Sunday, July 08, 2007
Declaration of Dependence
...The war, not the New Deal, defeated the Depression. Franklin Roosevelt's success was in altering the practice of American politics.
This transformation was actually assisted by the misguided policies -- including government-created uncertainties that paralyzed investors -- that prolonged the Depression. This seemed to validate the notion that the crisis was permanent, so government must be forever hyperactive....
...Before the 1930s, the adjective "liberal" denoted policies of individualism and individual rights; since Roosevelt, it has primarily pertained to the politics of group interests. So writes Shlaes, a columnist for Bloomberg News, in " The Forgotten Man: A New History of the Great Depression." She says Roosevelt's wager was that, by furiously using legislation and regulations to multiply federally favored groups, and by rhetorically pitting those favored by government against the unfavored, he could create a permanent majority coalition.
In the process, says Shlaes, Roosevelt refined his definition of the "forgotten man." This man had been thought of as a general personality, compatible with the assumption that Americans were all in it together. "Now, by defining his forgotten man as the specific groups he would help, the president was in effect forgetting the rest -- creating a new forgotten man. The country was splitting into those who were Roosevelt's favorites and everyone else."
Acting with what Shlaes calls "the restlessness of the invalid," Roosevelt implemented the theory that (in her words) "spending promoted growth, if government was big enough to spend enough." In only 12 months, just one Roosevelt improvisation, the National Recovery Administration, "generated more paper than the entire legislative output of the federal government since 1789."
Before Roosevelt, the federal government was unimpressive relative to the private sector. Under Calvin Coolidge, the last pre-Depression president, its revenue averaged 4 percent of gross domestic product, compared with 18.6 percent today. In 1910, Congress legislated height limits for Washington buildings, limits that prevented skyscrapers, symbols of mighty business, from overshadowing the Capitol, the symbol of government....
...War, as has been said -- and as George W. Bush's assertion of vast presidential powers attests -- is the health of the state. But as Roosevelt demonstrated and Shlaes reminds us, compassion, understood as making the "insecure" securely dependent, also makes the state flourish.