Sunday, May 5, 2013

More on the Disaster that was the FDR Presidency


More on the Disaster that was the FDR Presidency

A fair assessment of FDR’s economic policies is relevant today. FDR’s policies are the model for Obamanomics. The result will inevitably be the same. The economic performance numbers being reported by the U.S. government are a lie. True unemployment in this country is now worse than it was in the Great Depression:



The unemployment rate reported by the U.S. Government Bureau of Labor Statistics on Friday, May 3, 2013 was 7.5%, the BLS “U-3” rate.

This number seriously misrepresents the unemployment situation in this country because it excludes discouraged individuals who have stopped looking for work and those whose unemployment benefits have expired.

The best measure of unemployment currently reported by the BLS is the BLS “U-6” rate. This rate is currently 13.9%. It is essentially unchanged from a year ago.

The following chart of the U-6 Unemployment Rate from 1994 to 2013 reveals that U-6 rose sharply in 2008-2009, and has recovered only slightly from its peak in 2010. Moreover the U-6 unemployment rate we are now seeing is significantly higher than at any time in the last twenty years.

I wonder why the U-6 unemployment rate began rising so sharply in mid-2008?

Could it have anything to do with expectations in the economy of the introduction of Socialist economic policies with a new Democratic administration in 2009?



The unemployment rate among minorities and youth, including recent college graduates is well over 20% .

The underemployment rate, particularly among college graduates of all ages, is also in severe depression status.

In other words, the economic numbers that sent the stock market soaring on Friday are essentially a fraud, intended to sedate the people so they do not realize that Obamanomics is not working (except in the Washington D.C. metropolitan area where massive government spending is causing unprecedented housing inflation).  

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Customer Reviews


Jim Powell, Author

“Powell examines the long-term results of the New Deal and persuasively argues that they crippled the U.S. economy… The economic results of FDR's programs were devastating... Powell reveals how all of FDR's programs are based upon the fatally flawed premises of Keynesian economics”

95 of 122 people found the following review helpful

5.0 out of 5 starsValuable Resource on the Great Depression, May 12, 2008

By Doug

This review is from: FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression (Paperback)

A common historical misconception is that FDR's New Deal rescued the United States from the Great Depression. However, Cato Institute Historian Jim Powell argues that the New Deal exacerbated and elongated the Great Depression. With impressive attention to detail, Powell examines the long-term results of the New Deal and persuasively argues that they crippled the U.S. economy.

In this detailed book, you will learn about the numerous programs the FDR administration brought about, including the following:

* Programs that inundated private businesses with unprecedented waves of regulations, such as the Agricultural Adjustment Administration, the National Recovery Administration and the Securities and Exchange Commission.

* Programs that redistributed wealth from producers to consumers, such as the Federal Emergency Relief Act and the Reconstruction Finance Corporation.

* Programs that nationalized industries, centrally planned infrastructure or created make-work projects to increase employment such as the Civilian Conservation Corps, the Public Works Administration and the Tennessee Valley Authority. Powell argues that these programs typically led to poorly planned infrastructure that was more expensive than what could have been acquired in a free market.

The economic results of FDR's programs were devastating. For example, consider the Agricultural Adjustment Administration (AAA). The price and production controls of the AAA led to perverse practices such as millions of tons of domestic oat and corn being burned while the U.S. simultaneously imported oat and corn, millions of peaches being left to rot and millions of "excess" pigs being needlessly slaughtered while lard was being imported from overseas. The extent of economic regulation under the FDR Administration reached such absurd levels, there was even a government board organized solely to control the production and pricing of milk!

This book will also detail the oppressive controls on income and wages under the FDR administration. Under FDR, scores of private sector jobs were eliminated through minimum wage laws, personal income taxes hit 79% for certain brackets and how government spending during FDR's first two terms exceeded the total amount of Federal spending in the prior history of the United States.

Powell reveals how all of FDR's programs are based upon the fatally flawed premises of Keynesian economics, including the following:

* That government spending is always good for the economy, even if it is engaging in pointless ventures such as building pyramids.
* War is good for the economy.
* Gold (as a standard of currency) is a "barbarous relic" that prevents economic growth.
* A capitalist economy will inevitably slow to a halt without periodic bolsters from centralized planning.
* Consumption (i.e., the destruction of wealth) not production, drives the economy. Thus, government should redistribute wealth from those who would invest it to those who would spend it.

From reading this book, you will also learn that many of FDR's earliest programs, such as the AAA and the National Recovery Act, were originally ruled as unconstitutional by the U.S. Supreme Court. Unfortunately FDR stayed in office long enough to appoint 7 of the 9 sitting supreme court justices, which eventually opened the floodgates for New Deal reforms. Thus, is the unforeseen danger of having a President serve more than two terms.

Powell has done a fantastic job with this work. I am not surprised that FDR's Folly has been enthusiastically recommended by famed free market economists such as Milton Friedman and Thomas Sowell.

I highly recommend this book for anyone interested in free market capitalism and learning the real history of the Great Depression.

Jim Powell (historian)
From Wikipedia, the free encyclopedia
Jim Powell is Senior Fellow at a libertarian think tank, the Cato Institute in Washington, D.C., with which he has been associated since 1988. He has also done work for the Manhattan Institute, the Institute for Humane Studies, Citizens for a Sound Economy, the National Right to Work Committee and Americans for Free Choice in Medicine.
Powell is an author on the history of liberty. He wrote three books that reported findings about the unintended consequences of major presidential policies. Altogether he has written eight books and is perhaps best known for FDR's Folly http://g-ecx.images-amazon.com/images/G/01/wiki/icon-cart-small.gif, which has been praised by Nobel Laureates Milton Friedman and James M. Buchanan, Harvard historian David Landes and historian Thomas Fleming.[1] Powell's books have been translated into Japanese.
He has contributed several hundred articles for an unusually broad array of publications.[citation needed] He has given talks internationally as well as at Harvard, Stanford and other universities across the United States.
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The Forgotten Man: A New History of the Great Depression
“Roosevelt was claiming that with his advisers he had cornered the market on brains. If so, then after reading TFM, my sense is that there was not much value in this particular monopoly.”
Amity Shlaes (Author)

906 of 1,025 people found the following review helpful

5.0 out of 5 starsBrings You Back to the 1930's, June 15, 2007


This review is from: The Forgotten Man: A New History of the Great Depression (Hardcover)

The Forgotten Man (TFM for short) is not a polemic. It is not an argument for a particular theory or economic interpretation of the Depression.

Instead, the author steps back and lets the story tell itself. She has sifted through memoirs and contemporaneous accounts in order to carry the reader back into the mindset of the 1930's. She focuses on a diverse selection of protagonists from that period, including opponents of Roosevelt like Andrew Mellon and Wendell Wilkie as well as members of Roosevelt's "brain trust" like Paul Douglas and Rexford Tugwell.

Note that in the context of that time, "trust" meant the same thing as cartel (as in anti-trust laws). Roosevelt was claiming that with his advisers he had cornered the market on brains. If so, then after reading TFM, my sense is that there was not much value in this particular monopoly.

I came away with three major conclusions.

1. For better or worse, much of the country saw the Depression as something akin to a natural disaster, and people accordingly lowered their expectations for their standard of living.

2. Economic ignorance among policymakers was much worse than I had realized. I was steeped in the myth that the reason the Depression was so bad was that only Keynes had the answer, and he had to overcome the resistance of "the classical economists," such as Irving Fisher. But the differences between Fisher and Keynes seem small when compared to the differences between the policymakers and both economists. In physics, it would be like watching an academic debate over the meaning of quantum mechanics while policymakers are unable to grasp the simple concept of gravity.

3. The struggle over economic policy in the 1930's was really an episode in the long, historical conflict between business participants in the market and anti-business academics. Roosevelt gave free rein to the professors, until the start of the Second World War led him to realize that he would need the tycoons to help mobilize to defeat Hitler. I suspect that one reason that Roosevelt and the New Deal come off so well in the conventional wisdom is that history books are written by professors, not by entrepreneurs.

I should stress that these are my own views, and that TFM is much less prone to making generalizations and drawing conclusions. Readers with a variety of backgrounds and predispositions can appreciate the book and learn their own lessons.


Amity Shlaes
Amity Shlaes is author of COOLIDGE, for HarperCollins, out in February, 2013, in hardback and audio. COOLIDGE is a highly researched full biography of the thirtieth president. "Coolidge's story was always told as one of failure -- 'yes, but," Miss Shlaes said recently. "But research shows us that his story was one of prevailing: 'but, yes."" Coolidge's principles of thrift and old-style federalism couldn't be timelier today.' Coolidge was a paradox, a thrifty leader who begat plenty.
To research COOLIDGE, Miss Shlaes spent five years combing archives across New England, especially those of the Forbes Library in Northampton, the Vermont Historical Society in Barre, Vermont, and the Calvin Coolidge Memorial Foundation, on whose board she now sits.
She is also co-author of the forthcoming FORGOTTEN MAN GRAPHIC, a graphic version of her national bestseller about the 1930s, THE FORGOTTEN MAN. The artist for this 270-page treatment is the renowned cartoonist Paul Rivoche. Some samples of this cartoon book are on Miss Shlaes's Facebook page.
Miss Shlaes directs the Four Percent Growth project at the George W Bush Center, which seeks to advance knowledge of economics, free markets and growth. She is chairman of the Hayek Prize, a prize for free market books given by the Manhattan Institute.
Bloomberg has syndicated Miss Shlaes's column for the past six years. Readers also know her work also from the Financial Times, which carried her column before Bloomberg, and the Wall Street Journal, where she edited op eds and served on the editorial board, eventually concentrating on economics (1983-2000). Over the years Miss Shlaes has appeared in a variety of other publications, from Commentary Magazine, the American, and Foreign Affairs to the New Republic, Forbes, Fortune, the (London) Spectator, the American Spectator, Cosmopolitan and the New Yorker. Since 2008, Miss Shlaes has taught economic history at New York University's Stern School of Business.
Miss Shlaes started her career in the foreign policy area, writing about Germany and East Europe. Her first book, GERMANY: THE EMPIRE WITHIN appeared in 1991 (Farrar, Straus and Jonathan Cape). In the later 1990s, while at the WSJ, Miss Shlaes penned a national bestseller on the tax code, THE GREEDY HAND (Random House). In 2002 Miss Shlaes was J.P. Morgan fellow at the American Academy in Berlin, where she undertook work on THE FORGOTTEN MAN. THE FORGOTTEN MAN first appeared in 2007 (HarperCollins/Jonathan Cape). The paperback edition (HarperPerennial), published in 2008, contains a timeline and other material for teaching. Both editions are national bestsellers. In December, 2008, the Japanese edition of TFM was published by NTT. TFM appeared in Chinese in 2009. THE FORGOTTEN MAN has also appeared in Italian and German.
Miss Shlaes is the recipient of the Frederic Bastiat Prize of the International Policy Network, the Warren Brookes Prize (2008) of the American Legislative Exchange Council, as well as a two-time finalist for the Loeb Prize (Anderson School/UCLA). In 2009, "The Forgotten Man" won the Manhattan Institute's Hayek Prize. She is a magna cum laude graduate of Yale College and did graduate work at the Freie Universitaet Berlin on a DAAD fellowship.
She and her husband, the editor and author Seth Lipsky, have four children.

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