The New Deal Was a Success — at Creating Dependency

Drawing from Amity Shlaes’ excellent new book The Forgotten Man, George Will notes that FDR’s policies were an economic failure but a political success.

It is particularly galling that Roosevelt’s statist policies were so harmful (as Chris Edwards has succinctly explained), yet he is portrayed as the man who saved the nation from unbridled capitalism:

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.

…Roosevelt, however, made interest-group politics systematic and routine. New Deal policies were calculated to create many constituencies — labor, retirees, farmers, union members — to be dependent on government.

…Roosevelt implemented the theory that (in [Shlaes’] 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 1936, for the first time in peacetime history, federal spending exceeded that of the states and localities combined.

…[A]s Roosevelt demonstrated and Shlaes reminds us, compassion, understood as making the “insecure” securely dependent, also makes the state flourish.