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.
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