Missed Targets

Roe: Missed Targets

Trevor Roe tries, in a commentary published in the Roanoke, VA Times, to impose his interpretation on a number of economic issues. In my opinion, he raises more questions than he answers.
He begins by saying raising the minimum wage would increase costs too much on restaurants. European restaurants had a system more than forty years ago that included service in food prices, making tips unnecessary. Americans couldn’t do the same? And other areas of the economy, like WalMart, America’s largest employer, are more stable.
Mr. Roe doesn’t like labor unions, though he concedes they were valuable half a century ago. He accuses them of precipitating movements of factories to non-union areas and other countries since then. Perhaps, as he says, anti-company extremists caused the decline of union membership. Maybe that, and the relocation of factories, is a chicken and egg question. Was it the unions that made businesses unprofitable, or did they move their operations because they disliked unions? Businesses have disliked unions for well over a hundred years, and have expressed their dislike violently more than once. Relocating factories to other countries makes me wonder why. Reports from China, for instance, suggest they value the freedom to mistreat employees and not worry that their actions harm the environment.
I can’t disagree with Mr. Roe that universities charge too much tuition, and that community colleges give much better value for those needing a degree to get a decent job. Things I have read elsewhere suggest that those providing college loans have oversold their services to people who don’t know how to judge the value of that sort of education, which I think is not for everyone. Some might do better learning plumbing or various kinds of repair necessary for our technological society, which they might be able to learn in apprenticeship programs, for instance. I was fortunate to get my degree with less than $15,000 of debt from government loans. I also worked while I studied, as Mr. Roe says he did.
We know that Republicans were at one time concerned about healthcare. The Affordable Care Act was based on the system implemented by Mitt Romney in Massachusetts, but Republicans couldn’t stand that a Democrat should make it a nation-wide system. Should tort reform be included in the act, or would that be a way to evade responsibility?
I have little problem with the refusal to fund “one or two particular types” of birth control. The real challenge to it comes from the threat to defund Planned Parenthood and similar organizations for allegedly selling “baby parts” gleaned from abortions. That has been called a lie. There’s reason to be upset if it is not, but conservatives seem to want to outlaw family planning by other methods than abortion as well, and make it more difficult for women to get the healthcare they specifically need.
Mr. Roe says that Democrats (only Democrats?) have gutted the Social Security Trust Fund, taxed Social Security benefits, and want to submit higher income Americans to a “means test”. I don’t know if all of that is true or not, but why SHOULDN’T all Americans contribute to Social Security? My taxes support education, though I have no children of my own. They also support the military, though I don’t appreciate how much of that money is spent. Is there some group of Americans who has the right to determine how their taxes get spent when I don’t?
I lack the expertise to know if Mr. Roe is correct in saying that raising the tax rate on capital gains would penalize seniors with 401Ks and IRAs. Republicans, he says, have promised to address inequities in hedge funds. Shall we wait to see if they actually do it?
When it comes to income inequality, Mr. Roe’s view seems a bit outdated. He says most countries envy the standard of living enjoyed by the poor here. Is it our increasing homelessness (including children) they envy? Or the expenses imposed by accident or major illness? Those are devastating to people only getting by to begin with. No reasonable person expects equal outcomes, but the equal opportunities part of the equation has changed, along with the removal of factories and other forms of work to other parts of the country and other countries. Those selling student loans get much of their leverage from the fact that there are fewer ways to make a decent living without a college degree. Factories were one of the ways providing that opportunity, after unions helped provide decent wages.
Mr. Roe’s piece is remarkable for its sympathy for employers and lack of sympathy for employees, which makes his view biased. When he talks about the competitive global economy as one of the reasons for decline in union membership (read off-shoring of factories), he raises the question of what group of consumers the global economy is competing for. Henry Ford’s partner thought it made sense to pay workers well, so they could buy the products they built. Is that such a terrible idea, or does ideology forbid? Certainly other corporations at that time didn’t like the idea then, and don’t like it now. Is paying employees as little as possible a necessary part of capitalism, or could that work differently? Reportedly, it does in Germany, which has perhaps the strongest economy in Europe. And how does vastly overpaying CEOs (apparently even when incompetent) make corporations more competitive when paying ordinary workers does not? That doesn’t seem to be a question Mr. Roe is interested in answering.
Mr. Roe in this piece is answering a previous column, and declares that its author missed all of the targets he shot at. I don’t think he hit all of them himself.

Climate Change–Or Not

In recent weeks I’ve seen at least three articles denying even the possibility of man-made climate change in pretty bitter tones. The occasion seems to have been the Paris climate talks, which were denounced as useless. I’m not a scientist, and haven’t studied the data closely, but the idea has always seemed plausible to me. After all, we have been using both coal and oil in large quantities for most of the last two hundred years, which I don’t think the ecology was built to deal with.
At the same time we’ve been doing an awful lot of logging. Cutting down forests in the Amazon (only the most famous example) doesn’t seem like the smartest thing to do when plant life turns carbon dioxide into oxygen. Life on this planet breathes, and vegetable life is an important part of that cycle. Altering it is dangerous.
It is known, but apparently not very widely, that too much CO2 is bad for the human organism. Pulmonary acidosis I think might be analogous to what what carbon pollution in particular is doing to the world.
Chronic Obstructive Pulmonary Disorder (COPD) is one condition that can bring that sort of acidosis on (there are other kinds too). COPD damages the lungs so that they can’t expel enough CO2, which then builds up in the lungs and the rest of the body. This can cause a lowering of the pH balance so there’s too much acid in the body, as opposed to bicarbonate, which balances acid. The condition isn’t easy to diagnose, because it can cause a variety of symptoms: chest pain, palpitations, headache, nausea, vomiting, and abdominal pain, plus lethargy, stupor, coma, and ventricular tachycardia (the most dangerous kind) in particularly acute acidosis. Chronic acidosis can cause weight gain, muscle weakness, bone and joint pain. Eventually it can cause osteoporosis and fractures, too. Not being able to expel CO2 via the lungs is one way acid can build up. Another is when the kidneys are too damaged to expel it that way. I suggest, without being able to prove, that phenomena, sometimes labeled as climate change, sometimes probably not noticed, are linked to changes caused by pollutants of various sorts in the world’s ecological system. We don’t know everything about ecology, but we know that when wrong substances are introduced into mechanical systems, they cause them to work poorly. The result can be the kind of error characterized by, “Ignorance of the law is no excuse.”
I suggest that what is called climate change is part of a wider problem of pollution. Ending CO2 emissions would be a good start, but wouldn’t by itself restore the world’s ecology. Besides emissions, we produce too much non-biodegradable trash, which interferes with the communities of organisms from the microscopic to the largest on which we depend for our own lives, though we don’t act as if we know that. By treating everything in the world as resources for our use, we cause species extinctions, which lowers the amount of biodiversity. And we rarely know ahead of time what the loss of any species is going to cause. But if we lose a lot of species, I don’t think the results are going to be good for us or the rest of the organic world.
Wendell Berry, both a writer and farmer, has suggested that our present exploitative attitude towards the world began with the European discovery of the New World. It must have seemed inexhaustible to them, and they immediately began to exploit it. The Spanish were most interested in gold and silver. Early North American settlers were interested in tobacco as a way to make their fortunes. The Industrial Revolution opened a cornucopia of ways to exploit natural resources, and expanded the unexpected consequences. People through much of the twentieth century complained about pollution and environmental degradation, though I doubt many of them foresaw that carbon emissions were going to be as important as many of us now see them to be.
Of course it would be much more convenient if none of the above were true. If we poison ourselves, advertently or inadvertently, we are doing so in the name of convenience. Cars and other forms of transport are convenient, so we continue to build them and use fossil fuels to power them. Plastics are convenient, and we use them in most things we make. They are also nonbiodegradable, and clutter many parts of the world, interfering with nature’s functioning. Artificial fertilizers and insecticides are convenient, even though they may be killing the bees that fertilize our vegetable food. Few people want real fundamental change. It would be inconvenient, even if it might head off catastrophe. Humans prefer not to believe what is inconvenient.
Which is why Cal Thomas’s characterization in a recent column of belief in climate change as similar to belief in Santa Claus and the tooth fairy is perplexing. Mr. Claus and the tooth fairy are things children find wonderful. Who finds the idea of climate change wonderful? Making the changes we would need to make to combat it would cause profound dislocations, which would be convenient to few people, if any. I would prefer to believe that there’s no danger of ecological catastrophe waiting for us in the near future, but am afraid that’s unrealistic. I wish I could believe it were not.
Mr. Thomas’s line is familiar from pronouncements of other conservatives: climate change is a phony doctrine being shoved down our throats. He quotes one company as saying the Earth’s temperature hasn’t increased in almost 19 years, which he adds, is a record. Another source reports that last year was the hottest since we began recording such things. Who are we to believe? Since few of us are willing to be objective, no doubt it will be the politicians with whom we happen to agree.
I suggest that pollution has already been shoved down our throats for a long time, and that most people would prefer it were not. The people in favor of pollution are those who create it, and object to having to clean up their mess. Climate change, and what would have to be done to combat it, would be profoundly inconvenient for them in particular, but for the rest of us too.
Mr. Thomas goes on to say that money and power are associated with climate change orthodoxy. More money and power than have been and still are associated with the production of fossil fuels? The coal and oil companies are entrenched special interests. Their profits must dwarf those of companies producing sustainable power, which haven’t had a chance to become entrenched yet.
Do climate change believers try to suppress the views of deniers? Suppression isn’t the right way to address the issue, but the deniers certainly try to discredit (I think they would suppress if they could) what some claim to be about 97% agreement among the world’s scientists. Perhaps that figure is inaccurate, but if it’s at all close it seems unlikely so many scientists would engage in such a conspiracy. Considering the profits coal and oil companies have to lose, I don’t find conspiracy on their part to be unbelievable. Conservatives have built an alternate establishment to purvey their version of the news because they don’t like the mainstream one, in which they make fun of anyone who doesn’t share their beliefs. So naturally they accuse others of doing the same thing.
Mr. Thomas ends his column by asking why developed countries should stifle their growth potential by embracing the false doctrine of climate change, and suggests there’s no realistic answer. Let me suggest one.
This planet is vastly overpopulated. It’s a large place, but finite. It could be comfortable for an estimated two billion of us. We have about seven billion now, and it may be closer to nine. There simply are not the resources to continue economic growth in the form we have up to this point. Not unless we acquire resources from outside this planet, which seems highly unlikely. Much more likely is to dig more deeply and more dirtily for the resources we think we need, as well as starting wars to take resources away from the countries who have them. Such wars would exacerbate terrorism, and such mining would exacerbate pollution. Neither seems like a good direction to go.

The New Deal

We still live in the shadow of the Great Depression, and the response to it, the New Deal. Among other things, the Depression can be seen as an accumulation of problems from the 19th century until 1929, and the New Deal as an attempt to solve them. Some will deny the New Deal accomplished anything positive. Michael Hiltzik tries to tell the story of a complex era in his book, The New Deal. I’m sure he unavoidably leaves some things out, but the book remains fascinating.
I think one’s view of the New Deal may depend, at least in part, on whether one identifies more with employers and wealthy people, or with employees and poor people. The former are less likely to approve measures taken in the New Deal, the latter more likely, in my opinion.
We were reminded of the Depression seven years ago as the recession of 2008 began, but there were crucial differences. Fairly effective actions were taken quickly to solve those problems. It’s debatable whether they were the right actions, or if others might have been more effective, but the Depression was different. Its effects were more drastic, and had lasted more than three years by the time Franklin Roosevelt took office. Herbert Hoover had tried everything he could think of, and one would have thought he would be successful, since he had done nearly miraculous things providing food for starving civilians during and after World War I. But the Depression stymied him. Though he professed to believe the Depression had ended in 1932, banks were still failing in 1933. After Franklin Roosevelt was inaugurated his first priority was to save the banking system.
A banking holiday (which sounded more cheerful than a moratorium) of four days was declared, and it was then necessary to find a way to reopen the banks safely. Prominent bankers were asked what to do, but the only suggestion they had was to nationalize the banks, the one step Roosevelt was unwilling to take. The “holiday” was inconvenient at best. Will Woodin, Secretary of the Treasury, acted to allow banks to make change (but not pay out gold), to give customers access to their safe deposit boxes, to cash government-issued checks, and pay our funds for food, medicine, payrolls, etc.
The biggest problem with reopening the banks was what they were going to use for money to pay out withdrawals. The country was firmly on the gold standard, so that each person had the right to demand the gold equivalent of paper money. The gold standard had been put in place in the 1880s to use for international trade, but there had always been problems with it. “When the balance of payments went out of whack, policy makers instinctively moved first to protect the gold standard–that is, to preserve the fixed rate of exchange among their currencies. They did so by resorting to deflation rather than devaluation…In practice, that meant they preferred reducing wages and laying off workers to altering exchange rates.” That was advantageous to the bankers, while inflation, as long as it didn’t get out of control, was more advantageous to farmers and laborers. The question now was what could be used for withdrawals when the banks reopened. Since people had withdrawn their money from the banks and were hoarding it, various people had begun issuing scrip, with the idea of using it for money. But some scrip had backing and some didn’t. If it continued to be used, no one knew what would happen. Woodin came up with the solution: to print more money, which the Reserve Act gave him the power to do. That disconnected paper money from gold, and gave no authority to scrip. It remained for Roosevelt to make it clear that the banks would be solvent, and people could get whatever money they needed when they needed it. He did this with the first of his Fireside Chats by radio, which he did with great effectiveness. People returned the money they’d withdrawn from the banks, and ended the crisis.
A big part of the problem with the banks had been that when they were rumored to be about to fail people would rush to withdraw their deposits before their savings disappeared. Thus, the banks would be left without enough money to pay their depositors, which guaranteed their failure. It became necessary for deposits to be federally guaranteed and legislation enacted to make sure banks kept a large enough percentage of their funds liquid, so they could pay any necessary withdrawals. That didn’t completely stop bank failures, but drastically reduced them.
Related to this were problems with mortgages. At that time mortgages were short-term loans, and payments covered only interest, not principal. When people lost jobs in the Depression and were unable to make payments, banks foreclosed relatively quickly, and lost money on the properties because so many foreclosures drove the prices of real estate down. Changing the loans to run longer and the payments to include principal gave the mortgage payers equity, which made it more difficult to foreclose on the loans and made the real estate values more stable.
There were other problems with banks too. One of the reasons for bank failures was that many had included investments along with other banking functions, and had persuaded depositors to speculate. Legislation was enacted to separate commercial banking from investment banking, and then to regulate the stock market, which stock market people didn’t like. Banks had accepted government assistance to stay in business, but then castigated government for interference in the free market. That’s one of the parallels between the Depression and the recent recession.
It also became clear, through hearings being held just about the time Roosevelt was inaugurated, that much wealth was concentrated among very few people, that these people colluded for their own benefit, and that the stock market, among other institutions, wasn’t run very ethically.
J.P. Morgan’s son, who ran the bank his father had founded, on being investigated had to admit he gave certain people “gifts” (though he insisted he didn’t expect favors in return); that anyone with enough money wouldn’t be allowed to bank with his firm unless referred by another customer; and that he had evaded his income tax for the previous three years by selling stock to his wife, then buying it back at the same price, thus creating an artificial loss. He escaped legal punishment, but his reputation was ruined.
Richard Whitney was a defender of the stock market, and had made a name for himself when the stock market imploded in 1929 by spending $20 million on important stocks, which temporarily stabilized the market. That was considerably more than $20 million is worth today, but the stock market still crashed. As 1933 turned to 1934, and the Roosevelt administration proposed to regulate the stock exchange, he tried to defend its independence.
Supreme Court Justice Louis Brandeis influenced New Deal thought through his social liberalism, suspicion of concentrated economic power, and through two of his young followers, Thomas Corcoran and Benjamin Cohen, who worked to put initiatives in legal language which could be passed by Congress, which the Supreme Court couldn’t find fault with, and which could be acceptable to the business community. “They were no more inclined to upend the established economic order than their ultimate patron, Franklin Roosevelt, and they spent almost as much time defending their legislative drafts from the criticism that they did not go far enough as from the charge that they went too far.”
Adolf Berle, another member of what was called the Brain Trust, saw three areas needing improvement. First, he saw the stock exchange as “‘primarily a gambling institution,'” and didn’t see any possibility of getting rid of the human propensity to gamble. He did see a possibility of regulating the market so that traders would be less able to take advantage of investors. He, among others, wanted to accompany caveat emptor with caveat vendor, which we would now call transparency.
He also wanted credit to be less readily available, believing that buying stocks on margin had greatly contributed to the stock market crash, and that corporations “should be required to publish annual balance sheets, quarterly income reports, along with monthly reports of stock transactions by officers and directors of the corporations and holders of a threshold percentage of shares”. He wanted to rid the market of manipulative practices that allowed corporations to set their stock at whatever level they liked, and to prevent illegitimate profiteering. Corcoran and Cohen wrote the bill, and Corcoran had to defend it against an outraged Stock Exchange. He hadn’t expected to have to be cross-examined by members of the Exchange, but was able to do so, earning a reputation of being quick on his feet.
When Whitney followed him to the stand, he made an inferior impression in trying to defend stock market practices as having no improprieties. Ferdinand Pecora, who had been investigating such practices since before Roosevelt’s inauguration, was able to “demolish this assertion from the exchange’s own records of trading” in which questionable practices inflated the value of a stock to 89 7/8 from below 20. After a block of the stock was sold, the price declined to 32.
Whitney continued to defend what had been done. He wanted some compromise between federal regulation and self-regulation (though he preferred self-regulation). No one knowledgeable was fooled. The stock market wanted no regulation, and if that couldn’t be avoided, they wanted the regulation to be as ineffective as possible. The prospect of having their activities overseen filled them with paranoia. As in later times, they were willing to accept government assistance, but not government “interference”. Whitney, a few years later, became even more discredited when it was discovered he had engaged in fraud and embezzlement.
At this point, Franklin Roosevelt found the perfect chairman for the Securities and Exchange Commission in Joseph P. Kennedy. Kennedy was perfect because he had been involved in the stock market for decades, and knew all the tricks. His expertise helped the Commission regulate effectively in the relatively short time he headed it.
Wall Street wasn’t the only area of financial misbehavior. Another was uncovered with the proposal to found the Tennessee Valley Authority. The Tennessee Valley extends from Virginia to Mississippi, and at that time was an area of poverty, subject to frequent flooding. The TVA not only intended to build and acquire dams to control flooding, but also to generate electric power. Of the three million or so people in the valley, only about 10% had electricity. “Industrial development was stagnant, and city and countryside alike were charged profiteering rates on a take-it-or-leave-it basis by private companies that had divided up the region into service areas, each one a monopoly.” State regulatory agencies were ineffective. The power companies saw no reason to wish for the kind of change the TVA signified.
Wendell Willkie, later a Republican candidate for president against Roosevelt, was the representative of the power companies, and tried to intimidate the TVA representative, David Lilienthal, into selling all the power they generated to the power companies. He suggested “that Lilienthal should play ball now if he wanted to preserve any chance of obtaining a lucrative private sector job after his inevitable departure from government service…Lilienthal reflected: ‘This was so crude that I always made it a point to pretend he was talking about somebody else.'” He turned Willkie down.
A little later the city of Tupelo, Missisippi, signed a power contract with the TVA. Lilienthal told Willkie that if the power company denied the TVA use of its power lines, the TVA would build its own grid. The result of that was that utility rates came down sharply over much of the South. The TVA remains in the power business today, though no longer only in hydroelectric power.
Interestingly, the same scenario was playing out in the Hill Country in Texas, Lyndon Johnson’s home district. The Hill Country was another area of poverty, in which people had to endure intense physical labor just to get by, having to transport water a long way, and use wood for domestic power. Johnson had to twist arms to get electricity extended into this area, but the power companies discovered they could still make profits, and without overcharging.
Cleaning up financial misbehaviors was an important part of the New Deal, but other issues were at least as urgent. One of these was putting people back to work. There had been a sort of welfare in which people were given vouchers for food and other products, but with strict rules about what they could be spent on. Harry Hopkins was one of the people most concerned with putting people to work, and part of his concern was that people retain their dignity. These were, he explained, adults who had handled their own affairs before being caught in a financial maelstrom, and working, even at jobs that didn’t seem very important, gave them self-respect, which was at least as important as money to their survival. The same tendency to punish poor people persists today, apparently among people who can’t imagine having to struggle to survive, or that such a struggle might not be one’s own fault.
Harold Ickes headed the Public Works Adminstration in charge of really big projects, and had an exactly opposite philosophy to that of Hopkins. He tried to make sure that every dime was spent productively, so that his projects retained their value. Hiltzik suggests that both approaches were valuable.
Several different agencies engaged in employing people: the Works Progress Administration, the Civil Works Administration, the Public Works Administration, and the Civilian Conservation Corps. The latter was for young men from all over the country. These were given some clothes, arrangements were made for their families to receive $25 a month from their pay (at a time when $25 was a lot more than today), and they were set to work building roads and dams, and planting trees all over the country. Much of what they did paved the way for the powerful economy of the 1950s and 60s. So did the work of the other agencies, though they weren’t exclusively for young people, and not all of them worked on infrastructure. Eleanor Roosevelt felt that these agencies had helped many people both survive and survive with dignity, which made it possible for them to contribute to the later war effort.
Farming was an area of the economy which had been depressed for more than a decade before the Great Depression. That was because farmers were called to produce more food for World War I, and then had that market go away when European countries began producing their own food again. American farmers kept producing large crops, which drove prices down so they weren’t even making enough to pay the expense of planting and harvesting. New Deal policy makers decided they had to pay farmers to destroy their crops and the pigs they had raised, though the very idea was repugnant. But the agricultural market had been so arranged that the farmers made less than those who sold and transported what they produced. Many farmers lost their property, partly because they couldn’t pay their bills, and partly because of the Dustbowl (perhaps the first visible ecological disaster in this country), prompting a large migration to find work. Californians in particular disliked the migrants. Mr. Hiltzik doesn’t mention any real solution to the problems of farmers at that time, which probably has a lot to do with the prevalence of factory farms over family farms today.
New Deal policy makers tried to put industrial workers back to work too, though their immediate approach was problematic. It was assumed that competition wasn’t good for the economy, which gave established industries what they wanted without the necessity of treating their employees fairly. Hugh Johnson, head of the National Recovery Administration, had had broad powers during World War I to assure the effectiveness of the war effort. He had been able to count on patriotic cooperation then, but now that wasn’t effective. He wanted to put people back to work, but disliked the idea of collective bargaining to make sure they were adequately paid and had decent working conditions. He had to be forced out of his position before workers were given a minimum wage, a 40 hour work week, and collective bargaining rights. Industrialists resisted these reforms all the way, and held a permanent grudge against Roosevelt for them.
Roosevelt was able to accomplish a lot in terms of legislation in a short time because the country had been failing economically for three years before he took office. He hadn’t said exactly what he’d do to fix things, except that he would try many things, since that made better sense than not trying. And he did. Hiltzik says neither liberals nor conservatives were satisfied with him because he wasn’t liberal or conservative enough for either. He tried things that came from both camps, including legislation Herbert Hoover had either put in motion or considered. And there were so many urgent problems that he and his advisers had little time to search out the best solution to each problem. So they tried things, and if they didn’t work, tried other things, or tried to fix what they’d put in place.
The Depression was a watershed. There had been depressions every couple of decades, but never as serious as this. Roosevelt tried to remove the causes of depression, and had some success at that. Federally insuring bank deposits made banks considerably more stable, and separating commercial banking from investment banking made the former more stable too. So did regulating the stock market.
Not that everything he did was perfect. He tried to raise prices on agriculture by raising gold prices, which didn’t work. But as Raymond Moley, another New Dealer, commented, it didn’t work, but it didn’t hurt anything either. Except that it contributed to the increasing paranoia of business people, making them that much more likely to oppose anything Roosevelt tried to do. A much more serious mistake was what was known as “court packing.”
This was instigated by three Supreme Court cases in which the administration’s practices were called into question. One was a question as to whether Roosevelt had the right to fire a member of the Federal Trade Commission, and the Justices reversed a nine year old precedent which several of the sitting Justices had helped to set, stating the president had absolute power over offices of the Executive Branch. The second denied the government power to renegotiate already existing mortgages, as opposed to new ones. The third regarded interstate commerce in the poultry industry in New York. The ruling went against the government because, the Court said, poultry entered New York, but didn’t leave it. The decisions were a huge blow to the New Deal, and were widely criticized by people who saw them as ideological and a warning that future government legislation wouldn’t be upheld. Several other acts were struck down, until a case called Tipaldo after the owner of laundry who was “flagrantly” defrauding his female employees of their legal wages. The Court ruled that the government had no right to intervene in a contract between and employer and employees. At that point, the Court seemed to realize it had gone too far.
Roosevelt, meanwhile, had “suggested” that the Justices were too old and too overworked to render impartial decisions, which was transparently untrue. The Court wasn’t overworked, and his quarrel with it was ideological, as was the quarrel of the Court’s conservatives with him. The uproar this caused greatly damaged the ability of the government to pass any new domestic legislation, and the situation became ironic.
For one thing, one of the Court’s most conservative justices decided to retire, giving Roosevelt an opening to appoint whomever he wanted as a replacement. For another, the Court seemed to undergo a change of heart, and began upholding New Deal legislation. The occasion was a case involving the minimum wage, as Tipaldo had been, but this time the Court took into consideration the economic conditions which had changed so drastically since the 1920s, and upheld the minimum wage.
Unfortunately, Roosevelt persisted in trying to “pack” the court. Hiltzik explains that he still didn’t have the solid majority he would have liked, but his political instincts seemed to desert him, and he didn’t realize how his attempt appeared to most. That may have been the end (or beginning of the end) of the New Deal’s domestic legislation.
But possibly the most important act of the New Deal, and the one most often associated with it had already been passed: Social Security. The 1930s were different from previous decades only in that the situation of most elderly people was more acute. Most older people had been poor before, as few had access to pensions or any other way to support themselves when no longer able to work. The idea was popular among ordinary Americans, but much less so among the wealthy, who saw it as a way to redistribute money from one class to another, but one defender of the concept said that an economic cost would have to be paid, whether the elderly were supported by the nation or by their own children. If it wasn’t paid, many of the elderly would be condemned to starvation.
There was much controversy about how to finance the Act, and the payroll tax, though highly regressive, was chosen as the primary method. Hiltzik says this gave each person enrolled in the program a stake in it, which probably prevented it being repealed. There are always some few who want to repeal it, as with other aspects of the New Deal, but that would be politically very difficult, which Roosevelt intended.
The New Deal was imperfect in other ways too. Blacks got few benefits from it, compared to whites. Industries didn’t want to give them jobs, and unions didn’t want them as members. The New Deal Programs put in place to bring relief to poor people often refused to serve blacks. Blacks tried over and over to get anti-lynching legislation, but were never able to during FDR’s administration. The New Deal should have been for everyone, but was not.
It will be obvious from my comments that I think the New Deal was overall a good thing for America. Many problems had been avoided in the decades before, and were only addressed when life became extremely difficult for most people. Lack of work not only made starvation and similar fates possible, it was intensely demoralizing for people used to being able to support themselves and their families. Other parts of the world had the same kinds of problems, and picked far worse ways to deal with them. Think Communist Russia, Nazi Germany, and the civil war in Spain, which occurred in the 1930s. A Communist critique said that Fascism is a crisis of capitalism. America could have become a dictatorship, as these countries did, or already were. With all our imperfections we were very fortunate that extremism didn’t take us over.
Some will argue that it did, and that Roosevelt was a dictator of a sort. He seems to have enjoyed using power, but he didn’t deliberately starve large parts of his country, as happened in Soviet Russia, nor did he outlaw any political parties and create concentration camps for their members, as happened in both Russia and Germany. He did imprison Japanese-American citizens during World War II, which was far from his proudest moment, but that’s as close as he came to the horrors in other countries during his administration.
Most of the problems of the Depression had to do with money, and with the tendency of those with it to engage in fraud. Why should that have been true? Is it the same answer the bank robber gave when asked why he robbed banks? That it’s where the money was? Does that mean that capitalists didn’t feel they could trust ethical behavior to bring them a profit?
My own belief is that many of the people who disliked the New Deal then and dislike it now have a view of the public interest much different from mine. My bias is in favor of ordinary Americans who lack the power, economic or otherwise, to compete on an even basis with large organizations. Granted, the government is a large organization, but why is it that other large organizations propagandize against it while simultaneously seeking (often quite effectively) to manipulate it? Consider that banks labeled “too big to fail” were bailed out by the government with our tax money during the recession beginning in 2008. Individual consumers were not. Many people were stuck with bad mortgages. Many probably should not have bought them in the first place, but it seems reasonable to believe that the companies selling the mortgages should have realized much earlier than they did that they were making a mistake. They had the expertise most consumers probably did not.
So financial misbehavior is one of the parallels between the recession and the Depression. It would probably be unfair to indict bankers and business owners for being short-sighted and selfish, since those qualities by no means apply to just them. Consider, though, that those are arguably qualities most associated with criminal behavior. The Securities and Exchange Commission was an attempt to establish guardians to protect the interests of the majority of people. Regulation had been tried before (the Sherman Anti-Trust bill, for instance), but the perennial problem, as formulated by the ancient Romans, still applied: Who will guard the guardians? When the economy gets too laissez, it is no longerfaire. It’s possible to have too much regulation, but also to have too little, and of course people will disagree about what is too much and too little. I would prefer not to see initiative stifled, but it would be nice to be able to stifle the kind that produces fraud and corruption. Since there is no group with absolutely unimpeachable integrity to enforce regulation, we can expect to suffer from too much or too little of one or the other, if not both.
Conservatives and liberals will probably never agree about the value of the New Deal. Conservatives will continue to believe the New Deal shouldn’t have gone where it did, while liberals feel that it should have gone considerably further. Hiltzik says the politicians of the New Deal believed government had a positive role to play. Some of what they did seems to say he was right, but the overall effect of Roosevelt’s administration was ambiguous. The country didn’t fully recover from the Depression until we entered World War II.
So the debate remains unsettled. The argument will probably continue a long time.