TPMCafe

TPMCafe Book Club: January 18, 2009 - January 24, 2009

The New Deal Appeal

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Julian Zelizer is right to stress the common theme of under-consumption that underpinned the New Deal rhetoric of the 1930s. As he points out it was a rhetoric that united middle-class consumers and workers that was key to support both for Social Security and the Wagner Act. It was the key to the Democratic Party electoral successes of 1936 and 1940. At the local level it also helps explain why there was so much community support for striking workers: middle-class political sentiment was not necessarily on the side of 'law and order' and the employer. It was one of the factors that made the 1930s so distinctive in American history. Before the 1930s you had to go back to the mid to late nineteenth century, as Herbert Gutman noted, to find local middle-class solidarity with local artisans and workers against 'outside' employers. After the 1940s Meg Jacobs showed how consumers could be persuaded that organized labor, not business, was the cause of their difficulties during World War II and in the post-war inflation.

Partly because of that consumer-producer link, there was as Don Guttenplan's posts remind us, a radical cutting edge to the politics of the 1930s that we have never seen again. It is also a radical cutting edge that is absent today. No wonder historians on the right blame the New Deal for promoting class conflict rather than class unity.

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An Argument For Change

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My old comrade Jonathan Alter is right. Symbolism matters. Psychology matters. Mood music matters. Both of my paternal grandparents were on the WPA payroll, so for them the fact that the New Deal "gave employment to a lot of workers who needed it" was pretty important. Alonzo Hamby knows as much about FDR as any man alive, but perhaps he needs to be reminded that the long-term costs of long-term unemployment are not just reflected in a shrinking GDP. (Maybe a refresher on the state of American private utility companies in the 1930s is in order as well. Just because Samuel Insull appears in Dos Passos's great trilogy USA doesn't make him a fictional character.)

Those of us in the fact-based community are deeply indebted to James Galbraith and Marshall Auerback for providing the statistics to rebut what has now become the prevailing orthodoxy about the New Deal and unemployment. (Though a look at the comments below Galbraith's contribution reveals how far we have to go.) Whether the New Deal moderated or ended the Depression seems to me less important than recognizing that, for those on the receiving end, even amelioration was no small matter.

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Obama Needs An Argument

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President Obama needs an argument. The economic stimulus plan is already coming under fire from the left and the right, only days after he was sworn in as president (two times, in fact). In The New York Times, my colleague at Princeton Paul Krugman has written that he "ended Tuesday less confident about the direction of economic policy than I was in the morning." Krugman goes on to criticize the "platitudes in his Inaugural Address" as a warning sign that Obama might find his administration "dangerously behind the curve." Republicans are now raising their concerns as well. Republican congressional leaders are complaining that the stimulus bill coming out of the House is big on pork-barrel spending projects and deficient on measures that would actually stimulate the economy in the short term.

The waters are getting rough and Obama has barely stepped into the ocean. The President can't wait too long or he could lose control of the debate. An effective response will depend on many things, with one of the most important being his ability to develop an overriding and compelling argument about how we ended up in this economic crisis and how we can get out.

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A New Deal of the Mind?

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I am very grateful to James Galbraith for his post. It is very important to count in the people the government directly employed on the WPA and other programmes when calculating the impact on unemployment. James's father's analysis of the economic impact of public works projects that stimulated private sector employment is still indispensable. My only note of caution is that the New Deal was unable to fulfil Hopkins's hope that WPA jobs would have the same legitimacy and moral worth for the unemployed that private sector jobs had. Congress never allowed the WPA to pay wages that were comparable to the uncertainties created by unpredictable appropriations meant that workers could be suddenly laid off for reasons nothing to do with job performance.

One practical note on Jonathan Alter's shrewd observations about the importance of communications. Will all those millions of people engaged and energized by email and the web by the Obama have the same impact n Congress as those thousands who wrote every week to Roosevelt and members of Congress in 1933? Will they be activated to demand that Congress enact the President's program?

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The Hundred Days: What Worked, What Didn't, What Never Happened

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The phrase "hundred days" came to mind so easily in 1933 because it already had been used to refer to the period after Napoleon's triumphal return from Elba. Alas, that ended with Waterloo. Franklin Roosevelt's hundred days still appear to many scholars a triumph of presidential leadership, but the end result was not much better. We all know that the New Deal did not end the Great Depression in the United States; it was an ambitious mixture of failure and accomplishment. One way to approach its initial phase is to sort through its ambitious list of programs and ask how they worked out economically. One also might ask what could have been attempted, but was not. A few thoughts follow:

Rhetorical Leadership: Here Roosevelt remains the master. His inaugural address and follow-up fireside chat uplifted the nation and restored a large measure of hope. This alone was no small achievement. Unfortunately, Roosevelt's rhetoric also became increasingly less unifying and more divisive. The gratuitous inaugural swipe at the "money lenders" would escalate accordingly. At the very least, it was an unpromising way of dealing with a continuing national crisis.

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Why Obama Needs His BlackBerry

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Just a short post. I've had more than my say on the 100 days. I'm an admirer of Anthony Barger's book, which does an excellent job illuminating the longer term consequences of New Deal legislation. I try to do a little of everything in my book (which actuallly covers the period from June of 1932, when FDR was nominated until June of 1933, when the 100 days ended) but I put particular emphasis on the psycholigical dimensions of FDR's achievement in this period and I hope we can introduce that into the discussion.

FDR made tough decisions like cutting pay for himself and Congress (imitated by Obama, who froze pay), but he also looked for a bit of sugar to make the medicine go down more smoothly, like legalizing beer. He held two tightly controlled press conferences a week to spread his magic through the print press, and much less regular fireside chats, which were magical. Obama won't hold as many press conferences (though he recently held five in five days), but his speeches may end up aging at least as well as FDR's. My point is that communication skills are critical.

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Unemployment During The New Deal Era

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The view that the New Deal was too small and accomplished little, that only WWII ended the Depression, is very widely held. But it is not correct. It is based on a mis-reading of reconstructed unemployment statistics from that time, which treat the workers actually employed by the New Deal as though they were unemployed. Which they were not.

In fact, the New Deal accomplished a huge amount, both in specific construction projects and in providing employment to the American people.

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High Expectations Of The President

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Early this morning interviewed on CNBC, I was questioned about an e-mail from a listener in the United States who said that finding lessons from FDR in the 1930s was futile. Only the defense spending associated with World War II brought the country out of Depression. I agree with Julian's point that the New Deal had multitasked objectives - many achieved in terms of long-term reform and the infrastructure even if the purely economic record could have been better. I also feel that stopping things getting worse and enabling ordinary Americans, the unemployed and the farmers to survive the 1930s until the war provided 17 million jobs was a not unimportant achievement.

Incidentally, the most hostile comments that I have received about essays on the 30s in the British media that I have been asked to write come from Americans who either argue that recovery was simply about World War II or demonize FDR as a crypto-socialist.

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New Deal Government Spending Lifted U.S. Economy

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I like Julian Zelizer's division of FDR's objectives into three parts: immediate economic relief, infrastructure investment, and social engineering (that's a paraphrase, but I think an honest one.) But I'm not sure Badger's analysis entirely supports Zelizer's argument.

Zelizer writes: "It is clear that government spending during WWII was responsible for lifting us out of the Depression, not the New Deal. During the 1930s, FDR was not willing or able to go far enough in growing government." Both of those points are true as far as they go. But what they don't say is that, at least in Badger's reading (and I confess, in my own) government spending actually did a good job of lifting the U.S. economy, if not out of the Depression, then at least out of the immediate crisis. For one thing, part of that economic relief was in direct aid to states: both states like New York that already had "outdoor relief" programs (i.e. programs to aid people who didn't reside in state institutions) and states, like Pennsylvania, that left such relief up to private charities. As Mauritz Hallgrenm the editorial writer of the Baltimore Sun, observed in The Nation in his study of "Mass Misery in Philadelphia," by 1933 starvation was around the corner for millions of Americans. And the New Deal's programs largely averted that potential humanitarian catastrophe. (That most developed European countries already had social insurance programs by the 1930s shouldn't distract from the fact that the U.S. didn't, though it may account for this aspect of the New Deal's success being under-weighted in latter-day assessments). Badger also makes a case for the view that the stimulus of New Deal government spending did actually lift the U.S. economy as well. Here the data are more mixed, but it is at least arguable that it was FDR's misguided insistence on balancing the federal budget after 1936 that sent the recovery into a stall that only wartime spending would reverse.

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How FDR Was Multi-tasking In Those First Hundred Days

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One of the most important lessons that we learn in Badger's book is that there were really three different economic goals in the First Hundred Days. The first was the goal with which we are most familiar--to revitalize the economy and move the nation out of the Great Depression. When we evaluate FDR's success in meeting this challenge, the New Deal does not look very good. It is clear that government spending during WWII was responsible for lifting us out of the Depression, not the New Deal. During the 1930s, FDR was not willing or able to go far enough in growing government.

There was a second goal, however, and that was to rebuild the infrastructure of the economy to create a foundation for stronger economic growth in the future. Badger offers compelling evidence about how the New Deal established the foundations for the era of Great Expectations between 1940s and 1970s, when a wide range of Americans enjoyed unprecedented economic growth. The stories of the Tennessee Valley Authority and the Rural Electrification Administration are some of the best examples that we see from this component of the First Hundred Days. As a result of those programs, rural America exited the 1930s with more of the tools citizens needed to participate in economic growth.

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The Importance Of Political Cunning

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Sitting here in The Nation's London bureau watching Barack Obama take the office was a surreal experience. I'm still coming down from the thrill of hearing Aretha make "My Country Tis of Thee" a truly beautiful song--and the deep, deep relief of watching Dick Cheney slide into his limo and out of our lives. The 100 days have just begun.

So what can we learn from the past, and more specifically from Anthony Badger's brilliant evocation of a desperate time when a callow young president known best for his oratorical gifts came to office at a time of national crisis, with the world economy locked in a downward spiral, newspaper headlines dominated by bank failures and financial chicanery, rising unemployment and falling stock prices? First, that economic history isn't over either, and that the overweening confidence swelling the many apologias for capitalist triumphalism over the past decade were no more grounded in reality than those who saw in George W. Bush's imperial arrogance merely the righteous inevitablity of American dominance. Second that if we are indeed, as President Obama pledged, about to embark on remaking America, we would do well to begin on the ground of solid fact rather than ideological conjecture.

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A President Who Tried

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Anthony Badger reminds us that the First Hundred Days of the New Deal were imperfect. According to Badger, FDR did not do enough to end the Great Depression, many of his programs did not work, he was not fully prepared to handle the challenges that he faced, and Congress was actually responsible for many of the ideas and programs that we still associate with his White House. In Badger's portrait of the First Hundred Days, we don't see an infallible president who hit every challenge out of the ball park, but instead a very human president who struggled to confront a severe crisis and did not always know the best path to take.

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FDR's Lessons for Obama

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Anthony Badger has provided a wonderfully detailed and balanced account of FDR's First Hundred Days in his post. I do not intend in this more modest post to match his in-depth analysis or to debate the merits of particular policies enacted during this period. Rather my goal is to outline lessons that Obama could learn from FDR's success in enacting numerous major policy initiatives in his still unmatched First Hundred Days.

Like Franklin D. Roosevelt, Obama is a progressive Democrat elected at the end of a conservative era in American politics. Like FDR, Obama has an opportunity to become a transformational president. To achieve this goal, Obama would be well advised to follow Roosevelt's precedents for governing. Roosevelt not only won an unprecedented four presidential elections, but he also transformed the Democrats from a weak minority to American's dominant party.

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FDR and the First Hundred Days

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Opening my email on Monday morning, Nov. 17th, I found a message from CNN urgently requesting a live TV interview. I was told Barack Obama had mentioned reading a new book on FDR and the first Hundred Days the previous evening in his first major national TV interview. It was flattering that CNN assumed it was my book that he was talking about. CNN was undaunted by the fact that, as it turned out, Obama had been reading a different book, an earlier one by Jonathan Alter. Anxiety increased during the day as a high-tech CNN van tried to make it to medieval Cambridge. Eventually I stood in the driving rain on the steps of Clare College founded in 1326, telling American viewers about what their president-elect might be expected to learn from their own history.

Two weeks later British Prime Minister Gordon Brown recommended my book to readers of the Guardian newspaper as 'a classic example of how a work of history can illuminate the issues we're dealing with today.' Brown has cited Roosevelt and the New Deal as the model for his own recovery package in the UK. Media interest and requests for interview came from the US, the UK, Europe and Australia. By January 4th, the Observer (London) asserted that the book was 'Top of the political class's reading list on both sides of the Atlantic at Christmas.'

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This Week

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So, it's a pretty special week. And here at Cafe we're going to be delving into some of the excitement with two week long discussions-- each gazing in a different direction from this very particular point in history. In conjunction with Democracy Journal we'll be hosting a conversation about Obama's America. After eight years of Bush Administration malfeasance, we'll be examining where America stands, as measured by the values that define our nation, and what that means for the Obama Administration going forward. Over at book club, we'll be looking back-- to the first hundred days of FDR's administration.

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« TPMCafe Book Club: January 11, 2009 - January 17, 2009 | Back to TPMCafe Book Club | TPMCafe Book Club: January 25, 2009 - January 31, 2009 »
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