To respond, it would be good to have some solid scholarship on the New Deal. That is what Central Michigan University economist Robert Wright provides in FDR’s New Deal. Wright argues that New Deal–style policymaking began under Hoover and that its expansion under Roosevelt was a terrible failure. Far from ending the Depression, Hoover and Roosevelt’s interventions prolonged and deepened it. Many Americans were made worse off, especially members of minority groups with no political pull. The New Deal had such malign effects, Wright states, “because it denigrated the nation’s tradition of individualism and extolled collectivism.”

Collectivism, the dream of Marxists and other utopians, had never gained much traction in the United States. Most Americans resisted its idea that people should be compelled to live for the supposed good of all rather than freely pursuing their own self-interest. In fact, the architects of the New Deal sometimes admitted they sought to bring about a philosophical transformation of the nation. Wright quotes Laughlin Currie, one of FDR’s “brain trusters,” who said, “We used economic arguments for things we wanted to do on other grounds.”

Wright writes from “a public choice perspective.” Public choice theory tells scholars to analyze policies by asking how the measures were perceived to enhance the well-being of the politicians themselves, rather than assuming the politicians were focused on boosting general welfare. Throughout the book, we see that many New Deal policies were undertaken because they were likely to get key voting groups to favor the Democratic Party regardless of whether the policies benefited the country as a whole.

Before the New Deal / Wright locates the origins of the Depression in the “progressive” agenda of the early 20th century. The main culprits were the Federal Reserve System and the income tax, both of which would make the economy less resilient and more prone to political meddling. During the 1920s the economy “roared,” but that was in part because of the Fed’s easy money policy, leading to unsustainable booms in some sectors of the economy. When the Fed tightened in late 1928, it overreacted, leading to a severe contraction in the money supply, badly disrupting commerce. That could not have occurred without the blundering of Fed officials, who didn’t know what they were doing. The monetary contraction set the stage for the inevitable recession, and the stock market crash in 1929 was, Wright observes, just “the bearer of bad news.”

The United States had suffered financial panics before (as recently as 1921–22), but this was the first time a US president believed government power was the key to recovery. Instead of allowing the free market to correct the mistakes of the boom years, Hoover immediately began to intervene to fix what he thought was wrong with the economy. For example, he pressured employers to maintain wages, believing any reduction in purchasing power would aggravate conditions. All that did was yield shorter work weeks for employees who kept their jobs.

Roosevelt presidency / Hoover made other blunders that kept the economy from self-correcting, but Wright devotes most of the book to Roosevelt’s administration. FDR believed he and his team were carrying out “bold experimentation” to revive the nation. He famously pledged himself to promoting “four freedoms”—freedom of speech, freedom of religion, freedom from want, and freedom from fear—but as Wright notes, Roosevelt’s program at every step meant less freedom for Americans.

Wright explores the numerous programs enacted by Congress and decreed by FDR through executive orders, arguing that they actually made a bad situation worse. For example, Roosevelt’s agricultural policy was based on the absurd idea that national prosperity would be restored by driving farm prices up to their pre-Depression levels, thereby giving farmers more purchasing power. He did this by attacking supply to increase scarcity. So, at a time when many Americans were standing in bread lines, the US government was paying farmers to destroy crops and livestock and to produce less in the future. That destroyed goods for no good reason.

Another of FDR’s “fixes” for the economy was monetary. He had campaigned on a platform of maintaining sound money, evidently assuming that most voters wanted to stay with the gold standard. But once in office, he called the gold peg “an old fetish” and availed himself of powers under the National Emergency Banking Act to order people to turn over their gold coins, bullion, and gold certificates in exchange for paper Federal Reserve notes. Not long afterward, FDR pressured Congress to pass a statute abrogating gold clauses in all public and private contracts.

Could the government do that? The drafters of the Constitution would undoubtedly have said no, but in a 5–4 ruling the Supreme Court decided that it would turn a blind eye to those federal actions. Many Americans complied with the confiscation because of the severe penalty for not doing so: a fine twice the value of the gold. This was a huge windfall for the Treasury after the dollar was devalued from $20.67 per ounce to $35 per ounce, Wright reports. Despite the monetary gyrations, the Depression continued.

What about agriculture? By 1934, payments from the government constituted two-thirds of all income for farmers. Dependence on Uncle Sam quickly established itself among our formerly independent farmers. And the Depression went on.

Another New Deal innovation was federal regulation of previously free industries. The securities industry was among them, brought under federal control with statutes enacted in 1933 and 1934. Supposedly, regulation by the Securities and Exchange Commission was necessary to restore confidence in securities markets. But Wright argues that the new regime of mandatory full disclosure “was inferior to the system that had evolved organically since the 1790s, wherein securities issuers provided high-quality information to a relatively few important investors, to whom other investors looked for signals to buy, hold, or sell.” So, there was no economic improvement from securities regulation, just a lot of new jobs in Washington for bureaucrats.

Other industries that the New Deal subjected to federal regulation were airlines and trucking. Instead of free competition, government officials stepped in to set routes and rates. Those measures did not help either and were finally repealed in 1978.

FDR usually gets credit for pushing through the repeal of Prohibition. But as Wright points out, Roosevelt’s position was not because he was such a devotee of liberty that he hated governmental restrictions on what people could consume. Rather, he wanted government to receive tax revenue from the sale of alcoholic beverages. What occurred, Wright observes, was merely “to redirect the economic rents being extracted by bootleggers and organized crime to FDR’s radical reform agenda.”

Another aspect of the New Deal was Social Security. The idea that Americans should look to the federal government rather than their own wealth accumulation and family support in old age fit perfectly with the collectivistic views of FDR and his “brain trusters.” Social Security bedevils the country to this day. As Wright states, it distorts investment “by forcing Americans, through the Social Security payroll tax, to buy the government’s life annuity instead of private annuities, life insurance, real estate, business equity, or financial securities.” There was no need or constitutional warrant for this new governmental program, but it helped to further undermine American individualism, just as the progressives wanted.

The New Deal set other bad precedents for the nation. FDR and his allies did all they could to stifle criticism of their experimentation. They used the government’s control over radio licensing, for example, to threaten broadcasters who aired views that were unfriendly to their agenda. The federal government also got into the propaganda business by subsidizing plays that pushed the collectivist agenda.

Who benefited from the New Deal? Not the economy as a whole, which Wright shows was among the world’s worst performing in the 1930s. Of course, some groups did gain, such as organized labor and a big new voting bloc of federal employees, but others lost, such as Blacks, American Indians, young people, and women.

Court packing / Wright also reviews the history of the New Deal in the courts. In some early cases, the US Supreme Court upheld blatantly authoritarian state policies (such as price setting for milk). But in 1935 and 1936, the Court drew the line at several federal statutes where Congress had unconstitutionally delegated power to the executive branch. These cases involved the National Industrial Recovery Act (which promoted cartelization of industry), the Agricultural Adjustment Act, and other New Deal laws.

FDR would not allow the Constitution to get in his way. He threatened to “pack” the Court by having Congress pass a law allowing him to nominate six new justices. Many members of his own party recoiled at the idea, but the threat convinced Justice Owen Roberts to switch sides and approve New Deal legislation from 1937 on. The old justices retired and soon the Court was filled with FDR appointees who approved even the most egregious expansions of federal control, such as in the 1942 case Wickard v. Filburn that enlarged the scope of Congress’s power under the Commerce Clause.

Conclusion / The economy went into another tailspin in 1937, largely because of FDR’s continuing economic meddling, especially the National Labor Relations Act. The voters took out their displeasure on the Democrats in the 1938 elections, and that put an end to further New Deal legislation. But the damage had been done. New Deal policies would continue to hold back economic progress through the rest of FDR’s presidency. And his expansion of federal power would serve as the inspiration for much more of the same under future presidents.

The big message of Wright’s book is that the United States would have been far better off if it had forgone the “bold experimentation” of the New Deal. The economy would have recovered much faster from the Depression (which might never have happened at all but for bad governmental policies) if the federal government had stuck to its limited constitutional role. This book provides the reader with ample ammunition to combat the still prevalent idea that the New Deal was wise and beneficial.