The New Deal and Prospects for the American Way

April 12, 2011

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….

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Herbert Hoover and America’s Liberal Legacy

April 5, 2011

“We’d like to thank you, Herbert Hoover…You made us what we are today.” – from the Broadway musical Annie (1977)

For at least the past century, a broadly accepted ideal for American society has been equality of opportunity combined with the rewarding of individual initiative and talent. From small-government conservative to radical leftist, few people anywhere on the political spectrum would deny subscribing to some version of this platitude. This may suggest that there still exists an enduring American ideal. On the other hand, it may mean that the belief itself has come to lack substantial content, even if it does represent a distinctly American way of saying things.

President Herbert Hoover (1874-1964) was a tireless advocate of and firm believer in this ideal, and for him it had a concrete and substantive meaning. This is made very clear in Albert Romasco’s The Poverty of Abundance: Hoover, the Nation, the Depression, an older history that I have been reading. Well before Hoover’s assumption of the presidency, and for the remaining decades of his long life following his political fall, he defended his vision of the “American Way.” His world travels as a mining engineer had convinced him that America’s dramatic economic and cultural progress were the consequence of her unique social system. In one 1928 campaign speech, he described the virtues of this system as follows:

In the American system, through free and universal education, we train the runners, we strive to give to them an equal start, our government is the umpire of its fairness. The winner is he who shows the most conscientious training, the greatest ability, the strongest character. Socialism, or its violent brother, Bolshevism, would compel all the runners to end the race equally; it would hold the swiftest to the speed of the most backward. Anarchy would provide neither training nor umpire. Despotism or class government picks those who run and also those who win.

Nowadays a conservative might question the massive governmental apparatus that has been erected to secure that “free and universal” education, while a liberal might feel that Hoover was too rash in his blanket condemnation of leftwing movements; but both would broadly agree with Hoover in their desire for some form of the American system he describes. What was different in Hoover’s time is that opposition to governmental management of or interference with business was not a matter of lip service, but a manifestation of beliefs held strongly by a majority of leaders in government and business alike.

With the onset of the Great Depression, a severe economic crisis that built up during the 1920s, exploded with the stock market crash of 1929, and persisted until World War II, Hoover’s beliefs were put to the sternest test, and America was changed forever by the creation of a governmental regime that carried out public spending and manipulation of the economy on a massive scale. Not an economist, I am unable to give a verdict on Hoover’s policies, though most economists seem to think that a much more expansionary monetary policy should have been adopted. But despite Hoover’s association with laissez-faire economics, he did believe that the federal government had an essential role to play in directing the response to the depression; and by 1932 he was approving large-scale relief measures like the establishment of the Reconstruction Finance Corporation, with a budget of $1.5 billion for public works. Interestingly, he is treated more kindly in the liberal college-level survey of American history, The Unfinished Nation, by Alan Brinkley, who notes deep structural factors leading to the depression and shows Hoover in a neutral light, then by the authors of the (conventionally) conservative A Patriot’s History of the United States, Larry Schweikart and Michael Allen, who excoriate him for his “activist policies” that they believe “deepened and prolonged the business downturn.”

That historians on the American right should so denounce a man who in a sense was the last of our presidents to make a genuine stand against government expansion does suggest that there was something fundamentally liberal about his approach. And in fact a broader view of his presidency in conjunction with that of his successor, Franklin Roosevelt, suggests a real, if unintended, continuity between the two.

Hoover passionately wished to check the growth of the federal government:

The true growth of the Nation is the growth of character in its citizens. The spread of government destroys initiative and thus destroys character. Character is made in the community as well as in the individual by assuming responsibilities, not by escape from them. (2)

Yet far from being passive about the economic disaster, Hoover tackled it with vigor, not through direct wielding of governmental power, but indirectly, applying the authority and prestige of the federal government to encourage and coordinate “voluntaryism.” This meant the mobilization of existing, voluntary organizations of businesses, farmers, banks, and other economic actors to act in concert to keep up production levels, stabilize employment, and expand credit, so as to restore public confidence in the economy. Hoover also approved a number of governmental programs, forerunners of the New Deal, but generally balked at funding them on a large scale, believing in the need for a balanced budget. As these measures failed to produce the hoped-for results, Hoover’s popularity plummeted, making his electoral loss to Roosevelt a foregone conclusion. This is the outline of Romasco’s narrative.

Other things equal, I would certainly like to live in an America with a vastly downsized government, and from that perspective, Hoover’s America, whatever its problems, seems like paradise of liberty, and Hoover himself a wonder and a miracle. What would it be like to actually have politicians who fought – and sacrificed their careers – to limit their own bailiwick? However, a survey of the Depression years also leaves a strong impression of inevitability – like it or not, strong, unified action was believed to be necessary, and there was no entity besides the federal government capable of directing such action. Theoretical objections to an expanded government role can seem beside the point, and certainly did to many Americans in the 1930s.

But also, we should note that even if Hoover might today be considered well to the right of Ronald Reagan – or at least a more principled opponent of Big Government – there was an underlying logic to his political approach that was fundamentally not conservative, but liberal. This can be seen in Hoover’s use of such slogans as “equal opportunity for all,” which a true, Burkean conservative would regard with suspicion. Romasco’s description of Hoover’s political philosophy shows it to be the standard early 20th century American Progressivism that seems to have gripped most of the society during its heyday. The spokesmen for Progressivism, like Hoover or Theodore Roosevelt, were conservative in their instincts, but their political ideals strike me – aided by the hindsight of our post-1965 disaster – as showing a kind of hubris and overconfidence that I believe has been our national weakness, encouraged by the very splendor of our successes.

An important part of Hoover’s assessment of the American character was based on the fact of her phenomenal leap ahead of the European nations as the world economic superpower. This may have been reasonable as far as it went, but it seems to have led to mistaken ways of thinking, one of which was an exaggeration of the differences between European and American civilizations, and the presumption that American success had been due to American virtue and superior ways of thinking, rather than to a more complicated mixture of historical factors.

In contemporary Europe, Hoover claimed, the dominant ideas were the ideas of old: the class struggle between capital and labor, the practice of viewing and treating labor as a commodity, and the notion that the mass of laborers was ever destined to wallow helplessly near a level of bare subsistence. There the conception of “inevitable poverty” still commanded a general adherence. Europe provided a model of pitfalls to be avoided. (Romasco, p. 12)

Another error was to focus on the economic at the expense of the spiritual and cultural. By doing this, Hoover and the many men who thought like him may have been setting the stage for large-scale governmental control over the economy: if the essence of our way of life was rapid economic progress, than the need to keep that progress in motion would eventually override fears of the corrupting influence of government power.

And this tendency was reinforced by the American “ideal and practice of equal opportunity” – a slogan that later was used to justify limitless governmental coercion and transfer of wealth. Hoover himself started his presidency declaring that America was on the verge of wiping out poverty forever: the idea was not originated by Lyndon Johnson!

None of this is to deny the soundness of much of Hoover’s approach (I speak of his understanding of American culture; not of his abilities as an economist or politician): he did not see the American Way as an “ism” unconnected to the actual people who practiced it, but as “an expression of the spirit and environment of our people.” Traditionalists and conservatives can admire him as a man who fought to preserve what he saw to be the essential qualities of his nation, but they should be unsparing questioners of the Progressive views which did so much to shape the American 20th century and which still dominate our thought about so many matters.

Notes

1. Albert U. Romasco, The Poverty of Abundance: Hoover, the Nation, the Depression, New York: Oxford University Press, 1965, p. 11.

2. Romasco, p. 17.

3. Romasco, p. 13.