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March 16, 2011

The Forgotten Man

A New History of the Great Depression
Amity Shlaes - ISBN - 978-0060936426

George Will's one sentence comment was: "Americans just now need what Amity Shlaes has brilliantly supplied, a fresh appraisal of what the New Deal did and did not accomplish." And it just about summarizes the content of this magnificent 383 page treatise on the subject; exhaustive research and content makes clear that, with some minor exceptions:
• The New Deal was a complete failure--not to mention a fraud.
• The depression need not have been what it turned out to be.
• The 1920's were most definitely not a period of false growth and low morals.
• The depression inaugurated by the collapse in 1929 was not the result of a failure of capitalism.
• The New Deal did not teach that recovery required control and spending by the government

Frustratingly, we find ourselves today in a similar situation because government is doing again what it did for the decade of the 30's . . . and--surprise--it's not working this time, either.

There had been a similar "crash" a decade before during the Harding/Coolidge period. Government refused to intervene and the market recovered nicely without it. It was the New Deal approach to intervention that brought out the worst of the depression and fostered its continuation for over a decade. The big question is not whether WW II ended it--it did--but why the depression was so prolonged.

Obama recently reminded us--in his uniquely arrogant way--that the definition of insanity is doing the same thing over again, in the same way, and expecting a different result. Exactly so. Bush made mistakes; Obama is making them much worse. Look over your shoulder, Mr. President; you're repeating the errors of Roosevelt and cronies, and achieving the same result. Insanity, indeed!

Worse, Roosevelt won the elections because he created a new kind of interest-group politics . . . people who wanted something from government . . . the great public interest groups from labor to farm workers; senior citizens to union workers. (True, Republicans had courted big business, but the demands didn't rise to the cumulative levels that Roosevelt inculcated.) He also misconstrued the concept of the "forgotten man" to mean someone not intended by the originator of the phrase. The author uses the real forgotten man as the model for the book: the quiet, hard-working, obscure man who pays for it all, not the guy who ain't got nuttin' 'cause he don't do nuttin'.

During the Harding administration there was a serious recession in which unemployment quickly reached 10%; struggling firms cut costs by reducing wages and the country bounced back. In less than two years things were back to normal. Indeed, when Coolidge was inaugurated the unemployment rate was 5%, and within a year or so was down to 3%. Not so in 1929. Amongst other things, FDR forbade wage reductions, as he attempted to raise prices, especially for farmers, by paying them to leave their land fallow; he also destroyed crops and farm animals to create shortages, thus to increase prices. Needless to say, there was an increase hunger because there was less food.

Like--but in greater detail than--FDR's Folly reviewed here some months ago, Shlaes demonstrates how and why these progressive ideas were wrong and did much harm to the U.S. They still are.

She comments upon the exclusivity of the Intellectuals, captured in a novel entitled The Group. "Alone together," these dreamers reinforced one another; and did much to ruin America !

This ought to be required reading by all who vote, or plan to. FDR was neither a paragon nor a savior; he was a fraud . . . as was his New Deal. About this Shlaes leaves no doubt whatsoever.

Posted by Curmudgeon at March 16, 2011 12:40 PM