FDR’s Economic Policies FAILED. But Don’t Take My Word For It, Listen To Obama’s TOP Economic Adviser

Everyone ought to be familiar with the words of Franklin Delano Roosevelt’s Treasury Secretary:

“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises… I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot!” – Henry Morganthau, FDR’s Treasury Secretary, May 1939

And for the record, in April 1939, the unemployment rate was 20.7%.  Anybody who thinks that FDR’s policies did anything but dig us deeper into depression are morons.

But few Americans have ever heard those words from that FDR economic official.  It’s an example of the kind of thing the mainstream media – or what should more accurately be called the progressive propaganda conspiracy – is designed to prevent you from knowing.  They regard themselves as “gatekeepers” of the news, and they want to be able to decide what you get to know and what you should not know.

If you knew that FDR’s very own Treasury Secretary had openly admitted that FDR’s economic policy had failed, you would probably not want to try that path again.  And the mainstream media – which is firmly under the control of the liberal/progressive/socialist/Democrat agenda – simply doesn’t want you to come to such an accurate and informed opinion.

So it really shouldn’t surprise me very much that I was unaware of the words of “President Barack Obama’s top economic adviser,” Lawrence H. Summers, on the economic policies of FDR:

Larry Summers blasphemy: Hitler saved FDR’s ass
by Lee on July 23, 2011 21:16 pm

Larry Summers is often quotable and Charlie Rose is occasionally watchable. Put ‘em together and you get the very definition of a blind sow finding an acorn.

The whole clip is interesting, but the money quote begins a hair after the 21:30 mark when Summers says something about left wing icon FDR that will undoubtedly result in fewer dinner invitations in the Hamptons this summer:

“Never forget, never forget, and I think it’s very important for Democrats especially to remember this, that if Hitler had not come along, Franklin Roosevelt would have left office in 1941 with an unemployment rate in excess of 15 percent and an economic recovery strategy that had basically failed.”

Why next thing you know Summers will be saying that Keynesian economics don’t work.

Clip here to watch the video: CharlieRose.com

Pardon me?

Nope.  I read it right.

After eight years of miserable failure, FDR would have and should have left office as a disgrace with a disastrous unemployment rate.  But Adolf Hitler bailed him out.  And the country rallied around their president – no matter how much or how badly he had failed them.

And the mainstream media decided it was unimportant that we know that – in spite of the fact that Obama had cast himself as the economic reincarnation of FDR:

It ought to interest the American people that FDR prolonged the Great Depression by seven completely unnecessary years of miserable anguish and suffering:

FDR’s policies prolonged Depression by 7 years, UCLA economists calculate
ByMeg Sullivan
8/10/2004 12:23:12 PM

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

“President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services,” said Cole, also a UCLA professor of economics. “So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.”

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt’s policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

“High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns,” Ohanian said. “As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.”

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

Roosevelt’s role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century’s second-most influential figure.

“This is exciting and valuable research,” said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. “The prevention and cure of depressions is a central mission of macroeconomics, and if we can’t understand what happened in the 1930s, how can we be sure it won’t happen again?”

NIRA’s role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

“Historians have assumed that the policies didn’t have an impact because they were too short-lived, but the proof is in the pudding,” Ohanian said. “We show that they really did artificially inflate wages and prices.”

Even after being deemed unconstitutional, Roosevelt’s anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.

The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.

NIRA’s labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor’s bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

Don’t you think this would have been highly relevant for the American people to know in 2008 when Obama was running as FDR’s long-lost ideological twin???  I don’t know, maybe Time Magazine (the magazine that eulogized FDR as the bestest and most wonderfulest president ever ever, I noticed from the article above) could have ran this article instead of photoshopping Obama into their socialist hero.

I get so pissed off so often about how utterly dishonest the media is.

I mean, Scott McClellan wrote a book attacking President George W. Bush that I heard about for weeks and weeks in the press in 2008.  It didn’t matter how many lies and half-truths that amounted to whole lies might have been in it; it was anti-Bush; it was NEWS.

But when President Obama’s TOP ECONOMIC ADVISER basically says that Obama’s entire premise for the economy of the United States had already been a documented historical failure – which the prudent person should therefore expect to fail AGAIN – shouldn’t like SOMEBODY have reported that fact???

And now here we are, grinding our national gears and SUFFERING.  We’ve had a massive and massively failed $3.27 TRILLION “stimulus.”  We’ve had an absolutely godawful takeover of the health care system that is frankly so damaging to the economy that half of the 1,372 waivers (as of May 16) were requested by and given to the very liberal unions who had PUSHED FOR OBAMACARE IN THE FIRST PLACE.  We’ve had the absolutely disastrous Dodd-Frank financial regulations that have so stifled investment that EVEN ÜBERLIBERAL FINANCEER GEORGE SOROS said he couldn’t continue operating under such requirements.  We’ve got Obama’s packed National Labor Relations Board basically playing the role of union thug laying a beatdown on Boeing for daring to build a plant in a right-to-work state.

And these FDR-Obama Democrats say, “We’re doing all of this to help the poor.”  And it’s just a LIE.  They HURT the poor.  Over and over again, THEY HURT THE POOR.

Black people have been devastated.  Women have been devastated.  Under Obama, we’re seeing the highest poverty rate increase in fifty years. 

And the news we’re hearing right now is simply awful.

Manufacturing has tanked.  Consumer spending is the lowest since when we were seeing the panic-side of the “great recession” in October 2008.  The housing crisis is WORSE than – you guessed it – FDR’s Great Depression.  The credit rating agencies are giving the U.S. a negative outlook for the year.  China’s credit rating agency (remember who we borrow from!) just cut our rating for the second time in history – with both times occurring in Obama’s failed presidency.  Food stamp enrollment is at an all-time high, with one in six on the program.

And because we live in an age of constant media deception and propaganda, the news of Obama’s mishandling of the economy is always “unexpected.”

Here we are, déjà vu and voilà, in the worst shape since the LAST time FDR’s policies were poisoning America.  And we don’t learn because the media won’t LET us learn.  But you find out that FDR’s “progressive tax rates” that attacked the rich actually ended up hurting the poor as the rich sheltered their wealth to protect themselves and their families and the poor bore the brunt of economy and employment-killing taxation policies.

Obama is back to the same utterly failed Marxist class warfare tactics that have always failed before. In the 1990s, Democrats imposed a “luxury tax” on items such as yachts, believing that the wealthy “could afford it.” Maybe they could and maybe they couldn’t, but the FACT was that the rich STOPPED buying yachts. As in stopped completely.  As in NOBODY bought a yacht with that damn tax on it. The Democrats finally rescinded that stupid tax two years later after destroying the yacht building and yacht maintenance industries and killing over 100,000 jobs. Rich people weren’t hurt at all; ordinary people were devastated.

And now Obama wants to do the same thing with corporate jets that previous Democrats did to yachts. And they only people who will get hurt if Obama gets his way are the companies that hire people to build and maintain those jets and the workers themselves who will lose their jobs and their livelihoods. And the only thing that is stopping this rape of businesses, workers and the economy that depends on workers and businesses are Republicans – who are trying to do the right thing and make the tough decisions necessary to lead in the face of constant demagoguery.

And people wonder why this economy is struggling, and why it will CONTINUE to struggle until this FDR-clone (or clown?) is finally gone.

Tags: FDR, Great Depression, Henry Morganthau, jobs, Larry Summers, policies failed, stimulus, unemployment