurance. As he explained in Steward Machine, "The proceeds, when collected, go into the Treasury of the United States like internal revenue collections generally. They are not earmarked in any way." In other words, even after an individual has paid Social Secuity taxes for decades, he or she doesn't have a contractual claim to specific benefits. Congress could change the benefits formula at any time, and it has. By contrast, a private insurance policy is a contract specifying what premiums the insured will pay and what benefits the insured or heirs will get. If an insurance company defaults, it can be taken into court for breach of contract. Surely millions of Americans would feel more secure if their Social Security taxes bought a contractual right to collect a specific package of benefits, but they never got this from a Supreme Court that had done so much to trash freedom of contract. This position,. that a taxpayer doesn't have a contractual right to collect specific Social Security benefits, was affirmed by the Supreme Court decades later, in Flemming v Nestor, 363 U.S. 603 (1960). (219)

Because a disproportionate number of black workers were in the South, they were the principal losers from this minimum wage law. As George Mason University law professor David E. Bernstein noted, "labor union leaders, who by the late 1930s were an integral part of the New Deal coalition, supported a high, uniform national minimum wage partly out of labor solidarity, but also to limit competition between unskilled nonunionized southern workers and unskilled union members. (229)

Personal income tax rates hit 91 percent, and corporate excess profts taxes hit 95 percent.
Meanwhile, on April 27, 1942, FDR issued a message to Congress in which he declared, "No American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year." The Treasury Department submitted to the House Ways and Means Committee a memorandum calling for a 100 percent tax on incomes over $25,000. (245)

The idea that the government had the power to set an income limit is disturbing, particularly since the trend has been for high tax rates to affect people with lower and lower incomes. Middle-class people are hit with tax rates originally aimed at the rich, simply because there are far more middle-class people. The government, like bank robbers, goes where the money is. (245-6)

Taxes made it almost impossible for living standards to recover from the Great Depression, but there wasn't much to buy anyway. Consumer goods factories had converted to producing war goods, and empty store shelves were commonplace. Practically everything was scarce. Despite the paper shortage, the government printed longer and more complicated tax forms. (246)

Tax withholding would have an unintended consequence: dramatic expansion of the Internal Revenue Service. Commissioner Guy Helvering estimated that to administer withholding for some 30 million wage earners would require hiring an estimated 11,000 more IRS agents, finding more office space, and increasing the IRS budget by about $24 million. He acknowledged, too, that the law would impose substantial costs on employers who did the government's work of collecting and remitting taxes.
The World War II tax regime, supposedly "temporary," remained largely intact afterwards. It continued to be a mass tax—there was no going back to the days when only a few people had to worry about the IRS. Federal income as well as Social Security taxes continued to be withheld from paychecks. While President Truman signed the Revenue Act of 1945, which cut the top federal income tax rate from 94 percent to 86.45 percent, and there were additional modest tax reductions in the Revenue Act of 1948, taxes went up again during the Korean War. Concerned about high levels of Cold War defense spending, President Eisenhower opposed tax cuts. Social Security taxes, which especially hit lower incomes, were increased. (247)

New Deal farm programs have backfired just as Social Security has done, and they have been as tenaciously defended. Washington channeled hundreds of billions of taxpayer dollars to farmers who agreed not to grow certain crops. Marketing orders, authorized by the Agricultural Marketing Agreement Act of 1937 as amended, continue to restrict production and marketing. They are the most blatant type of interference with U.S. agricultural markets, a throwback to medieval times when guilds determined who could work in various trades, how much they could charge, and how much they could produce. (255)

Recalling Henry Wallace's policy of destroying food during the Great Depression, the kind of thing that had outraged novelist John Steinbeck, the Department of Agriculture still enforces orders that ood food be left to rot when officials decide too much has been produced. This sort of thing has been going on so long it isn't news anymore, but New York Times reporter Ann Crittenden filed a vivid report about consequences of the New Deal in our time: "Stretching in all directions are millions and millions of navel oranges all abandoned to rot under the California sun. The oranges have been dumped under what is known as a Federal marketing order." (256)

New Deal farm laws, still in effect, continue to benefit big farmers, because the programs are based on the amount of acreage a farmer has or the quantities of crops produced. As investigative reporter James Boyard observed, in a 1989 study, "the USDA gave, in direct payments to the 29,000 largest farms, an average of $46,073—an amount that exceeded the net worth (including the value of house and cars) of over half the families in America." (256-7)

On President Nixon's second inaugural," [New Orleans investor James U.] Blanchard recalled, "we hired a World War I-style biplane to carry a 50-foot sign: LEGALIZE GOLD!" People smuggled gold bars into the United States and displayed these publicly, daring Treasury officials to enforce the relic of law. But times had changed, and President Gerald Ford gave Americans back an important part of their economic liberty by legalizing private gold ownership on December 31, 1974, for the first time in forty years. (262)

The New Deal did plenty to prolong high unemployment. New Deal policies were dubious when considered from the standpoint of their effects. After Americans had suffered through a catastrophic contraction for three years (1929-1933), FDR supported policies like the National Industrial Recovery Act that promoted further contraction. His executive orders helped enforce higher consumer prices when millions of Americans were unemployed and needed bargains. FDR approved the destruction of food when people were hungry. FDR signed into law higher taxes for everybody, so consumers had less money to spend, and employers had less money with which to hire people—during the worst depression in American history. New Deal labor laws empowered the most racist unions to exclude blacks and had the effect of making it illegal for many employers to hire blacks. The power of the Federal Reserve became more centralized, but this meant that the mistakes of a few people (members of the Federal Reserve Board) were likely to harm millions across the United States; and indeed the Fed's mistakes were a major cause of the depression of 1938 as well as the monetary contraction of 1929-1933. After having throttled competition with the National Industrial Recovery Act, Agricultural Adjustment Act, Bituminous Coal Conservation Act, Robinson-Patman Act, Retail Price Maintenance Act, Federal Communications Act, Civil Aeronautics Act, high corporate taxes, and other measures, New Dealers posed as defenders of competition and filed a record number of antitrust lawsuits against private employers, one effect of which was to further discourage investment needed for growth and jobs. (263-4)

Sophisticated New Dealers dismissed as simplistic those who defended individual rights, private property, and economic liberty, yet experience has revealed New Deal policies to be quite simplistic. FDR believed that if the federal government bought all the gold in the United States and as much of the gold as it could get overseas, he could push up farm prices. FDR imagined that government spending programs would end the agony of high unemployment, but he ignored the fact that government spending comes directly or indirectly from taxation, and people taxed have less money to spend or invest, offsetting the effect of spending programs. FDR assumed that taxes could be increased repeatedly without undermining incentives for people to produce, but he was mistaken. New Deal efforts to force wages above market levels made it more expensive for employers to hire people and contributed to chronic high levels of unemployment. Pro-FDR intellectuals assumed that government officials work selflessly for the public good, but as we now know, the self-interest of government officials, particularly their concern to win the next election, had a major impact on New Deal spending. FDR touted the Tennessee Valley Authority as proof that government could work wonders with electric power, ignoring subsidies from the 98 percent of American taxpayers who didn't live in the Tennessee Valley (and, as it turned out, the TVA didn't work wonders, since non-TVA southern states grew faster than TVA states).
New Dealers were naive to assume that dictatorial power would enable them to stabilize the American economy and bring about recovery. FDR was hailed when, in his first inaugural address, he asked for "broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe." Hugh S. Johnson, when he headed the National Recovery Administration, exercised unprecedented arbitrary power over American industry. Henry Wallace was virtually the dictator of American agriculture, dispensing subsidies, setting prices, and issuing regulations that favored some interests over others; and he went on to become FDR's running mate in 1940.
Yet what dictator ever brought prosperity by interfering with the economy? History is littered with catastrophes that occurred because dictators couldn't keep their hands off the economy. (265)

FDR, Louis Brandeis, and other "progressives" liked to talk about their "experiments" with the economy, but these turned out to be the same types of restrictions, like medieval guild regulations, that had blocked progress for ages. More than two centuries ago in The Wealth of Nations, the savvy Scotsman Adam Smith had exposed the folly of mercantilists, those who imagined that taxes, trade restrictions, government spending, and government gold hoarding would bring prosperity. Such policies were "experiments" only to the degree that New Dealers were ignorant about what had been tried and failed before. (267)

Why did the smart, well-educated, well-intentioned New Dealers back policies that prolonged the Great Depression? How could they have gone so wrong? Most of the New Dealers, as noted, were lawyers. Few among them, including FDR, had any practical business experience. They certainly seem to have overestimated the importance of their knowledge, as opposed to the knowledge of millions of ordinary people spending their own money and running their businesses. The New Dealers really came to believe that their knowledge, combined with political power, could cure the problems of the world. They thought that by issuing executive orders, passing laws, raising taxes and redistributing money, they could make society better. (270)

(See also)


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