Just how well did the New Deal work?

The Washington Times Weekly - - Commentary -

“Not since the Great De­pres­sion.” “Not since the 1930s.” You hear those phrases a lot th­ese days, and with some rea­son. As Congress pre­pares to pass the Demo­cratic stim­u­lus pack­age, it may be worth­while to look back at Franklin Roo­sevelt’s New Deal and con­sider how well it worked as pol­icy — and po­lit­i­cally.

There’s a fairly broad con­sen­sus on pol­icy that some of Roo­sevelt’s ac­tions made a pos­i­tive dif­fer­ence but that they didn’t get us out of the De­pres­sion. Amity Shlaes in her path­break­ing “The For­got­ten Man” makes a strong case that some of Roo­sevelt’s moves blocked re­cov­ery, and even his ad­mir­ers ad­mit that his poli­cies led to a sharp re­ces­sion in 1937-38. Af­ter eight years of the New Deal, un­em­ploy­ment re­mained at 15 per­cent in 1940 — dou­ble the fig­ure for to­day. What re­ally got us out of the De­pres­sion was World War II. The to­tal num­ber of em­ployed per­sons and mil­i­tary per­son­nel in­creased from 44 mil­lion in 1938 to 65 mil­lion in 1944.

So it would be un­wise to copy the New Deal as a recipe for eco­nomic re­cov­ery. And the poli­cies that pro­duced the war­time boom are not repli­ca­ble to­day. We are not go­ing to have ra­tioning, wage and price con­trols, gov­ern­ment spending nearly half the gross do­mes­tic prod­uct, 91 per­cent tax rates and a 12-mil­lion-man mil­i­tary (the equiv­a­lent to­day would be 27 mil­lion).

There has been gen­eral agree­ment, how­ever, that Roo­sevelt’s poli­cies were po­lit­i­cally suc­cess­ful. Most of us in the po­lit­i­cal com­men­tary busi­ness make fre­quent use of the phrase “New Deal Demo­cratic ma­jor­ity” and tend to be­lieve that Roo­sevelt’s poli­cies worked for his party for a long gen­er­a­tion ex­tend­ing into the 1960s.

I think the pic­ture is more com­pli­cated than that. Democrats did win big in the 1934 and 1936 elec­tions. They made big gains in large cities and fac­tory towns, many of which were staunchly Repub­li­can in the 1920s. But th­ese gains were not sus­tained, as the ef­fects of some New Deal poli­cies — high taxes on high earn­ers, the union­iza­tion-pro­mot­ing Wagner Act and jobs pro­grams like the WPA — be­came ap­par­ent.

In early 1937, unions en­gaged in sit-in strikes in auto and steel fac­to­ries; they were plainly il­le­gal, but Demo­cratic gov­er­nors in Michi­gan and Ohio re­fused to en­force court or­ders against them. Later that year, the “cap­i­tal strike” Ms. Shlaes de­scribes led to a sharp re­ces­sion.

The jobs pro­grams were widely crit­i­cized as “boon­dog­gles” and “leaf-rak­ing.” Al­le­ga­tions of po­lit­i­cal fa­voritism and cor­rup­tion were wide­spread. In the 1938 off-year elec­tions, Democrats lost 81 House seats, 51 of them in the in­dus­trial belt from Penn­syl­va­nia and Up­state New York west to the Up­per Mid­west. The Demo­cratic gov­er­nors of Michi­gan and Ohio were de­feated for re-elec­tion. The con­gres­sional district that in­cluded Flint, Mich., site of the first sit-in strike, went from Demo­cratic to Repub­li­can; so did most con­gres­sional dis­tricts in Ohio.

As pro-New Deal his­to­ri­ans have con­ceded, New Deal poli­cies no longer had con­gres­sional ma­jori­ties, given the op­po­si­tion of many South­ern Democrats. Nor was the out­look for Democrats rosy as the 1940 elec­tions ap­proached. Polling, then in its rudi­men­tary stages, sug­gested that Repub­li­cans would win if the elec­tion were de­cided on do­mes­tic is­sues.

But in Septem­ber 1939, World War II broke out in Europe. In June 1940, France fell; Adolf Hitler and Joseph Stalin, then al­lies, seemed to have most of Europe un­der their sway. Just days later, the Repub­li­cans nom­i­nated Wen­dell Wil­lkie, an at­trac­tive can­di­date with no ex­pe­ri­ence in for­eign pol­icy. The Democrats met in July, and Roo­sevelt sent a let­ter say­ing that he did not want to be a can­di­date. But, with help from the Chicago com­mis­sioner of sew­ers pip­ing over a loud­speaker, “We want Roo­sevelt!” the pres­i­dent was renom­i­nated. He won his third term in Novem­ber not, as he put it later, as “Dr. New Deal,” but as an ex­pe­ri­enced leader when the na­tion was fac­ing grave peril.

“The Amer­i­can peo­ple in their righ­teous might will win through to ab­so­lute victory,” Roo­sevelt de­clared in his Pearl Har­bor speech, and so they did by Septem­ber 1945. In my view, it was the war ef­fort, the mo­bi­liza­tion of big gov­ern­ment, big busi­ness and big la­bor, that much more than the New Deal en­hanced the pres­tige of the state. It got Amer­i­cans proud of think­ing of them­selves as small cogs in very large ma­chines. It made them amenable to statist poli­cies that they would never have ac­cepted in the 1920s and at which many of them were bridling in the late 1930s.

No two po­lit­i­cal times are ever the same. But with the cur­rent stim­u­lus pack­age, we get the whiff of bailout fa­voritism and crony cap­i­tal­ism that was also present in the New Deal. The forced union­iza­tion en­vis­aged by the card­check bill may prove to be no more pop­u­lar than the union­iza­tion forced by the sit-ins was in Michi­gan and Ohio in 1938. To­day’s Demo­cratic pro­grams may get as mixed a po­lit­i­cal re­ac­tion as the New Deal did in the years be­fore World War II.

Michael Barone is a na­tion­ally syndicated colum­nist.

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