The New Deal

@Elmud,

Obama is undoubtably trying to imitate the new deal- hence his vast new spending. However it definatly falls short of FDR's economic policy. For a start he should have dealt with the banks the way FDR did- close them down and go over their accounts, and reopen only the most responsible ones- now obviously that would need to take a somewhat different form today- the banks would have to be replaced to a greater extent- but the principle of reform and justice in the financial sector needs to be upheld.

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@avatar6v7,

I was thinking about the CWA work camps. FDR put about four million people to work. They made about fifteen dollars a week. Not much money but, back then, at least they could afford to eat. Considering the homeless population we have these days, a program like that wouldn't seem to be a bad idea. Probably impractical these days but, maybe a similar program could address this problem. For those who wanted to work anyway.

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@Elmud,

As a social ecologist and Marxist urban social theorist, I cannot help but think that whatever attempts at fixing the economy and society as a whole are doomed to fail. Maybe they will work as a band-aid for a period of time, but it only prolongs an inevitable face-off with the real problems--hierarchy and social class.

In all actuality, the New Deal was not a success even though many think it ended the Great Depression, but in fact that honor goes to World War II. The reason why the New Deal, and Obama's stimulus package were/will be failures are due to the fact that they do not target the underlying problem that caused the economic crises in the first place. It takes more than an injection of money into the economy and safety nets installed for people to fix problems.

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@Theaetetus,

Theaetetus wrote:

As a social ecologist and Marxist urban social theorist, I cannot help but think that whatever attempts at fixing the economy and society as a whole are doomed to fail. Maybe they will work as a band-aid for a period of time, but it only prolongs an inevitable face-off with the real problems--hierarchy and social class.

In all actuality, the New Deal was not a success even though many think it ended the Great Depression, but in fact that honor goes to World War II. The reason why the New Deal, and Obama's stimulus package were/will be failures are due to the fact that they do not target the underlying problem that caused the economic crises in the first place. It takes more than an injection of money into the economy and safety nets installed for people to fix problems.

I'll second that. The problem is this: we probably don't agree on what the underlying problems are.

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@Theaetetus,

Theaetetus wrote:

As a social ecologist and Marxist urban social theorist, I cannot help but think that whatever attempts at fixing the economy and society as a whole are doomed to fail. Maybe they will work as a band-aid for a period of time, but it only prolongs an inevitable face-off with the real problems--hierarchy and social class.

In all actuality, the New Deal was not a success even though many think it ended the Great Depression, but in fact that honor goes to World War II. The reason why the New Deal, and Obama's stimulus package were/will be failures are due to the fact that they do not target the underlying problem that caused the economic crises in the first place. It takes more than an injection of money into the economy and safety nets installed for people to fix problems.

With all due respect Theatetus, that is a pretty pessimistic overall view of things. If I may ask, what would you consider to be the solution to the economic crisis we are experiencing today?

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@Elmud,

Did Roosevelt's New Deal end the Great Depression? No; the industrial production needed to fight the Second World War was the primary factor in ending that economic crisis. But to say that the New Deal was a "failure" is far too extreme. The New Deal put millions of people to work, which is certainly a good thing considering that those people could, as a result of their employment, afford food. Allowing people the ability to earn enough money to sustain themselves is hardly a failure.

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@Didymos Thomas,

Elmud wrote:

With all due respect Theatetus, that is a pretty pessimistic overall view of things. If I may ask, what would you consider to be the solution to the economic crisis we are experiencing today?

To start with, the banks need to be nationalize (at least temporarily), and the country needs national health care. The military budget should be slashed, and the troops stationed throughout much of the world need to be brought home. The government should also work on investing in infrastructure that pushes society into the 21st century. All government buildings from schools to courthouses should be made energy efficient (this will more than pay for itself in the future), and the government should invest in people that have good ideas to solve the current ecological crisis. Anyway, that would make a nice start...

Something also need to be done to reduce the injustice cause by social class and social hierarchy. This is really the fundamental cause of the current crisis, and without something that balances society, many solutions will only be band-aids that put off the inevitable.

Throwing trillions of dollars at Wall Street and banks is not going to solve anything without fundamentally changing what caused the crisis in the first place. Spending trillions on defense is not going to help either.

Didymos Thomas wrote:

Did Roosevelt's New Deal end the Great Depression? No; the industrial production needed to fight the Second World War was the primary factor in ending that economic crisis. But to say that the New Deal was a "failure" is far too extreme. The New Deal put millions of people to work, which is certainly a good thing considering that those people could, as a result of their employment, afford food. Allowing people the ability to earn enough money to sustain themselves is hardly a failure.

You are right. It was not a failure, but due to a decrease in government funding later in the 1930s it was not nearly the success it could have been. Representatives are notorious for not seeing things out until the end. They tend to call things a success to quickly and reduce funding to quickly as a result.

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@Didymos Thomas,

Didymos Thomas wrote:

Did Roosevelt's New Deal end the Great Depression? No; the industrial production needed to fight the Second World War was the primary factor in ending that economic crisis. But to say that the New Deal was a "failure" is far too extreme. The New Deal put millions of people to work, which is certainly a good thing considering that those people could, as a result of their employment, afford food. Allowing people the ability to earn enough money to sustain themselves is hardly a failure.

Yeah, he managed to lower the unemployment rate by a few percent to 19%, and all he had to do was legitimize the the wholesale destruction of a sustainable economic model.

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@Mr Fight the Power,

Mr. Fight the Power wrote:

Yeah, he managed to lower the unemployment rate by a few percent to 19%, and all he had to do was legitimize the the wholesale destruction of a sustainable economic model.

I don't know if the model of economics before the Great Depression was truly sustainable. It seems to have promoted too much of an unbalanced accumulation of wealth. This seems to lead to serious economic downturns by undermining the very system required for capitalism to operate by undermining the working classes ability to consume if wealth is not dispersed through the population.

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@Theaetetus,

Theatetus,

In general I'd agree with most of what you would propose, but the devil is in the details. I've always liked TR (yes, I know he had flaws), but gained even more respect for him when I learned that he was more about balance than his reputation suggests. He feared not only the greed of the rich but the jealousy of the poor. Class warfare can cut both ways.

So, suppose Obama hadn't started throwing around trillions of dollars. Suppose he had said: Slow down. Let's take a few years and study this and once we have absolute proof of what will work, then we'll take action. All the banks that are failing, all the people that are losing jobs, you'll just have to wait.

He wouldn't be in office long enough to do anything.

Whether or not what he did has a positive effect, democratic systems like ours create a political environment that requires the appearance of quick and decisive action. That's been known since the Founding Fathers wrote the Constitution, and they tried to add checks to slow the process down to prevent mob action. Citizens have to take as much blame for creating that environment as representatives do in responding to it.

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@Theaetetus,

Mr. Fight the Power wrote:

Yeah, he managed to lower the unemployment rate by a few percent to 19%, and all he had to do was legitimize the the wholesale destruction of a sustainable economic model.

As Theatetus says, the "model" he "destroyed" was not sustainable in the first place. Had it been sustainable the economic collapse would not have occurred in the first place. The crash of '29 was not the first economic crisis; recall the late 1800s.

Given the fact that he ended an economic model that was not only unsustainable, but detrimental to a whole class of citizens, Roosevelt's efforts were already legitimate. Were his policies perfect? No. Going in the right direction? Maybe, maybe not, but it's quite clear that what he was overturning was far from legitimate. Roosevelt did not end capitalism - the US has never had a capitalist economy.

Lowering the unemployment rate by a few percentage points is better than allowing the unemployment rate to grow any further.

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@Didymos Thomas,

Didymos Thomas wrote:

As Theatetus says, the "model" he "destroyed" was not sustainable in the first place. Had it been sustainable the economic collapse would not have occurred in the first place. The crash of '29 was not the first economic crisis; recall the late 1800s.

Given the fact that he ended an economic model that was not only unsustainable, but detrimental to a whole class of citizens, Roosevelt's efforts were already legitimate. Were his policies perfect? No. Going in the right direction? Maybe, maybe not, but it's quite clear that what he was overturning was far from legitimate. Roosevelt did not end capitalism - the US has never had a capitalist economy.

Lowering the unemployment rate by a few percentage points is better than allowing the unemployment rate to grow any further.

If you want a good book on the New Deal, try "Freedom from Fear" by David Kennedy. He talks about how FDR and the "New Dealers" feared that the New Deal was not sustainable. There was a great pessimism that democracy had spent itself and was in decline. Very interesting.

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@Resha Caner,

I'll have to check out that book. Thanks for the suggestion.

Now, I do not think the New Deal was sustainable. But I'm also not sure that sustainability was the point of the New Deal. Was it supposed to be a sustainable model, or a strategy for bringing the nation out of economic crisis? It is one thing for the New Deal to be a permanent, sustainable model and another thing for the New Deal to be a relatively short term plan for improving the living conditions of Americans and helping the economy to recover.

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@Didymos Thomas,

What I learned from Kennedy is that I had too narrow a view of what FDR was trying to accomplish. Backing up (and oversimplifying), Progressivism came out of the Populist movement with people like William Jennings Bryan. Then TR appropriated Progressivism and made it a Republican cause. Wilson took it back for the Democrats, but the ship foundered, and people got tired of reform agendas (mainly due to WWI). Hence, the roaring 20's.

What FDR was trying to do was rehabilitate Progressivism. So he meant the "New Deal" to be a grand new progressive agenda, not just an economic recovery package. In that respect, he wanted to create something that endured. As far as economic recovery, he only saw that as a temporary political opportunity for kicking out Republicans and putting Democrats back in charge. He failed with respect to creating the legacy he had envisioned. His "temporary" measures are what people associate with the New Deal. They consider them a success, and try to extend what he meant to address a single issue, to long term economic planning.

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@Didymos Thomas,

Didymos Thomas wrote:

As Theatetus says, the "model" he "destroyed" was not sustainable in the first place. Had it been sustainable the economic collapse would not have occurred in the first place. The crash of '29 was not the first economic crisis; recall the late 1800s.

Given the fact that he ended an economic model that was not only unsustainable, but detrimental to a whole class of citizens, Roosevelt's efforts were already legitimate. Were his policies perfect? No. Going in the right direction? Maybe, maybe not, but it's quite clear that what he was overturning was far from legitimate. Roosevelt did not end capitalism - the US has never had a capitalist economy.

Lowering the unemployment rate by a few percentage points is better than allowing the unemployment rate to grow any further.

I mean that he neglected the ability of the market to correct itself. The early 20s were much like our present decade, with the money supply growing by 60% in less than a decade.

Roosevelt himself recognized the reckless spending and unsustainability of the trends of the economy. From Lawrence W. Reed: He accused the president of "reckless and extravagant" spending, of thinking "that we ought to center control of everything in Washington as rapidly as possible," and of presiding over "the greatest spending administration in peacetime in all of history." Roosevelt's running mate, John Nance Garner, charged that Hoover was "leading the country down the path of socialism."

Instead of allowing the market to normalize and set a precedent for sustainable economic management (or lack of management), Roosevelt went wild with his social programs masking them as economic recoveries.

This is exactly what is happening again today, and this sort of pattern is disastrous. We can likely expect war and I would not be surprised if the US has lost its status as the foremost power in the world within my lifetime; relegated behind the European Union, China, and possibly India and Russia.

The state ratchets. The successful state creates problems in order to secure its own future. If this doesn't last a decade and result in the end of "pax americana", expect the catastrophe further down the road.

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@Elmud,

In times of a growing surplus of labor with no work something needs to be done to slow the rise of unemployment. Otherwise, what ends up happening is that capitalism undermines itself, because the necessary consumers to keep the economy chugging along do not have the necessary funds at their disposal. Our current problem though is that the federal government under the Bush administration undermine the ability to pay for all of their wasteful government programs. So now at a time when there need to be public investment in a crumbling infrastructure, there are no funds available because they are wasted on ridiculous defense projects and the growing police state.

That is the one thing that the New Deal truly succeeded at. It was a good investment in the public infrastructure. The market will only correct itself as long as there is not a surplus of labor.

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@Theaetetus,

Theaetetus wrote:

That is the one thing that the New Deal truly succeeded at. It was a good investment in the public infrastructure. The market will only correct itself as long as there is not a surplus of labor.

In an environment of rampant negativity, on tv, radio, forums and in most casual conversations about the condition of things, it is good to see a positive statement every now and then. Positive thinking and positive actions will be the determining factor on how things will correct themselves. Negative thinking will only compound our problems. Thanks T.

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@Resha Caner,

I wanted To post this in an effort to show the ambitious nature of Franklin D. Roosevelt's desire to alleviate the distress of his country during the great depression. These are the programs he instilled to provide some sense of security and hope for those who had lost both. These are some of the programs of the New Deal.

The CCC.- Civilian conservation Corps.
The CCC. provided many jobs for the unemployed during the Great Depression.It was responsible for building many public works and created structures and trails in parks across the nation.

The CWA. -Civil Works Administration.
The CWA temporarily provided jobs for the unemployed and ended in 1934 because it was considered cost prohibitive. Regardless of that, it did provide many jobs for those who had none. Even just for a short time.

The FHA.-Federal housing Administration.
The FHA was a government agency created to combat the housing crisis of the Great Depression. The large number of unemployed workers combined with the banking crisis created a situation in which banks recalled loans. the FHA was designed to regulate mortgages and housing conditions.

The FSA.-Federal Security Agency.
The FSA , established in 1939 had the responsibility for several important government entities, until it was abolished in 1953. It administered social security, federal education funding, and food and drug safety.

The HOLC.-Home Owners Loan Corporation.
The HOLC was created in 1933 to assist in the refinancing of homes. The housing crisis created a great many foreclosures and Roosevelt hoped this new agency would stem the tide. In fact, between 1933-1935, one million people recieved long term loans through the agency that saved their homes from foreclosure.

The NRA.-National Recovery Act.
The NRA was designed to bring the interests of working class Americans and business together. Through hearings and government intervention the "hope" was to balance the needs of all involved in the economy. However, the NRA was declared unconstitutional in the landmark Supreme Court case Schechter Poultry vs. The US.The Supreme Court ruled that the NRA violated the separation of powers.

The PWA.-Public Works Administration.
The PWA was a program created to provide economic stimulus and jobs during the Great Depression. The PWA was designed to create public works and continued until the US ramped up wartime production for WW2. It ended in 1941.

The SSA.-Social Security Act.
The SSA was designed to combet the widespread poverty among senior citizens. The government program provided income to retired wage earners. The program has become one of the most popular government programs and is funded by current wage earners and their employers.

The TVA.-Tennessee Valley Authority.
The TVA was established in 1933 to develop the economy in the Tennessee Valley region, which had been hit extremely hard by the Great Depression. The TVA was and is a federally owned corporation that works in this region to this day. It is the largest public provider of electricty in the United States.

The Wpa. -Works Progress Administration.
The WPA was created in 1935. As the largest New Deal agency, the WPA impacted millions of Americans. It provided Jobs across the nation. Because of it, numerous roads, buildings and other projects were completed. It was renamed the Works Projects Administration in 1939. It officially ended in 1943.
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So, what effect did the New Deal have on the attitude of the people who were suffering from the Great Depression? It gave them hope. It gave them once again, a sense of security and also a faith in the compassionate ambitions of their government to solve their problems. A failure? Not likely. A lot can be learned from this type of reaction to crisis. JMO. Thanks.

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@Mr Fight the Power,

Mr. Fight the Power wrote:

Yeah, he managed to lower the unemployment rate by a few percent to 19%, and all he had to do was legitimize the the wholesale destruction of a sustainable economic model.

Lowering the unemployment rate was not so much the purpose, it was to stop it from continuing to rise. Just because it was only lowered the unemployment rate by a few percentage points does not mean that it wasn't effective. Reversing the trend of rising unemployment in itself was a major achievement at the time. The fact that it lowered unemployment was only a testament to its overall effectiveness.

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The New Deal

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