Creative and preservationist destruction.
We know -- those of us who aren't Austrians -- that the New Deal promoted recovery, even if it didn't get the country all the way back to pre-Crash conditions before the end of FDR's second term; that it laid the foundations for the modernization, at long last, of the South; that it established regulations for banking and securities that proved successful until repealed; that it prevented a nontrivial number of Americans from starving and gave the dignity of work to millions; that its basic provisions for social security -- including not only old age pensions and unemployment insurance but established the principle, as Justice Cardozo wrote, that in dire straits "the ill is all one or at least not greatly different whether men are thrown out of work because there is no longer work to do or because the disabilities of age make them incapable of doing it. Rescue becomes necessary irrespective of the cause."
We also know that in doing these things, New Dealers made some blunders and some devil's bargains -- that by lurching uncertainly into and out of relief they did not do as much to end the Depression as they might have with a committed and full-scale program at the start (are you listening, stimulus-compromisers?); that to keep the South in the Democratic Party they left Jim Crow largely untouched; that to get Social Security established they had at the start to omit coverage for occupations that disproportionately included African Americans.
But the New Deal did more: not only did it build modern America, it created our sense of the old America.
New Deal programs of infrastructure investment including not only the Public Works Administration and the Tennessee Valley Authority but the road-building Works Progress Administration made possible the era of prosperity and productivity that followed the war years and permitted the convergence of standards of living across the American states.
At the same time New Deal programs documented a vanishing America, amassing slave narratives, folk music, and ethnographic interviews of all kinds. As the New Deal abetted America's move from the countryside to the city, it also saved memories of the ways of life lost.
Are we truly in a similar transition now -- to a post-suburban world, to a post-paper world? What folkways do we want documented?
To post-suburban and post-paperless I offer an additional hyphenated adjective: post-consumer.
We're confronted with what Nassim Nicholas Taleb calls a black swan -- a disruptive, paradigm-shifting condition for which we have no prior frame of reference. This presents a unique opportunity to renovate our society to new specifications. And an implicit threat: if we do not seize the initiative, the rebuilding will be done for us. We'll have to live with what emerges and accept moral culpability for not making our best effort to manage the outcome.
As valuable as they are, the historical lessons of the New Deal do not in themselves point our way forward. Certainly there are parallels. But we must acknowledge that this crisis is of our own unique making, requiring unique solutions. We must also accept the reality that disagreement, political babble and false starts are a necessary part of the human condition.
Societal evolution is a discontinuous process. In this crisis we have a chance to make enormous progress. I hope we take advantage of it.
Great blog, Eric. Recommended.
February 13, 2009 9:32 AM | Reply | Permalink
Back in September, I was reminded of the provenance of the New Deal almost daily. Both WaMu and Wachovia experienced bank runs - actual George Bailey, Mary Poppins bank runs, something that we thought was gone from our experience forever. Funds in money market accounts were suddenly unavailable, an unthinkable event. My
Depression era parents even called to see if they should withdraw a large amount of cash to keep for expenses. Without the institutions of the New Deal, including the FDIC, the financial system would have collapsed the second week of September. We only have leisure to discuss these issues today because of those institutions.
On another note, post-suburban is an interesting concept and may be the great issue for debate in the next two decades. Do we use technology for alternative fuel sources to continue the automobile culture? There are several problems with that besides oil, inlcuding sprawl and congestion. Or do we move to something closer to the European model of concentration and mass transit? What is the post-suburban world?
February 13, 2009 11:08 AM | Reply | Permalink
Well, a few quibbles.
The evidence that the New Deal actually had any positive effect on the broader economy is negligible. The government effectively spent money to buy employment numbers; apart from the government programs themselves (and it can be argued but it is not relevant to do so here... because of some of them) little improvement in the economy actually occurred.
From the last reply I'll add that the FDIC is about the only New Deal institution relevant to the crisis, but it's a big one. The "George Bailey" bank runs of 2008 were composed solely of fools who didn't understand they were protected anyway.
I hardly think that documenting "folkways" is an appropriate large scale use of taxpayer money. That said, the demise of "discretionary" (Read: infrastructure and investment) spending as a proportion of the budget has left a void where useful federal money could be spent.
The New Deal was wasteful and in many ways counterproductive. But there were good programs mixed in with the bad. For every National Recovery Act there was an FDIC, et cetera.
We shouldn't want to create a "New Deal". We should want to learn from the New Deal what might actually help us, and then do that.
February 13, 2009 11:27 AM | Reply | Permalink
So the likes of the TVA and the BPA haven't on a continuing basis, "effected" the "broader economy"? And the likes of the lodges on Mt. Hood and Mt. Rainier, etc., don't continue today to effect the broader economy.
People were employed, in many case, in pursuit of projects which continue today to create economic activity.
The New Deal, to a large extent, was aimed at "insur[ing] domestic tranquility" and "promot[ing} the general welfare", two of the six Constitutional purposes of our government.
February 13, 2009 1:36 PM | Reply | Permalink
"little improvement in the economy actually occurred"
Such ignorant remarks detract from your credibility as a serious participant. Look at GDP from 1930-1941. It grew nicely from about 1933.
You might want to argue that this was mere correlation, that the New Deal did cause this long term growth at all, but to do so rationally you'd have to deal with reality and post a sound basis.
February 13, 2009 3:46 PM | Reply | Permalink
The improvement from 1933 (and subsequent fall again in the late 30's) tracks closely the changes in government debt accretion. Essentially, the difference between 1933 and 1935 or 1939 was the difference in the number of people the government was borrowing money to pay off.
This is in no way a sustainable recovery, and it certianly doesn't represent "long term growth".
February 13, 2009 4:38 PM | Reply | Permalink
Stop lying please. There was no big fall in the late 30s, there was a well-explained correction which was resolved in a year leading to further growth. GDP consistently up and unemployment down.
Your dishonesty is repugnant and devalues your occasional good contribution. If you want to point to the Bush years as an example of debt accumulation supporting an economy, go for it, but keep it honest.
February 13, 2009 6:21 PM | Reply | Permalink
Well-explained, in that the difference between the "New Deal Recovery" and the "New Deal Recession" was (drum roll please) government debt accretion.
Roosevelt's attempt to balance the budget in the late 30's diminished the ameliorative and consumption inducing effects of government; output declined not because anything changed in the "real" economy, but because government stopped supporting it with money not taken out of the taxpayer's pockets.
This in itself isn't an indictment of the New Deal unless you think that the New Deal was supposed to do something other than float the economic boat on a sea of government debt (much like the current stimulus). I don't. The New Deal was a patchwork of novelties with a few good ideas, a few terrible ideas, and a lot of things in the middle. However, its net effect was to reduce unemployment in the short term, by adding to debt and using the money to buy things.
February 17, 2009 11:12 AM | Reply | Permalink
Can we have an Amen for Rauchway?
Presidente: For the sake of argument, I will concede (although I don't believe it for a second) that you may be right in some technical sense when you say: "little improvement in the economy actually occurred" from the New Deal.
But that that can be considered true ONLY if you are willing to ignore people actually living within the economy. (And we've seen an identical blind spot in the last eight years as economists offered huzzahs to the "economy" while the middle class melted.)
In other words, numbers can lie. Dorothy Ward's picture of that migrant mother (I am willing to bet many people know exactly which picture I am talking about) speaks a truth about the Depression years that reams of quantitative analysis could never capture.
So the New Deal wasn't perfect? So what? It provided millions with the dignity of work. It fed more millions. It offered Americans a vision of a more perfect union. And it built the roads and infrastructure (and wonderful recordings and pictures) that still delight us in the National Parks today. A much more enduring legacy than anything we're going to get from today's acolytes of Ayn Rand, all busy genuflecting before the Holy Trinity of markets, competition and deregulation.
February 14, 2009 1:29 PM | Reply | Permalink
I'm not arguing that the New Deal did not have significant ameliorative effects. It did, and amelioration is a laudable goal. I make only the narrower point that the New Deal did not actually solve any of the underlying problems, and may well have made them worse.
After all, the weird thing about the Depression is how long it lasted, and a big part of that is the failure of prices to adjust downward due to government intervention.
February 17, 2009 11:08 AM | Reply | Permalink
February 13, 2009 12:21 PM | Reply | Permalink
I think that we need stimulus, but that we should be looking forward - not backwards. The New Deal DID promote recovery, but we don't need to dredge it up to prove that investing in our infrastructure now will promote recovery. I think that now is the time for NEW ideas, not a re-hashing of history. Also, I think that though there are echoes of the New Deal era in what is happening now - the specific details are different. I agree with El Presidente that it needs to be the RIGHT changes. Anyone else read Thinking Big (http://thinkingbigthebook.com/)? It's a great guide to the new progressive agenda, and suggests the specific funding that I think would bring about change. It's interesting to compare that to Obama's bill... Certainly Thinking Big doesn't contain funds for building a Mafia Museum in Las Vegas.... the stimulus bill DOES.
February 13, 2009 1:11 PM | Reply | Permalink
I grew up on a farm and am going to move back to it next month. I have lived in a small city otherwise. Reading your post my first thought was it is all on the net now but then I got thinking - I don't know anything about the suburbs. That really is an alien world to me. I have an uncle and aunt in Columbia MD and visiting them over the years since I was a child was like a foreign country. Can all that be documented, and how? Oh, I just now sadly remembered John Updike. Sad because he is dead but I remember his writing fondly. There is so much more now to document when we talk about peoples lives. I can start to rattle off brand names that I know and I haven't had a TV in over 30 years. Are we going to document Chucky Cheese?
I do think there is more to getting the recovery (past and present)going then getting the money numbers right in the right places. I think we remember the New Deal working because the people that lived throught it thought it did. And is that what it takes? I think a lot of people want Obama to suceed and that helps the recovery. But on the other hand there are a lot of people that are angery about the causes of the crisis and that anger can lead to distruction. I am not talking about people rioting in the streets distruction, but rather a distruction of the old institutions and ways such that if it is percieved by the public that we will be returning to the same old there will be pull back in rooting for sucess of the recovery. And if that sounds perverse it is because people are perverse.
Interesting post bringing two threads together, thank you
February 14, 2009 6:50 PM | Reply | Permalink