Let's Look At the Horror That Was the First New Deal
Before one can properly answer whether a "new" New Deal of government intervention and control of the economy is a necessary response to today's financial crisis, one should first ask if the original New Deal did a good job mitigating the financial crisis of its era. The answer is a resounding no: rather than help end the Great Depression, the programs of the Franklin Delano Roosevelt's New Deal only served to exacerbate and prolong America's economic crisis.
Why? Because at root, the New Deal was little more than a series of programs aimed at the coerced redistribution of wealth from those who produce it to those who do not. Minimum wage laws, laws that unfairly biased labor negotiations in favor of trade unions, massive public works programs that allocated resources based on politics rather than economic merit, laws that encouraged farmers to restrict production, intrusive regulation of finance and currency and a literal Ponzi scheme to pay for workers' retirements (just to name a few of the New Deal's many mandates) each violated economic freedoms and created a series of perverse incentives that hampered production, throttled employment and punished thrift.
As such, the New Deal was a devastating impediment to economic recovery; one cannot shackle the engines of production while simultaneously expecting gains in production and wealth. Furthermore, the New Deal was judged to be largely unconstitutional; prior to Roosevelt's threatened court-packing scheme, the New Deal's programs were being thrown out left and right. To enact his programs, Roosevelt had to attack the very fabric of the American constitutional order.
Thus the idea that America should revisit this era represents a chilling threat and would be a giant leap backwards in time to one of the worst eras in American history.
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Franklin Roosevelt introduced the welfare state into America by signing into law the minimum wage, progressive taxation, Social Security, and in 1938 created Fannie Mae to provide low-interest mortgages.
Ever since then, government intervention into the marketplace has increased, spawning more welfare programs and causing market havoc.
For instance, take only one such case: To Fannie Mae, the government added Freddie Mac, exempting both from taxation and oversight. Through one of their programs called "Affordable Housing," government forced banks and insurance companies to extend loans to those who could not afford to meet payments. The result was a financial crisis, for which the government blamed capitalism and "greedy" businessmen---despite the fact that the government controls 90 percent of the nation's secondary mortgage market---and added insult to injury by telling CEOs to resign and to conceal vital information from shareholders.
This is the inevitable consequence of the welfare state. It is called socialism. Mr. Obama has expanded socialism and will continue to do so. To stop him we must petition the government to rescind all welfare programs. We do not need another New Deal. We need to get rid of it and all the welfare programs it stimulated.
The best and only moral way to help people, if that is one's motive, is to protect their individual rights and freedoms.
Sincerely,
Sylvia Bokor
Dostoyevsky's masterful work Crime and Punishment has a great passage from one of its side characters that touches on the topic of government intervention in the economy:
"...It came to my tearing my coat in half to share with my neighbor and we both were left half naked... Economic truth adds that the better affairs are organised in society-the more whole coats so to say-the firmer are its foundations and the better is the common welfare organised too. Therefore, in acquiring wealth solely and exclusively for myself, I am acquiring so to speak, for all, and helping to bring to pass my neighbour's getting a little more than a torn coat; and that not from private, personal liberality, but as a consequence of the general advance."
Many "progressives" in FDR's administration admired Mussolini's and Stalin's tactics in order to control their economies and had a profound distrust of profit motives and the free market in general. The truth is that since the start of the 20th century, the United States has never had a truly free market. We've had progressively more regulation and less freedom, all in the name of preventing recessions and promoting more income equality, yet we can see what a complete disaster the mixed economy has produced.
What we need instead of a new New Deal is some sort of incentive for politicians to grow the economy- not stifle investment and tax profits like they have for the past century. There's too much class envy in this country, and a lot of politicians get elected in order to bring down a class rather than lift the others up. Have you ever been employed by a poor person? Let the wealthy keep their profits and they will invest them in the economy. They may get wealthier, but we will too. "A rising tide lifts all boats". Kick em out of office if that tide falls. They want the responsibility and credit for fixing the economy? Fine. But when their meddling and anti-growth policies cause legitimate suffering, they need to be held accountable.
Another problem is the taxation of work. The harder you work, the more the government will take from you. Many have proposed a flat tax to overcome that, but what we really need is a flat tax on consumption, which will encourage savings and investment, which are practically zero in this country.
The American Dream up until recently was home ownership, and politicians did everything in their power to help people attain that, causing the mess we're in. I think we should replace that dream with the goal of becoming Debt Free and Independent of Government Assistance, whatever shape or form - welfare, tax credits, bailouts. Only if we do that will we return to prosperity and freedom.
Although the idea is old enough, nobody can name any instance where socialism has worked. Instead, successful economies minimize government involvement in their economies. We permit government to run only those functions for which private enterprise is plainly ill-suited. That is what explains our nation's past successes.
Consider these examples. Our military, our police, and our courts have always been run by government. No private agency could be trusted with those functions. On the other hand, competition amongst private producers makes even essentials such as food, clothing, and shelter cheaper and better than they would be if government produced the same things.
Unfortunately, some people are always attracted to what seems like an easy solution. So we now have a socialist education system. As a result, each succeeding generation taught by this system has been less informed than the one which preceded it. Until the advent of the PBS and NPR, government did not involve itself in the news media. So the public now receives much of its news directly biased by government.
Because it takes experience to overcome a bad education and to see through lies, our society's only hope of escaping creeping socialism is that the Baby Boom generation will finally grow up.
Pray.
Government got us into this mess through the Fed, Fannie and Freddie, the Community Reinvestment Act, the tens of thousands of regulations on the financial markets, and all the other ways by which it was conspired to redistribute trillions of dollars from the productive to the non-productive by giving out loans to people who clearly couldn't repay them. The Left thought they could put people into homes that they couldn't afford, and nobody would notice, making the current financial crisis simply a matter of chickens coming home to roost--people can't afford to pay their mortgages, and the everyone else is being forced to make up the difference.
It's socialism through the backdoor. And now, people honestly believe that government's going to fix the problems they created by using more of the same tactics? Just as with the Great Depression, which was caused by government intervention and exacerbated by more of the same with the New Deal, our government is now begging, borrowing, and printing--that is, stealing--$7.5 trillion and counting to make up for their past meddling. It needs to stop, and it needs to stop now, before it really is too late.
I agree with wynand32 and F2XL. Heck, it's socialism through the frontdoor and shoved in our faces- for those of us that know what socialism is- the gov seems to think it can dress it up in the name of helping out mainstreet and the middle class...which of course is always how socialism is implemented (i.e. altruism). I think Biden summed it up with taxes when he said it was patriotic to pay taxes. We'll get a New new deal alright - Obama will dress this deal up real nice, mix in a little fear with a little 'Gov to the Rescue' and attach a huge number of dollars to it. Like the article says- resources will be allocated based on politics and not a free market.
I fear it is too late wynand32. This is the result of government regulation - of the lack of true free market capitalism. America has lost the values that created it and made it strong and respected - now we are used by the world as a wet nurse.
I like the analogy of calling an arsonist to put out a fire when it comes to the government and the current market crisis.
Soon people will call for more bailouts and regulation. Once the problem gets worse, they'll say it was deregulation or insist we didn't regulate enough. History repeats itself.