Insanity-are We There Yet

Insanity – are we there yet? A look at America’s current situation compared to the policies of Herbert Hover and Franklin D. Roosevelt’s administrations. Many have used the quote, “insanity is doing the same thing, over and over, and expecting different results.” It has been attributed to Albert Einstein (1879-1955), but evidence is lacking. Regardless of who said it, the principle is true and a good gauge for evaluation. How does the current situation of America measure up? Are those in power repeating past policies, ideologies, arguments, etc., and expecting different results? First, let us take a look at the past and then compare it to today. Hover, FDR and the Great Depression One of the myths prevalent about Franklin D. Roosevelt and the great depression is FDR’s miraculous decent upon the catastrophic past policies leading to the depression and saving the day. However, history has show that this mythological personification of FDR and his administrations are not only inaccurate, but a revision of history. From the writing of Amity Shlaes, Jim Powell, and Jonah Goldberg, to name just a few, they have set the record straight.1 Not only did FDR not save America from the great depression but contributed to its prolonged duration. To blame just the Democrats would be unfair and inaccurate. Herbert Hover, the Republican President prior to FDR, was just as negligent. Failed policies Jim Powell, in his book FDR’s Folly, sums up by identifying ten factors that contributed to the onset and continuation of the great depression.2 Let’s look at several of these and compare them to what we are doing today. First Both Hover and FDR believed that government spending would get America out of the depression. What they ignored was the fact that government spending can only come at the expense of the people – taxation. Hover’s Smoot-Hawley tariff raised import duties on agriculture and manufactured goods by an average of 59 percent. In return importing nations raised their import duties, which raised prices on almost everything in the United States. FDR raised taxes on liquor, tobacco, gasoline, flour, corporations, estates, money for investing in your corporation, and the starting of the social security tax, just to name a few - and all in the name of the redistribution of wealth. The only problem was the “wealth” dried up. What employer, company, or corporation wanted to invest in the company (which also meant the people), when most of their profits were going to go to the government. Thus, unemployment continued to rise along with prices. Today we’ve seen government spending (by both Republicans and Democrats) at unprecedented levels again in the name of wealth redistribution. Obama, in true FDR fashion has not only declared that we (the government) can spend our way out of our economic woes, but that only the government can fix the problem.3As history has shown, taxation must and has followed.

Second Public works and other “job” programs were one of FDR’s favorite experiments. The Civilian Conservation Corps and the Public Works Administration were established to put thousands of young men to work and to spend millions on public projects. However, money taken from the private sector by taxation to fund these programs affected the private sector by decreasing their money supply and caused higher unemployment. Many were employed by the government but many lost their jobs in the private sector as well. After a year and a half of these social welfare programs unemployment was still at 22 percent. Today billions have been spent by Bush and Obama to provide employment on public projects funded by the government through the taxation of the private sector. Again we see many unemployed because of the higher taxes business must pay. Third FDR prevented wages and prices from adjusting to the prevailing circumstances through farm subsidies, price controls, and wage controls. While many were starving during the depression the federal government, in order to increase agriculture prices, paid farmers to pour thousands of gallons of milk away and slaughter thousands of pigs. Because of the shortage now in supply of milk and pork, caused by the government, prices did rise, however, people did not have the money to pay the increased prices, thus sales plummeted. Also, falsely keeping wages higher than the market level only caused business to raise prices to make up the loss. Because of Obama “cash for clunker” program we now are faced with a used car market where prices are above market level due to a shortage of used cars and new car sales at an all time low. History has shown that raising wages and prices above the market level only causes business to either lay off more employees or raise prices or both. Fourth Through the National Labor Relations Board established by FDR by the Wagner Act, unions were now able to secure a closed shop, secure a bargaining monopoly, making it illegal for companies to act in any way contrary to union interests, and forcing participation and payment of dues of employees to unions. By negotiating contracts above what the market could bear led to above market wages (thus higher unemployment and prices), and labor unrest. Because of union monopolization, unions were able to segregate those they did not want in their work force (mainly blacks). Obama’s close ties to labor unions is producing legislation to make it mandatory to belong to a union, ban secret ballots in voting whether to unionize or not, and increased wages above what the market can bear. Again, we see individual freedoms sacrificed at the alter of unionism. Insanity? These are just a few of the policies and ideologies that enabled the great depression to last ten years longer than it should have, and the actions of the current and past government administrations. Again, if insanity is to keep doing the same thing yet expecting different results, how are we doing? I would exclaim – could we please stop the insanity!

1

See Goldberg, J. (2007). Liberal fascism. New York, New York: Doubleday; Powell, J. (2003). FDR's folly. New York, New York: Three Rivers Press; and Shlaes, A. (2007). The forgotten man. New York, New York: HarperCollins. 2 Powell, J. (2003). FDR's folly. New York, New York: Three Rivers Press, p. 271-274. 3 CNN News. (1998-2009). Obama: ‘Only Government’ Can Fix What Ails Us…. Retrieved from http://www.cnsnews.com/Public/content/article.aspx?RsrcID=41688