Sunday, February 1, 2009

FDR Was A Great Leader, But His Economic Plan Isn't One to Follow

By Amity Shlaes, Sunday, February 1, 2009; Page B01

One evening in the 1930s, a 13-year-old named William Troeller hanged himself from the transom of his bedroom in Greenpoint, Brooklyn.

William's father was laid up in Kings County Hospital awaiting surgery for an injury he'd suffered on the job at Brooklyn Edison. A federal jobs program was paying William's older brother Harold for temporary work. But the amount wasn't nearly enough to make ends meet. Gas and electricity to the family's apartment had been shut off for half a year. Harold told a New York Times reporter that both hunger and modesty had driven William to act. "He was reluctant about asking for food," read the headline in the paper.

The surprising part of this story is not that it happened; most Americans know that after the 1929 stock-market crash, hard times sometimes led to suicide. The surprising part is that William Troeller killed himself not in 1930, when Herbert Hoover was president, but in 1937, in Franklin D. Roosevelt's second term. The New Deal was almost five years old, but the economy was not back. In fact, the country seemed farther from recovery than before. A new sense of futility was overcoming Americans. The British magazine the Economist sneered that the United States "seemed to have forgotten, for the moment, how to grow."

The date matters, because our new president has made it clear that his model is Roosevelt. Barack Obama has spoken of creating 3 million jobs with his stimulus plan. As a new president in 1933, Roosevelt spoke of creating "one million jobs by October 1" through his spending packages. At about $850 billion, Obama's stimulus represents about 5.9 percent of gross domestic product. The spending programs of Roosevelt's National Recovery Administration amounted to almost precisely the same share. Then as now, the country was in what we might call an "illions" moment, when a nation contemplates federal spending of a magnitude previously unimaginable. The only difference is that today, we're discussing trillions instead of billions.

(Excerpted, click link above for full article.)


Before FDR's "New Deal" became reality, unemployment in the 1920's was a low 5%, considered "full employment" by modern economic standards.  At the 'height' of the New Deal, unemployment approached 25%, meaning one of every four American's was out of work.

This is the economic model Barack Hussein Obama wants to follow?

Any economic recovery plan has to include stimulus for the Private Sector to pick up where government "stimulus" plans leave off.  That is to say, the Private Sector must create JOBS so that they are available when Government spending ends.  New Deal public spending achieved it's first goal of creating short-term jobs with limited economic activity during Roosevelt's first term, but did nothing to achieve its second goal to stimulate the private sector to create jobs in the Roosevelt's second term.  The "New Deal" ended up supplanting the economy instead of boosting it.  As a result, the Great Depression lasted a full five years longer than it should have, from 1929 to 1941 when America entered WWII, instead of 1929 through 1936.

The same flaw that existed in FDR's plan exists in Obama's plan.  There is limited to "stimulus" or tax-breaks for corporations to invent, create, produce and make jobs.  Instead, those who pay NO TAXES are given "refunds" in a demonstrably failed liberal attempt to stimulate the economy from the bottom up.  This approach has never worked.  Obama's plan relies solely on Government spending, creating 600,000 Government Jobs while providing no stimulus in the private sector until the out-years 2012 and beyond.  The majority of the Obama "stimulus" plan is nothing more than a pay-back to the failing Unions and a 1960's style "hippie spending revolution" to pay for programs that Liberals had long promised, but never "funded."


1 comment:

Dirk said...

And there's no telling how much longer the Great Depression would have lasted if it had not been for WWII. Obama's mixture of FDR's & Jimmy Carter's economic policies are a recipe for disaster. It didn't work under the FDR administration, it didn't work under the Carter administration. The current so-called economic stimulus package is just about all pork, I suspect to pay off campaign support debts.

Great post!