Why It's Time for Dr. New Deal (Again)





Ralph E. Shaffer and Walter P. Coombs, professors emeriti at Cal Poly Pomona, can be reached at reshaffer@csupomona.edu.

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Speaking Thursday night in New Orleans George W. Bush raised the federal ante to clean up and rebuild after Katrina to a staggering quarter of a trillion dollars. He no doubt intends to fund that through another tax cut for corporations and the wealthy. That will surely make Bechtel, Halliburton, General Electric and numerous other Wall Street giants richer yet, but there is a more practical and time-tested way to deal with the problem of reconstruction. We need another dose of medicine from Dr. New Deal (a term used by Franklin D. Roosevelt) in the form of a modern WPA.

In the midst of an economic hurricane known as the Great Depression, Franklin D. Roosevelt moved quickly with public works programs not only financed by the federal government but operated by that government as well. Millions of Americans, unemployed because the market system failed in 1929 and was unable to right itself without massive government aid, went to work on the federal payroll, engaged in the type of work that is needed not only in New Orleans but throughout the Gulf Coast area hit by Katrina.

Roosevelt knew that the unemployed did not want relief handouts. They wanted the dignity of a job and the feeling that what they did was useful service to their community and the nation.

The principal agency involved in that program was the Works Progress Administration - WPA, for short. Led by Harry Hopkins, a former social worker rather than a businessman, the agency and its predecessors paved roads, created playgrounds and athletic fields, hired teachers to instruct children when the local community couldn't afford them, installed sewer lines and sidewalks, built public buildings and airports, and engaged in work similar to what needs to be done on the Gulf Coast.

WPA was actually the third such work relief program under FDR. Nine months after his inauguration in Mar., 1933, with upwards of fifteen million Americans unemployed, five million had gone to work for a WPA predecessor. They were paid wages as federal employees, not given "relief" handouts. FDR was adamant--the unemployed should earn a living, not live on the government dole.

From 1935, when WPA replaced the temporary agencies, until America's entry into World War II, millions more found meaningful employment while feeding their families and rebuilding a crushed economy and nation. Cities throughout America still have the WPA logo in sidewalks put down in the 1930s or early 1940s. The agency also hired thousands of artists, musicians, actors and writers as it recognized the need to add a cultural dimension to its work.

WPA did much to improve the nation's aging infrastructure and Congress cheerfully provided the funds, considered an investment in America's future. By eliminating middlemen in the form of the Halliburtons of that era, the nation received the full value of its investment.

Rearmament and the Second World War ended the need to find work for the unemployed. Archconservatives decried FDR's humanitarian program as a socialistic venture, refusing to recognize the human need. Instead, they offered a Scrooge-like belief that those who didn't have a job really didn't want to work. They were happy to scrap WPA, hoping that the lesson of the Great Depression -- that government has an obligation to step in when the market system fails to meet its responsibilities -- would be forgotten during the coming prosperity.

They were wrong. Herbert Hoover, this time in the guise of George W. Bush, has failed again. Rather than saddle the nation with an astronomical debt that future generations will have to bear, it's time to return to Dr. New Deal's solution.

Hundreds of thousands of refugees with no homes to return to and no jobs to support them will be more than willing to pick up a shovel, run a WPA bulldozer, or set up school in a barn if necessary to support themselves and return this nation to normalcy.


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Richard J Jensen - 9/23/2005

FDR set up the WPA as a nationalized welfare system in 1935. But it was Hoover who set up the massive relief program ERA. Roosevelt took it over in 1933 and named it FERA. So in the "first New Deal" of 1933-34, it was a Hoover program that provided relief for the unemployed.


Richard Fell - 9/20/2005

You’ve chosen to remain a mystery on grounds of superiority. So be it. You’ve chosen your name with precision, Mr. Frederick Thomas, and there are so many of them. A good day to you.


Frederick Thomas - 9/20/2005


Mr. Fell, if I thought there were any possibility of you learning a little something, I would play your little baiting game through to the end.

I further choose not link you with anything else I have published, as it generally requires both emotional maturity and a good education to understand.

Otherwise, thank you for your comment.


Frederick Thomas - 9/20/2005


Better: "For God's sake, no!"

Also, you seem to have a few issues with declentions, word choice and grammar ("wie"="als ob", "an am"="am", etc), which a few hours with a good German I text may resolve.

"Ach nein, wir haben die wieder!"

Recognize that one? Since probably you do not, and since most of my fellow Amis know no German, I will respond in English.

You say that I treat the two profs as if they were my students. Indeed, they could benefit from that. Neither has anything but a messy romantic view of economics, and what they advocate is embarassingly naive and certainly damaging if implemented.

You also say that my challenge to the (communist?) party line is "weak at best." Aside from noting that it is certainly better than your German, I would suggest that you read the three sources I referenced, and you may learn something.

Do this after your remedial German lessons. Nothing weakens an argument like grammar errors.


Frederick Thomas - 9/20/2005

The above comment somehow ended up on your thread. It was intended for the young man below. Sorry!

Thank you for your comments, which can help to frame the issues here. I would like to focus in a little tighter on some of the points.

My issue, and the issue of the current class of economists with the New Deal is

(1) the government tried to replace private companies, instead of hiring them. No government agency except (sometimes) the military is a fraction as efficient as a free enterprise firm. The work they did was lousy, they spent much time as "one man digging with a shovel and nine men leaning on shovels," as the Trib said once, accurately. Even China has dumped the New Deal model, after 45 years of trying to make it work and 35 million murdered.

(2) The New Deal actively sought to destroy the free enterprise economy and businesses (except some large companies which contributed to FDR).

I specifically mentioned the results for the three largest European economies, not just Germany, to indicate that the depression applied only to us, not the rest of the world. The depression was FDRs child.

Professor Schacht was special, and simply performed more intelligently than his counterparts in other European countries. All three countries, however, were recovered by 1936, and the US was in worse shape than ever. By the way, it's "Schacht" ("Chessman") not "Schlacht" ("Butcher").

German economic practice used free enterprise even for large public works projects such as the autobahn system. This was not the "Nazi economy," rather it was the "German economy", much like before and after.

The German economy did not even go on a war footing until 1942, a year after the US! At that time, Fritz Todt had died and Albert Speer was in charge.

Hitler is sometimes depicted as an evil genius who knew everything. Actually he was a poorly educated but carismatic speaker who needed Schacht and other experts and was totally dependent upon them.

The quasai government agency purchasing services was the "Todt Organization", named for the immanently qualified Dr. Fritz Todt.

The same money which was so well spent there was given to poorly organized and ignorant laborers here, and here the leadership of the poorly organized workers was usually incompetent-normally political appointments. No wonder FDR was such a disaster for us.

There is no problem, in short, with public works, only with government agencies trying directly to replace private firms in doing the work, a la WPA.

The only public works from the mid 1930s which have survived are the ones done by private companies such as The Pa Turnpike, Columbia Highway, etc. Almost everything the WPA built has fallen apart and had to be rebuilt or junked.

Thanks for your constructive and interesting comments. This subject needs to be discussed.


Richard Fell - 9/20/2005

Ah, Frederick the Great, back again patronizing "good" professors and "fellow Amis’ in typical condescending manner. You are obviously undaunted by the intelligence of others and I’m afraid no amount of patronizing, or cosseting will succeed in persuading others your point of view who don’t already share it with you.

I continue to wait for all those articles you claim you have written. Come on "Professor", confess or come up with the evidence. You've had more than enough time to fabricate something.


Frederick Thomas - 9/20/2005


Better: "For God's sake, no!"

Also, you seem to have a few issues with declentions, word choice and grammar ("wie"="als ob", "an am"="am", etc), which a few hours with a good German I text may resolve.

"Ach nein, wir haben die wieder!"

Recognize that one? Since probably you do not, and since most of my fellow Amis know no German, I will respond in English.

You say that I treat the two profs as if they were my students. Indeed, they could benefit from that. Neither has anything but a messy romantic view of economics, and what they advocate is embarassingly naive and certainly damaging if implemented.

You also say that my challenge to the (communist?) party line is "weak at best." Aside from noting that it is certainly better than your German, I would suggest that you read the three sources I referenced, and you may learn something.

Do this after your remedial German lessons. Nothing weakens an argument like grammar errors.


Frank Halsey - 9/20/2005

Herr Thomas,

Sie halten einen Vortrag diese Professoren, wie sie Ihre Studenten sind. Und spielt das "Tadelspiel" ohne Ihr Verständnis zu erkennen, dass der Geschichte schwach an am besten ist.


Oscar Chamberlain - 9/20/2005

"The other countries, particularly Germany, with Hjalmar Schacht as its economic genius, used real free market policies, with reduced taxes and much reduced regulation, to solve their recessions. Which helped the workers more? The FDR model or the European model? "

Actually, it's the Nazi model. Schlacht had skill, but Germany's rise from the Depression occured under Hitler. His regime was hardly free market.

Besides, some New Deal programs were good at infrastructure creation and improvement, even if they did not solve the larger problem. As such they can be a general source of inspiration for rebuilding the Gulf region.


Frederick Thomas - 9/19/2005

What the good professors suggest would be vastly worse than Katrina.

It would kill the economy, kill jobs, and return us the the FDR warmongering days of the late 1930's, and that, I suggest, would be beyond shameful.

Points:

"Millions of Americans, unemployed because the market system failed in 1929 and was unable to right itself without massive government aid, went to work on the federal payroll..."

In 1929, a stock market correction no worse than that after 9/11, but caused by unwise margin buying, was horribly exacerbated by Herbert Hoover with really stupid anti-market sabotage which was dumb, and which FDR copied later, which was dumber.

Hoover jawboned to force large employers to raise pay for workers when demand there was reduced demand for their services. In the face of non-existent profits, even more were laid off, which started the entire thing falling, here and overseas.

This was followed by a policy of reducing money supply because there was "lessened demand", exactly opposite of what was needed. Milton Friedman, where were you when we needed you?

1929-1932 was a litany of anti-market, anti economic silliness by hapless Hoover, and his junior economists. But the only one who applauded Hoover was FIDDER, who went even further on his own. All this is before we even consider the issue of tariffs.

FIDDER loved to make small businessmen into "criminals" persecuted like Girondins under the terror by alphabet soup agencies which he created by fiat quicker than the suoreme court found then unconstitutional.

A little DC launderer with 12 employees was accused of charging 35 cents per shirt rather than the government mandated 45 cents. He was jailed for six months without benefit of trial by the cloud chambers of the alphabet agencies. Broken, he lost his business and 12 were added to the unemployed.

The government of FDR did this, and it was one of tens of thousands such wreckings of businesses which made a depression of a recession. Blame FDR. Blame Morgenthau. Blame the whole bunch of foolish academics who supported it.

The result:

In 1932:

US 12% unemployment
UK 12% unemployment
Fr 11% unemployment
Ge 13% unemployment

In 1936:

US 12% unemployment
UK 6% unemployment
Fr 6% unemployment
Ge 0% unemployment

FDR took a nasty recession caused by unwise margin buying, and Hoover's policies, and turned it into the depression, which only the deadliest war in history, during which FDRs policies were tanked, could solve.

The other countries, particularly Germany, with Hjalmar Schacht as its economic genius, used real free market policies, with reduced taxes and much reduced regulation, to solve their recessions. Which helped the workers more? The FDR model or the European model?

(Recent history in France and Germany has reversed the prewar past, with sky-high interference in the ecomomy by leftie governments, generating 12% unemployment compared to 5% under Bush. France's lefties will be dumped, as Germany's already have been.)

I recommend that these two emeritae read "FDRs Folly" to learn a little of what really happened. For a lighter version, "The New Dealer's War" can also be useful. For FDRs warmongering, see "Day of Deceit".

The New Orleans disposessed should go to work, but for small construction businesses without stupid governmental interference. Then you will get a really rapid recovery, and residual employment afterward, and a worthwhile product as a result.

It is quite depressing to have the two good professors still so mired in the dead and destructive policies of the past. Time to enter the 21st century, guys!


Jude A Camwell - 9/19/2005

see my article at Blogcritics from Sept 16th.

Link:

http://blogcritics.org/archives/2005/09/16/143617.php


Alonzo L Hamby - 9/19/2005

Dense as usual, I am missing a connection. I always thought the New Deal was a response to mass unemployment brought about by a worldwide economic depression--which, by the way, it failed to cure and may even have made worse.
It is to the credit of Franklin Roosevelt and the people around him that they extended necessary aid to many of the unemployed, but what this has to do with the response to a natural disaster, I don't know. If the authors want a model from the past, they might better take a look at Herbert Hoover and the great Mississippi River flood of 1927.

Who knows? If we could bring Hoover back to run FEMA, he might even be able to do the job better than it is being done now.