I just finished Burton Folsom Jr.’s “New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America.” This book centers on Franklin Roosevelt’s New Deal to combat the Great Depression. The overwhelming majority of historians and literature on the New Deal paints it very favorably and often hails FDR as among the greatest presidents of all time. Folsom offers a compelling contrarian take and effectively shows that not only has the New Deal proven to be a disaster for the USA, but also that FDR should be viewed as one of the worst presidents ever. It’s a highly worthwhile read and is written in a very easy-to-follow manner. And it’s only 270 pages.
The general theme is a critical attack of FDR’s New Deal policies to demonstrate that not only were they bad economics, but many of them were also politics at its worst. The New Deal didn’t just fail to cure the Great Depression. It actually made things worse.
Folsom starts by discussing FDR’s background and rise to power. He then discusses briefly the Roaring 20’s, the time before the Great Depression, and the causes of the Great Depression. The popular view is that the excesses and uneven distribution of wealth of the Roaring 20’s along with underconsumption soon after caused the Great Depression, but Folsom (and I) disagree, citing instead the massive war debts incurred by Europe during World War 1, the Smoot-Hawley tariff, and the Federal Reserve constricting money supply.
From there, business was about to pick up (as in FDR’s New Deal, not actually business activity – that came to a screeching halt). Folsom discussed the National Industrial Recovery Act (NIRA was eventually shortened to NRA). This overthrew America’s traditional free market system and instead had industry collaborating with government to regulate everything from hours to wages to prices. It was unanimously ruled unconstitutional in a couple years, but the damage was already done.
Next was the Agriculture Adjustment Act (AAA). It’s like a farming NRA, but with subsidies for farmers not to produce and some other details. Then, we find the Works Progress Administration (WPA) that had federal spending balloon for local and state projects. Folsom detailed some other policies, such as the Air Mail Act that put the Army in charge of air mail, Federal Emergency Relief Administration (FERA) blunders, and the Tennessee Valley Authority (TVA).
Folsom breaks from his assault to give FDR some credit for doing some good stuff, or at least not catastrophically bad stuff, in his discussion of financial actions, such as intervening in gold, silver, stocks, bonds, tariffs, and banks. But, Folsom’s back on the warpath in the next chapter, attacking minimum wage laws, social security, and labor relations.
Next, Folsom discusses tax policy (income, excise, and corporate) and the Internal Revenue Service (IRS). He shows the damage FDR’s tax increases caused to the economy and how FDR used the IRS against his political enemies. Folsom then shows how FDR used political patronage and deceit to secure votes, acting in his best interest versus the nation’s. FDR even tried to take control of the Supreme Court and purge “disloyal” democrats from the party.
He closes by discussing the long-lasting damage FDR did to the office of the presidency and the nation, what he probably should have done to combat the Great Depression (tax cuts and a business-friendly environment), how the Great Depression finally ended (Folsom credits World War 2 for ending the Great Depression and Truman’s post-war leadership for putting America back onto the path to prosperity once again), and why it matters today.
People need to see this contrarian (and largely correct, in my opinion) view of the New Deal. Present-day conservatives and liberals should read this book, but for different reasons. Conservatives should read it so that they can back their attacks on liberal policies with historical proof that they failed miserably. Liberals should read it so they can see where past ideas went astray, subsequently improve them, and defend them better.
The parallels between then and now are frightening. I am reminded of the quote by Howard Simons below.
“Those who forget history are condemned to repeat it. Alas, those who study history and inflict it upon others are condemned to repeat it, too, and suffer the additional burden of understanding the gruesome parallels unfolding in their lives.”
Such is my agony. I hope you’ll share my pain, as insane and masochistic as that might sound. And, on that note, Happy New Year.
Friday, December 31, 2010
Wednesday, December 29, 2010
(Lame) Duck Season Scorecard
Lame duck season reminds me of the old Bugs Bunny cartoons. He tries to convince Elmer Fudd that it’s duck season while Daffy Duck claims it’s rabbit season. Zaniness ensues. It also reminds me of Duck Hunt and the laughing dog when you miss.
This is my lame duck season scorecard. Most topics could be separate posts in and of themselves.
The Good – We’re not getting our taxes increased to start the New Year. The Bush tax rates were extended for two years. Remember, this issue was not about tax cuts. It was about preventing tax increases. We also receive a reduction in social security taxes for a year. I was sad to see the Energy Star credit wasn’t extended for another year. Not simply because I’m putting central air into my house next year, but because it was a great tax credit that encouraged investment. The deal wasn’t perfect, but it was better than the alternative of increased taxes in 2011. I wanted the Energy Star credit, but the social security relief softens that blow. I also wanted to see an extension longer than two years (if not permanent) because making them permanent would’ve created more economic certainty, confidence, and investment. This was a clear victory for Obama. He made himself look like he’s coming back to the center and outplayed the GOP. He got unemployment benefits, social security tax relief, and non-permanent extension of the Bush tax rates in exchange for ceding the estate tax and upper class extensions.
DADT (Don’t Ask, Don’t Tell) was repealed by Congress and Obama despite much GOP opposition. I’ve previously advocated for DADT’s repeal, so I was thrilled here. McCain and the GOP were clearly stalling for time until the next Congress, especially after the Pentagon report showed that repealing DADT would have little meaningful negative impact. Obama was delivering on a campaign promise and it would’ve been much harder to do so with the incoming Congress. The GOP made themselves look obstinate and obstructionist by persisting with their resistance after the Pentagon’s study.
I was also happy to see the DREAM Act fail. The main reason I was happy to see this bill fail is because this issue is far too complicated to be addressed in a lame duck session. In general, I also thought there was a lot more wrong than right with DREAM.
The Bad – New START troubles me deeply. In my view, it is a foreign policy failure and domestic security disaster. The Russians clearly got the better of the Americans during the negotiations. Not only does this treaty substantially hurt our nuclear warfare (both offensive and defensive), but it also hurts our conventional warfare. I think China and Russia (and others) sense weakness on foreign policy and defense in the Obama administration and are rushing to fill the power vacuum.
The Ugly – The 9/11 first responders finally got what they rightly deserved, namely money to help them with their healthcare. These people are heroes who sacrificed so much and we’ve turned our backs on them for way too long. I somehow doubt they dawdled and took a vote before springing into action on 9/11. The great travesty of this issue is that it took nine years to get it done and both parties deserve plenty of scorn for such callousness.
The GOP fought this tooth and nail because of fiscal discipline, yet the GOP is often very quick to trumpet 9/11. The GOP is practically the party of 9/11. I was expecting them to be championing these heroes. Seriously, how often do you hear some republican politician trumpet 9/11? I hear it a lot, and I was baffled by their conduct. Their handling of this issue was absurd, hypocritical, and heartless.
The democrats were even worse. Their handling of the issue was heartless, but also incompetent. From strictly a political strategy perspective, the democrats had a chance to score huge points with everyone in America and simultaneously make the GOP look really bad. All they had to do was champion the 9/11 heroes…and they didn’t. I don’t know why. The GOP served themselves up on a silver platter for the democrats here and the democrats still blew it. This is how you snatch defeat from the jaws of victory, especially when we remember the democrats hold the presidency and majorities in Congress.
The bottom line is I’m absolutely sickened and disgusted with how both parties addressed this issue.
This is my lame duck season scorecard. Most topics could be separate posts in and of themselves.
The Good – We’re not getting our taxes increased to start the New Year. The Bush tax rates were extended for two years. Remember, this issue was not about tax cuts. It was about preventing tax increases. We also receive a reduction in social security taxes for a year. I was sad to see the Energy Star credit wasn’t extended for another year. Not simply because I’m putting central air into my house next year, but because it was a great tax credit that encouraged investment. The deal wasn’t perfect, but it was better than the alternative of increased taxes in 2011. I wanted the Energy Star credit, but the social security relief softens that blow. I also wanted to see an extension longer than two years (if not permanent) because making them permanent would’ve created more economic certainty, confidence, and investment. This was a clear victory for Obama. He made himself look like he’s coming back to the center and outplayed the GOP. He got unemployment benefits, social security tax relief, and non-permanent extension of the Bush tax rates in exchange for ceding the estate tax and upper class extensions.
DADT (Don’t Ask, Don’t Tell) was repealed by Congress and Obama despite much GOP opposition. I’ve previously advocated for DADT’s repeal, so I was thrilled here. McCain and the GOP were clearly stalling for time until the next Congress, especially after the Pentagon report showed that repealing DADT would have little meaningful negative impact. Obama was delivering on a campaign promise and it would’ve been much harder to do so with the incoming Congress. The GOP made themselves look obstinate and obstructionist by persisting with their resistance after the Pentagon’s study.
I was also happy to see the DREAM Act fail. The main reason I was happy to see this bill fail is because this issue is far too complicated to be addressed in a lame duck session. In general, I also thought there was a lot more wrong than right with DREAM.
The Bad – New START troubles me deeply. In my view, it is a foreign policy failure and domestic security disaster. The Russians clearly got the better of the Americans during the negotiations. Not only does this treaty substantially hurt our nuclear warfare (both offensive and defensive), but it also hurts our conventional warfare. I think China and Russia (and others) sense weakness on foreign policy and defense in the Obama administration and are rushing to fill the power vacuum.
The Ugly – The 9/11 first responders finally got what they rightly deserved, namely money to help them with their healthcare. These people are heroes who sacrificed so much and we’ve turned our backs on them for way too long. I somehow doubt they dawdled and took a vote before springing into action on 9/11. The great travesty of this issue is that it took nine years to get it done and both parties deserve plenty of scorn for such callousness.
The GOP fought this tooth and nail because of fiscal discipline, yet the GOP is often very quick to trumpet 9/11. The GOP is practically the party of 9/11. I was expecting them to be championing these heroes. Seriously, how often do you hear some republican politician trumpet 9/11? I hear it a lot, and I was baffled by their conduct. Their handling of this issue was absurd, hypocritical, and heartless.
The democrats were even worse. Their handling of the issue was heartless, but also incompetent. From strictly a political strategy perspective, the democrats had a chance to score huge points with everyone in America and simultaneously make the GOP look really bad. All they had to do was champion the 9/11 heroes…and they didn’t. I don’t know why. The GOP served themselves up on a silver platter for the democrats here and the democrats still blew it. This is how you snatch defeat from the jaws of victory, especially when we remember the democrats hold the presidency and majorities in Congress.
The bottom line is I’m absolutely sickened and disgusted with how both parties addressed this issue.
Friday, December 10, 2010
The Offshore Drilling Moratorium is a Really Bad Idea, and My Idea is Better
I consider myself a practical environmentalist in that I believe it is possible to balance the economic needs of man and the environmental needs of the Earth. I’ll go more into that in a future post, but it suffices as a lead-in to today’s topic, namely Obama’s seven-year moratorium on offshore drilling. The title of this post says it all, and now I’m going to tell you why.
First, a history lesson. Back in 1979, there was a nuclear incident, a near-meltdown, at Three Mile Island. The Chernobyl explosion a few years later gave the anti-nuclear crusaders even more ammunition to wage their fear-based campaign. Long story short, because of TMI, Chernobyl, and NIMBY (Not In My Back Yard), there was so much fear and hatred of nuclear power that we haven’t really built many new nuclear plants in several decades, which is a really big problem. But, here’s the thing. The nuclear power industry historically has a very strong safety record, and decades of advances in technology and the state of the art since TMI have only improved an already solid record.
What’s that got to do with the offshore drilling moratorium? Simply put, my fears that the BP incident would become offshore drilling’s TMI are playing out. The parallels are eerie. Sure, I’ll readily agree the oil industry screwed up big time here and caused a spectacular ecological and economic disaster. I’m not downplaying that, but we have to learn from history and Obama hasn’t.
We see from the nuclear power example that industry adapts. It learns from its mistakes and takes corrective action to ensure history doesn’t repeat itself. Like nuclear power, the offshore industry had a pretty solid safety record coming into the catastrophe. All the drillers saw what happened, and they’ve already taken internal corrective action to ensure it doesn’t happen on one of their rigs. I could rattle off countless examples of industry adapting, but nuclear and TMI were the most pertinent.
Sure, the government needs time to review its regulations and such, but such a moratorium is overkill and it’s going to have some very negative consequences. Figure 1 shows our domestic and imported oil for the past 30 or so years along with our consumption per the EIA. You see a steady rise in imports and overall consumption and a steady decline in domestic production. But we’re seeing some changes.
First, a history lesson. Back in 1979, there was a nuclear incident, a near-meltdown, at Three Mile Island. The Chernobyl explosion a few years later gave the anti-nuclear crusaders even more ammunition to wage their fear-based campaign. Long story short, because of TMI, Chernobyl, and NIMBY (Not In My Back Yard), there was so much fear and hatred of nuclear power that we haven’t really built many new nuclear plants in several decades, which is a really big problem. But, here’s the thing. The nuclear power industry historically has a very strong safety record, and decades of advances in technology and the state of the art since TMI have only improved an already solid record.
What’s that got to do with the offshore drilling moratorium? Simply put, my fears that the BP incident would become offshore drilling’s TMI are playing out. The parallels are eerie. Sure, I’ll readily agree the oil industry screwed up big time here and caused a spectacular ecological and economic disaster. I’m not downplaying that, but we have to learn from history and Obama hasn’t.
We see from the nuclear power example that industry adapts. It learns from its mistakes and takes corrective action to ensure history doesn’t repeat itself. Like nuclear power, the offshore industry had a pretty solid safety record coming into the catastrophe. All the drillers saw what happened, and they’ve already taken internal corrective action to ensure it doesn’t happen on one of their rigs. I could rattle off countless examples of industry adapting, but nuclear and TMI were the most pertinent.
Sure, the government needs time to review its regulations and such, but such a moratorium is overkill and it’s going to have some very negative consequences. Figure 1 shows our domestic and imported oil for the past 30 or so years along with our consumption per the EIA. You see a steady rise in imports and overall consumption and a steady decline in domestic production. But we’re seeing some changes.
For example, did you know that domestic oil production increased in 2009 for the first time since Papa Bush’s presidency? It’s true according to the EIA, and it’s a little-known fact Obama and his detractors would both like to keep under wraps (it makes Obama look bad to his environmentalist supporters and his detractors want to paint him as an enemy of business). Also, according to the EIA, 2010 is on pace to have higher domestic production than 2009, giving us the first consecutive YOY increases in domestic oil production since the Reagan days. Two years don’t make a trend, but increased domestic oil production is promising.
Now, look at imports. They peaked in 2005 and have dropped sharply since, mostly in 2008-09 and likely due to the economic collapse. Canada is our chief source by far, followed by Mexico. After those come our ‘friends’ in Venezuela and Saudi Arabia, who, between them, sold us ~750M barrels in 2009 (over 10% of our annual consumption). At our current level of ~$90/barrel, that’s ~$70B going to two countries that don’t like us very much.
I don’t know about you, but I’d like to stop importing oil from countries that don’t like us. The moratorium will make this very difficult because it will probably reverse the two positive trends, namely the increased production and decreased imports. Instead, we could reduce or even eliminate imports from Venezuela and Saudi Arabia (or other countries we’re not on the best of terms with) if we engaged in a concerted effort to increase domestic production, decrease consumption, and import more from friendly countries (to reward them for getting along with us).
Also, note that increasing domestic production and decreasing consumption are both direct stimulus to our economy. Drilling here creates jobs here. Also, companies and people using less oil means we have more money left over for other, more useful stuff/activities. Increased domestic production should appeal to the right wing. Reduced consumption also leads to reduced greenhouse gases, which should appeal to the left wing.
My idea sounds like a win for everybody. Obama’s idea…not so much.
Now, look at imports. They peaked in 2005 and have dropped sharply since, mostly in 2008-09 and likely due to the economic collapse. Canada is our chief source by far, followed by Mexico. After those come our ‘friends’ in Venezuela and Saudi Arabia, who, between them, sold us ~750M barrels in 2009 (over 10% of our annual consumption). At our current level of ~$90/barrel, that’s ~$70B going to two countries that don’t like us very much.
I don’t know about you, but I’d like to stop importing oil from countries that don’t like us. The moratorium will make this very difficult because it will probably reverse the two positive trends, namely the increased production and decreased imports. Instead, we could reduce or even eliminate imports from Venezuela and Saudi Arabia (or other countries we’re not on the best of terms with) if we engaged in a concerted effort to increase domestic production, decrease consumption, and import more from friendly countries (to reward them for getting along with us).
Also, note that increasing domestic production and decreasing consumption are both direct stimulus to our economy. Drilling here creates jobs here. Also, companies and people using less oil means we have more money left over for other, more useful stuff/activities. Increased domestic production should appeal to the right wing. Reduced consumption also leads to reduced greenhouse gases, which should appeal to the left wing.
My idea sounds like a win for everybody. Obama’s idea…not so much.
Saturday, December 4, 2010
DADT – I’m Asked to Tell My Thoughts
I’ve been asked to tell my thoughts on Don’t Ask Don’t Tell. Honestly, I think it’s time to repeal this policy. I have several justifications for thinking so. I’d also like to address some of the concerns that are frequently mentioned by opponents of repeal.
First, from a legal perspective, as far as I know, we’re not allowed to discriminate based upon sexual orientation anywhere else. Employers aren’t allowed to use sexual orientation in their hiring/firing decisions. There’s also the matter of the court’s ruling that the military must repeal the policy, citing the Constitution. I don’t want to spend too much time on legalities here, though.
The common counter is that the military is different, and it sure is a unique work environment, but its differences actually make it more conducive to a change in policy like this. Opponents of repealing the policy right now claim it would be a burdensome additional distraction on the military while it’s engaged in war. I’d argue that there’s no better time to implement such a change than during war because the individuals are focused so intensely on the enemy that this policy change would be a minimal distraction. By contrast, if we tried to repeal this policy during peacetime, it would likely be much more disruptive because there’s more idle time for it to become a distraction. Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, agrees. He’s quoted as saying, “War does not stifle change; it demands it. It does not make it harder; it facilitates it.”
If there’s one thing I’ve learned in my dealings and talks with military personnel (past, present, and future), it’s that they are extremely mission-oriented and professional, so much so that they wouldn’t let something like sexual orientation interfere with unit cohesion. Many of them think of the person in the foxhole next to them as a brother/sister-in arms first and foremost, with no regard for stuff like race, gender, or sexual orientation. They just care about having that person’s back and whether that person will have their back.
This level of professionalism applies not only to how the straight people in the military would react, but also the homosexuals. It’s not as though there’s going to be a flamboyant coming-out party. Indeed, the overwhelming majority will probably still keep their sexual orientation to themselves. The Pentagon’s report showed that only 15% of those who identified (anonymously) as homosexual would have their sexual orientation known to everyone in their unit. Even if they’re open about it, homosexuals are generally very respectful of personal boundaries in my experience. If, hypothetically, one started hitting on someone, all that person has to do is say, “Thanks, but I’m straight,” or something to that effect and the message is usually clearly understood. No doubt, this would all be part of training that every person in the military would go through to minimize the impact should DADT be repealed.
Unit cohesion is often cited as a source of worry for opponents of repeal. I’m not too concerned about this, to be honest. All manner of non-military units function just fine with openly homosexual members, ranging from fire and police departments to sports teams to any sort of work crew (construction, design, accounting, legal, etc.). Why would the military be any different?
Opponents of repeal also claim that allowing homosexuals to serve openly would diminish the toughness of our military. They believe the military should resemble our enemy’s worst nightmare, and I agree. But, the current enemy is radical Islam, which is well known for its hatred and fear of homosexuals (non-radical Islam is often tolerant of homosexuality). I’d think homosexuals with guns would be one of their worst nightmares.
Opponents also worry about the repeal hurting recruitment. I don’t think it’ll have a big impact. Homosexuals already serve in the military and they always have, even if we don’t know who is and who isn’t among them. America has become more tolerant of homosexuality as time goes on. We’ve discharged ~13,000 people under DADT, and if we’ve got such a shortage that we’re allowing active gang members to serve, why not allow open homosexuals? Active gang members worry me much more than open homosexuals.
They have a lot to do, but I’m hopeful Congress will repeal DADT during this lame-duck session. I think the GOP is stalling until the new Congress since the Pentagon report didn’t confirm their position.
First, from a legal perspective, as far as I know, we’re not allowed to discriminate based upon sexual orientation anywhere else. Employers aren’t allowed to use sexual orientation in their hiring/firing decisions. There’s also the matter of the court’s ruling that the military must repeal the policy, citing the Constitution. I don’t want to spend too much time on legalities here, though.
The common counter is that the military is different, and it sure is a unique work environment, but its differences actually make it more conducive to a change in policy like this. Opponents of repealing the policy right now claim it would be a burdensome additional distraction on the military while it’s engaged in war. I’d argue that there’s no better time to implement such a change than during war because the individuals are focused so intensely on the enemy that this policy change would be a minimal distraction. By contrast, if we tried to repeal this policy during peacetime, it would likely be much more disruptive because there’s more idle time for it to become a distraction. Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, agrees. He’s quoted as saying, “War does not stifle change; it demands it. It does not make it harder; it facilitates it.”
If there’s one thing I’ve learned in my dealings and talks with military personnel (past, present, and future), it’s that they are extremely mission-oriented and professional, so much so that they wouldn’t let something like sexual orientation interfere with unit cohesion. Many of them think of the person in the foxhole next to them as a brother/sister-in arms first and foremost, with no regard for stuff like race, gender, or sexual orientation. They just care about having that person’s back and whether that person will have their back.
This level of professionalism applies not only to how the straight people in the military would react, but also the homosexuals. It’s not as though there’s going to be a flamboyant coming-out party. Indeed, the overwhelming majority will probably still keep their sexual orientation to themselves. The Pentagon’s report showed that only 15% of those who identified (anonymously) as homosexual would have their sexual orientation known to everyone in their unit. Even if they’re open about it, homosexuals are generally very respectful of personal boundaries in my experience. If, hypothetically, one started hitting on someone, all that person has to do is say, “Thanks, but I’m straight,” or something to that effect and the message is usually clearly understood. No doubt, this would all be part of training that every person in the military would go through to minimize the impact should DADT be repealed.
Unit cohesion is often cited as a source of worry for opponents of repeal. I’m not too concerned about this, to be honest. All manner of non-military units function just fine with openly homosexual members, ranging from fire and police departments to sports teams to any sort of work crew (construction, design, accounting, legal, etc.). Why would the military be any different?
Opponents of repeal also claim that allowing homosexuals to serve openly would diminish the toughness of our military. They believe the military should resemble our enemy’s worst nightmare, and I agree. But, the current enemy is radical Islam, which is well known for its hatred and fear of homosexuals (non-radical Islam is often tolerant of homosexuality). I’d think homosexuals with guns would be one of their worst nightmares.
Opponents also worry about the repeal hurting recruitment. I don’t think it’ll have a big impact. Homosexuals already serve in the military and they always have, even if we don’t know who is and who isn’t among them. America has become more tolerant of homosexuality as time goes on. We’ve discharged ~13,000 people under DADT, and if we’ve got such a shortage that we’re allowing active gang members to serve, why not allow open homosexuals? Active gang members worry me much more than open homosexuals.
They have a lot to do, but I’m hopeful Congress will repeal DADT during this lame-duck session. I think the GOP is stalling until the new Congress since the Pentagon report didn’t confirm their position.
Subscribe to:
Posts (Atom)