“We have never made good on our promises.”
— Treasury Secretary Henry Morgenthau, May 1939
Right-leaning media outlets were sent a flutter last week when columnist Charles Krauthammer supposedly “SCHOOLED” (all caps!) comedian Jon Stewart about the virtues of contemporary conservatism. The headmaster’s lesson, however, disavowed his apparently antiquated ideological forebears who opposed FDR’s New Deal:
“The conservative idea is not that government has no role. You might have argued that in the thirties when conservatives opposed the New Deal. There’s no question of accepting the great achievements of liberalism — the achievements of the New Deal . . .”
So ingrained are the supposed mythological “achievements” of the New Deal that a bright fellow like Mr. Krauthammer forcefully endorses its premise, and critics are labeled “immoral.”
But the passage of time has allowed for a factual and critical reexamination of the period, and the results aren’t pretty. In truth the New Deal in many (many) instances failed those who needed it most and benefited the well-off. And its political, legal, and cultural legacy still negatively reverberates today.
The New Deal then
Although conventionally explained as government coming to the rescue of the “little guy,” in reality the New Deal often left him poorer and hungrier.
During the 1930s FDR introduced a multitude of laws designed to keep prices of consumer goods artificially high. The New Deal protected certain interest groups by plunging headlong into the business of price-fixing. And FDR’s “codes” cartelized some 500 industries. Those with political muscle wrote the regulations, raised prices, and banished unwanted competition.
In the early days, the government actually arrested and prosecuted business owners for selling goods below government-approved rates. Some of the laws strain credulity to the modern reader, for instance the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937).
Thus, at a time when millions were out of work and going hungry, the New Deal ensured poor families paid more for milk, bread, and meat. And FDR’s ‘war’ on the hungry didn’t end there. During the Depression, the government actually paid farmers to plow over 10 million acres of crops and destroy 6 million farm animals.
Moreover, the bulk of government largess didn’t go to the most needy. Southerners, by far the Nation’s poorest, received relatively little help. Instead, most aid went to politically more important Eastern and Western states, where incomes were 60 percent higher. Blacks too suffered disproportionately. One law alone likely cost 500,000 black low-skilled workers their jobs.
Besides giving relatively little aid to the poorest, FDR also stuck them with bill. Taxes tripled during this period but most of the money came from excise taxes on lower and middle class indulgences such as beer, cigarettes, soda, and chewing gum.
So while the New Deal was an overt political success, Mr. Morganthau’s candid reflections speak to its substantive accomplishments.
The New Deal now
The New Deal’s biggest present-day accomplishment is the administrative state. The federal government now invades every aspect of modern life from how far cars must drive on a gallon of gas to how much dirt someone can put in his yard. The Federal Register has 78,961 pages and an estimated regulatory burden of $1.8 trillion — over half the federal budget.
In addition, the pre-New Deal judiciary had basically, although not uniformly, protected the individual in matters of contract and economic well-being. But bullying from the FDR administration (sound familiar?) led to a legal revolution and the judicial sanction of what one scholar labeled “naked interest group pluralism.” The effect today is the little guy, who can’t hire a cadre of lobbyists and lawyers, loses in court too.
Another New Deal legacy is the demonizing of America’s job and wealth producers. FDR referred to them as “economic royalists” and “privileged princes.” And it wasn’t mere rhetoric, he sic’d government lawyers on businesses through over 150 anti-trust lawsuits. Charles and David Koch may have replaced Andrew Mellon but the demonization of the “one percent” continues unabated.
The New Deal was not a complete failure. Social Security, for instance, has helped a few generations of elderly Americans meet monthly expenses. But on whole it failed those who needed help most and the paradigmatic changes it brought politically, legally, and culturally have been on the whole disastrous.
Take note, Mr. Krauthammer.
Paul H. Jossey is a lawyer living in Alexandria, Virginia. His interests include First Amendment law and environmental policy. Please follow him on Twitter.