Many of my online friends describe the American economy today as built upon fake money and empty credit, careening towards a disaster the likes of which we have never seen. I take their assessment very seriously, mainly because it seems obvious to me that we are hollowing out our productive capacities with a flood of unskilled immigrants, the transfer of much of our manufacturing to China and elsewhere, and a huge growth in government spending backed by unsound credit. Not having much to add to the theoretical discussion of such matters, though, I here think about the Great Depression more as a cultural event, without assuming a priori that certain liberal policies aimed at alleviating the situation had no reasonable justification.
I continued my reading on the Depression years with Albert Romasco’s The Politics of Recovery: Roosevelt’s New Deal (New York: Oxford University Press, 1983), which forms a sort of sequel to Romasco’s book on Hoover, The Poverty of Abundance, discussed here last week. The Politics of Recovery, though, is a more difficult read, lacking the drama provided in the earlier work by Hoover’s determined, and tragic, defense of the “American Way.” Hoover’s ideals were “conservative” in the modern sense in that he understood American civilization to be founded on a system of free enterprise that rewarded productive achievement, marked by minimal governmental interference or relief policies. But his larger view was a liberal one which gave a central position to “equal opportunity,” provided by universal public education. Hoover was also liberal in seeing a strong Federal role in battling the depression, although he hoped this role would be mainly limited to helping the private sector solve the problems by itself. Far from being “inactive” in his response to the depression, Hoover fought long and hard to resist the clamor for massive federal intervention in the economy.
With Roosevelt, no clear ideology, either moral or economic, seems to have been at work. Romasco presents a bewildering array of sectors, interest groups, and experts who pressured the President and Congress to forward their various agendas; and a bewildering set of legislation debated over and passed under Roosevelt’s political leadership, the contents of which often involved contradictory economic aims. Roughly at work were two opposing approaches: “orthodox internationalism,” whose advocates called for currency stabilization, a balanced budget, and the removal of barriers to international trade (primarily with Europe), and “economic nationalism,” which called for America to get its own economy in order first, through such devices as protective tariffs and inflationary policies particularly intended to raise the prices of commodities produced by farmers – one of the groups whose displeasure FDR feared the most. One senses an America already heterogeneous, divided, and made politically unwieldy by its size.
Some of the details of the narrative are obscure to me, but Romasco’s basic conclusion is that the New Deal is best understood not as a coherent economic program, but as a political one. It was not an economic success, nor was it based on a consistent approach with predicted results that could be tested. Indeed, Romasco seems to feel that one of FDR’s biggest problems was in his acquiescence to economic nationalism, which he perhaps thinks was the less sensible position, as well as a factor in the dangerous buildup to war during the 1930s.
What the New Deal was, of course, was a massive expansion of the size and power of the federal government. And perhaps this was the true “ideology” and the main achievement of FDR. My grandparents, lifelong East coast liberals, adored him. Romasco is ambivalent about this legacy, accepting the general idea that “something needed to be done” and that such expansion was probably inevitable, but noting the destruction of personal autonomy and the negative effect of the creation of a patron-client relationship between government and the subjects of government largesse. He writes:
Under the acceptable symbol of an economic recovery program, Roosevelt concocted a splendid mélange of public gifts which were then distributed to those groups with the political leadership and the organized constituencies capable of making effective demands upon the government. The first beneficiaries of the New Deal’s cornucopia included bankers of all sorts, commercial farmers of staple crops, large businessmen, home owners, states, and cities. Others who benefited less from this first outpouring, such as industrial workers and the unemployed, or gained nothing, like the overlooked elderly and the tenant farmers, sharecroppers, and migrants, were later added to the public list of recipients in what is generally termed the Second New Deal of 1935 and thereafter. What is evident in this roll call of those who received public assistance is that it proceeded by a rough order of political preference. It exposes, therefore, Roosevelt’s priorities as well as his perception of relative political visibility. (p. 244)
Romasco certainly shows us an America going through profound changes. There was strong, principled opposition to the growth in the federal government, but there was a stronger desire for forces of authority to step in and produce concrete results, or at least to produce very concrete evidence that action was being taken. Business entities were unable to effectively organize themselves as Hoover tried to have them do, and so government stepped in to fill the vacuum. And as the government became more actively involved in providing relief for various economic woes, it seems to me that people came to see this as normal, and even to find it reassuring. Romasco writes:
[I]n the process of accepting and dealing with pressure group politics, the Roosevelt administration provided a remarkably ready access to the federal government to all who possessed the will and organization to seek assistance. This brought Washington close to the people and it familiarized the national government to its citizens as the last resort of appeal whenever all else failed. (p. 246)
I would love as much as anyone to downsize big government, but calling for “small government” or “balanced budgets” alone – which is about the most that conservatives and Tea Party activists are able to manage today – is not a sufficient response to the our problems as they stand today. The large role of government in directing many aspects of our national life has been long accepted by the majority of the American people. And why should they not accept it? Government does, after all, provide many services that most people are perfectly happy with. The public/private distinction is not always sufficient for judging the merits of an activity or institution – for example, a school. That judgment rests on more basic things, like its moral soundness or the intelligence with which it is managed.
Then again, phenomena like the Tea Party movement are not really just about balanced budgets. Looming in the background is the growing realization by a certain segment of the white population that the government no longer represents their interests. To me, this is the aspect of the system that seems unsustainable – far more important than the unsoundness of our financial system, although I suspect that the two types of unsoundness are inseparable. I hope that when the systematic failures occur, we as a people will take them as opportunities to restore moral soundness to our institutions. If this sounds like something Hoover would say, so be it….