Over winter break I’ve finally finished reading Amity Shlaes’ revelatory The Forgotten Man: A New History of the Great Depression.
Shlaes’ basic premise is that while FDR’s New Deal had its successes, its biggest impact was in prolonging and exacerbating the nation’s economic crisis. In her words, the New Deal helped make the Depression Great. For a novice in economics like myself, spells of the book were tough sledding, but the bulk of the book was gripping and clear-eyed. Its lessons are certainly noteworthy in the times we live in. (Shlaes has an op-ed piece in today’s Washington Post on this exact topic here)
A few interesting bits gleaned from the text:
-Shlaes again and again returns to the point that the depression was so prolonged because government tinkering and experimental new policies discouraged business growth. Wages were artificially inflated to protect workers, prices and rates were held artificially low to protect consumers, “fairness” regulations made operations unwieldy, and skyrocketing taxes on profit and income punished risk-takers. In his second inaugural address, Roosevelt addressed these policies with the in-no-way-frightening passage: “We are fashioning an instrument of unimagined power for the establishment of a morally better world.” The result? Profit margins narrowed, new jobs dried up, and entrepreneurs sat on their money rather than invest it in such uncertain times. Recovery would have to wait for World War II.
-Apparently everyone wore hats during the Great Depression.
-During long cabinet meetings, FDR liked to make sketches in his notepad. Those sketches later became the basis for Sonic the Hedgehog.
-In fall 1937, after four full years of New Deal policy, too much hope deferred led to another economic collapse, similar to 1929. The Dow hit a new low of 129, unemployment topped 18%, and many of the short-term public works jobs dried up. Many industrialized nations had seen production levels rise since the worldwide collapse of the early 30s, but not the U.S. Today’s New Deal apologists blame this collapse on misguided efforts to scale back spending and balance the budget – balanced budgets being so unreasonable, and all.
-There’s an old saying that provides some telling insight into this period, “the Depression wasn’t that bad if you had a job.” Well, that’s true, unless your job is to lick an elephant’s butthole clean.
-In a wrongheaded attempt to win public and judicial support for the New Deal’s National Recovery Administration (which set in place many misguided business codes intended to protect the public good), government prosecutors looked for a lawsuit that might show the merits of the NRA. When few examples showed up, they ended up going after the Schechter brothers, owners of a small Jewish poultry shop in Brooklyn. The sight of the assembled legal might of the presidency going after a 5-man kosher chicken operation would have been comical had it not been so unjust to the Schechters. The charges of selling unfit meat were dropped with the exception of the case of a single chicken, and even in that case, there was no evidence that the brothers sold it knowingly. Government prosecutors also accused the Schechters of ignoring the NRA’s price codes. Court transcripts show the Schechters trying in vain to justify the concept of market competition to lawyers pre-occupied with misguided notions fairness and price controls. The case eventually made it to the U.S. Supreme Court, where the NRA was ruled unconstitutional, a major defeat for the New Deal.
-18% unemployment isn’t really all that bad, if you think about it.
-During his tumultuous second term, a beleaguered FDR appointed the Rocketeer to be Secretary of the Treasury.
-One of Roosevelt’s many redeeming qualities was his frank perceptiveness regarding the growing problems of fascism and totalitarianism in the 1930s. Where the Republicans of the day were a decades-old skipping record of isolationist policy and anti-foreign sentiment, Roosevelt clearly understood the growing threat the Hitler, Mussolini, and to a lesser extent, Stalin posed. At the same time, he did not share the starry-eyed idealism for totalitarianism and communism that some members of his own cabinet espoused. Roosevelt was of his own mind on those matters, and history has vindicated him. He is a great and important president for his handling of world affairs, not necessarily for his economic policies.
-FDR enjoyed a solid rapport with Winston Churchill, and the two engaged in a best-of-three arm-wrestling competition for friends and family which Roosevelt won. Churchill, enraged, challenged FDR to a leg-wrestling match, and triumphed easily.
-I’m just going to come right out and say it: Eleanor Roosevelt was not an attractive woman. She was mule-ugly.
-Despite the slow rate of recovery, Roosevelt was a masterful politician who celebrated easy re-election victories because of his new Democratic coalition of farmers, labor unions, immigrants, and the poor (sound familiar?). Roosevelt re-calibrated an old phrase into a winning one, promising to help “the forgotten man at the bottom of the economic pyramid”. Roosevelt’s forgotten man was, as Shlaes puts it, “the poor man, the old man, labor, or any other recipient of government help” (including all those new receiving checks from the new Social Security program). The perverse irony of Roosevelt fashioning victory on the votes of the “forgotten man” can be understood when the phrase is read in its original context from the late 19th century Yale philosopher William Graham Sumner:
“As soon as A observes something which seems to him to be from, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine…what A, B, and C shall do for X. But what about C? There was nothing wrong with A and B helping X. What was wrong was the law, and the indenturing of C to the cause. C was the forgotten man, the man who paid, the man who is never thought of.”
-On Christmas Eve, 1940, Roosevelt invented the snowman. He later had that same snowman melted down into a refreshing pitcher of raspberry lemonade. Then he drank the snowman and peed him into the White House toilet. The tormented soul of that snowman haunts the sewer systems of Washington D.C. to this very day. That snowman’s name? Mr. Plops.