Rick Wagner Column November 20, 2008
Reagan, not FDR, offers best model for fixing the economy
Some in the Obama camp are looking at the policies of FDR to see what might be done about our economic problems.
That’s fantastic news because the results of a four-year study at UCLA calculated that FDR’s policies prolonged the Great Depression by seven years.
Economists believe that had it not been for Roosevelt’s interventionist policies, the Depression would’ve ended in 1936 as opposed to 1943.
It isn’t surprising few people know much about it, as there is a portion of the electorate that thinks Franklin Roosevelt is an intersection in Chicago.
The UCLA economists found the introduction of the National Industrial Recovery Act was the first step toward prolonging and deepening the Depression. Roosevelt and his advisers had the interesting idea that if you artificially inflated wages and prices through government action, it would somehow jump-start the economy.
Much like the theory that firing a revolver repeatedly into the engine of a car will make it start.
This act only lasted a couple of years before the Supreme Court declared it unconstitutional, but President Roosevelt had a unique way of meeting this challenge.
When a court stymies most people, they think of replacing the judge, but Roosevelt was smarter. He threatened to add judges.
That’s because the number of judges on the Supreme Court is not stated in the Constitution and, if the president couldn’t get his way with nine, he would simply move to expand the court to 15. He also had the Congress to get it done.
Coincidentally, after this threat, the Supreme Court then began to find that similar legislation, such as that creating the WPA and the CCC —which were engaged in the same sort of overreaching the court
found so troubling in the past — were now miraculously OK.
If the Roosevelt administration started these ill-guided efforts in 1933 and you add seven years, that puts us at 1940. Something was just getting started about then. That’s right, World War II.
We can only hope that’s not the sort of stimulus the Obama administration is hoping for to pull us out of this economic downturn.
While on the topic of Kamikaze economics, we might note that this was the time when many of the schemes from government we still can’t pay for were hatched.
For instance, spreading the wealth didn’t originate with Joe the Plumber. It was a campaign cornerstone for Huey P. Long, Governor of Louisiana from 1928 to 1932.
Huey was a radical populist with a good ear for buying votes and called his program, “Share Our Wealth,” with the slogan, “Every Man a King.”
He thought the government could create these kings by guaranteeing everyone income that would provide them with a home, a radio and an automobile.
He also called for limiting how much money a person could have, how much they could transfer to their children and how much they could earn in a year.
In response, Roosevelt created the Social Security Administration, cleverly choosing a retirement age of 65. The cagey thing about this was that, even by 1940, only about half the citizens alive could expect to reach the age 65.
There still was some safety in the numbers game since, even by 1950, there were 16 people working for every retiree in the program.
Today that number is 3.3 workers for every retiree.
With this trend, if you’re a worker in your 30s, you might expect a future where you just take your paycheck to the Social Security Administration and they return you a few bucks for gas money and some crackers to get by on until you get paid again.
The Obama administration might want to spend a little more time studying Ronald Reagan and his fix of the Carter fiasco. His policies actually improved the economy.
Rick Wagner offers more thoughts on politics at his blog, The War on Wrong, which can be reached through the blogs entry at GJSentinel.com.