Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

The Big Lie About The Great Depression
Townhall.com ^ | June 27, 2007 | Ben Shapiro

Posted on 06/27/2007 5:10:50 AM PDT by Kaslin

In her vital and fascinating new book, "The Forgotten Man: A New History of the Great Depression," Amity Shlaes tells a story about national icon President Franklin Delano Roosevelt. Shortly after FDR took office, Shlaes explains, he began arbitrarily tinkering with the price of gold. "One day he would move the price up several cents; another, a few more," writes Shlaes.

One particular morning, Shlaes relates, FDR informed his "brain trust" that he was considering raising the price of gold by 21 cents. His advisers asked why 21 cents was the appropriate figure. "It's a lucky number," stated Roosevelt, "because it's three times seven." Henry Morgenthau, a member of the "brain trust," later wrote: "If anybody knew how we really set the gold price through a combination of lucky numbers, etc., I think they would be frightened."

Ignorance of basic economics -- and the concurrent attempt to obfuscate that ignorance by employing class-conscious demagoguery -- remains the staple of the Democratic Party. For over 60 years, Democrats and their allies in the media and public school system have taught that the Great Depression was an inevitable result of laissez-faire economic policies, and that only the Keynesian policies of the FDR government allowed America to emerge from the ashes. The Great Depression, for the left, provides conclusive proof that when it comes to economics, government works better than business.

This point of view has a sterling reputation. That reputation, unsurprisingly, was created by FDR himself. FDR turned the Great Depression into a morality play -- a morality play in which those in favor of individual initiative were the sinners, while those who relied on government were the saints. "We have always known that heedless self-interest was bad morals," Roosevelt intoned in 1937. "We know now that it is bad economics."

This, as Shlaes convincingly shows, is hogwash. The Depression lasted nearly a decade longer than it should have, due almost entirely to governmental meddling under both Herbert Hoover and FDR. High tariffs and government-sponsored deflation followed by enormous taxation and unthinkable government expenditures turned a stock market stumble into a decade-long nightmare. Only the devastation of World War II lifted America out of the mire, solving the drastic unemployment problem and providing a legitimate medium for FDR's pre-war wartime policies.

Nonetheless, the myth of a grinning FDR leading America forth from the soup kitchens remains potent. And today's Democrats rely desperately on that fading falsehood, hoping to bolster their bad economics with worse history. Hillary Clinton routinely hijacks Rooseveltian language, most recently disparaging the "on your own society" in favor of a "we're all in it together society." John Edwards' "two Americas" nonsense drips of FDR's class warfare. Never mind that Keynesian economics does not work. Never mind that it promotes unemployment, discourages investment and quashes entrepreneurship. For Democrats, the image of government-as-friend is more important than a government that actually protects the rights that breed prosperity.

"The impression of recovery -- the impression that a President was bending the old rules and, drawing upon his own courage and flamboyance in adversity and illness, stirring things up on behalf of the down-and-out -- mattered more than any miscalculations in the moot mathematics of economics," novelist-cum-economist John Updike recently wrote, defending FDR from Shlaes' critique. "Business, of which Shlaes is so solicitous, is basically merciless, geared to maximize profit. Government is ultimately a human transaction, and Roosevelt put a cheerful, defiant, caring face on government at a time when faith in democracy was ebbing throughout the Western world. For this inspirational feat he is the twentieth century's greatest President, to rank with Lincoln and Washington as symbolic figures for a nation to live by."

For Updike and his allies, image trumps reality. The supposed harshness of the business world matters more for Updike than the fact that profit incentives promote economic growth, efficiency and creativity. The "caring face" of government is more important for Updike than creating a framework that produces jobs and affordable commodities. Updike's sporadically employed father liked FDR because FDR made him feel "less alone." No doubt Updike's father would have felt less alone if he had been steadily employed by a private enterprise -- the kind of enterprise stifled by Roosevelt.

"We are beginning to wipe out the line that divides the practical from the ideal," FDR announced in 1937, as unemployment stood at 15 percent, "and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world." Today's Democrats continue to embrace the vision, even at the cost of a prosperous reality.


TOPICS: Business/Economy; Editorial; Government; US: District of Columbia
KEYWORDS: economics; fdr; greatdepression; liberalhack; oldschoollibtard; roosevelt
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-77 next last
To: Kaslin

My favorite part is when they mention the unprecedented growth after the war. It’s worth mentioning that the end of the war (and the start of the unprecedented growth) came just after the death of FDR.


21 posted on 06/27/2007 6:17:49 AM PDT by Jaysun (It's like people who hate corn bread and hate anchovies, but love cornchovie bread.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: HEY4QDEMS
Dredging up mistakes from 75 years ago that I can do nothing about is pointless IMO.

The point is to educate people who don't know about those mistakes and their consequences, and are trying to make them all over again. IMO.

22 posted on 06/27/2007 6:18:07 AM PDT by tacticalogic ("Oh bother!" said Pooh, as he chambered his last round.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Kaslin

Got my masters degree in The Dismal Science. The Great Depression had its roots in the trade war that began in Europe in the late 1920s. Our very own Congress got into the trade war with the Smoot-Hawley Tariff Act. World trade fell by 90%!!! Would Texas become poorer if we tried to produce everything within our own borders? Prices would rise, quality would drop, and everyone’s standard of living would suck. The Crash of ‘29 was followed by the idiotic policy of cutting the money supply. This, coupled with the drastic decrease in the velocity of money, was a disaster. Raising taxes on productive people, misallocating resources through government programs, new regulations....Its just too bad that Milton Friedman was not there to tell them how to fix it. BTW, I recently read the biography of Bernard Baruch. He was a financial genius when it came to making his own fortune and a complete moron when prescribing national policies.


23 posted on 06/27/2007 6:18:25 AM PDT by darth
[ Post Reply | Private Reply | To 1 | View Replies]

To: 50sDad
What produced the Great Depression was unrestricted buying on “margin”.

I disagree. That led to the stock market crash of 1929 but not the Great Depression.

What caused the Great Depression was the passage of the Smoot-Hartley Tariff Act of 1930, which arguably encouraged other countries to retaliate with tariffs of their own. At virtually the same time, Congress unwittingly passed the largest peacetime tax increase in the history of the United States. The combination of these two events caused, not just the United States, but also the entire world to sink into a deep depression.

24 posted on 06/27/2007 6:22:10 AM PDT by MosesKnows
[ Post Reply | Private Reply | To 3 | View Replies]

To: nicollo
That's up to whoever gets elected in '08. Be afraid, very afraid of a democratic government during a downturn.

When a downturn has happened in the past, the liberals have broken every rule and told any lie to try to use the downturn to convince the populace to lean toward a further expansion of the federal bureaucracy. When I say liberal, I point toward those in both parties.

25 posted on 06/27/2007 6:22:19 AM PDT by OriginalIntent (Undo the ACLU revision of the Constitution. If you agree with the ACLU revisions, you are a liberal)
[ Post Reply | Private Reply | To 20 | View Replies]

To: tacticalogic
The point is to educate people who don't know about those mistakes and their consequences, and are trying to make them all over again. IMO

That's all well and good but more often than not, it is advanced as a reason to bitch and provides very little constructive substance.
26 posted on 06/27/2007 6:22:59 AM PDT by HEY4QDEMS (Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: Kaslin

Ironically, it was World War II as started by Adolf Hitler that brought America back from the Depression.

In September 1939, right after the war began, Roosevelt went to Congress to modify the Neutrality Act to allow Britain and France to buy weapons on a “cash and carry” basis.

British and French money poured into our country and factories geared up to build weapons for them.

In 1940, the U.S. defense buildup began and the unemployment rates tumbled even further.


27 posted on 06/27/2007 6:25:42 AM PDT by Nextrush ( Chris Matthews Band: "I get high....I get high.....I get high.....McCain......")
[ Post Reply | Private Reply | To 1 | View Replies]

To: HEY4QDEMS
That's all well and good but more often than not, it is advanced as a reason to bitch and provides very little constructive substance.

Then let's try to put it into some kind of constructive context, like the coming debate on socializing health care, rather than engage in speculative bitching about the reason it was brought up.

28 posted on 06/27/2007 6:30:10 AM PDT by tacticalogic ("Oh bother!" said Pooh, as he chambered his last round.)
[ Post Reply | Private Reply | To 26 | View Replies]

To: tacticalogic
rather than engage in speculative bitching about the reason it was brought up.

Who's bitching about it being brought up? Certainly not I, I was answering the question as to what the Libs will do when they find out about this.

Anyone who thinks I am bitching is being way over sensitive.
29 posted on 06/27/2007 6:36:59 AM PDT by HEY4QDEMS (Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.)
[ Post Reply | Private Reply | To 28 | View Replies]

To: HEY4QDEMS
Dredging up mistakes from 75 years ago that I can do nothing about is pointless IMO.

That looked critical of even bringing it up, as being a waste of time. Apologies if I misunderstood.

30 posted on 06/27/2007 6:40:35 AM PDT by tacticalogic ("Oh bother!" said Pooh, as he chambered his last round.)
[ Post Reply | Private Reply | To 29 | View Replies]

To: gridlock

***It is a very good thing that FDR is fading into history.***

Ah, but my dear sir, it isn’t. It’s still kept alive by the communist professors who teach people like my neighbor who points to FDR as the greatest president this country has ever known.


31 posted on 06/27/2007 6:42:55 AM PDT by kitkat (I refuse to let the DUers chase me off FR.)
[ Post Reply | Private Reply | To 10 | View Replies]

To: tacticalogic

That’s understandable. I don’t always translate my thoughts to the keyboard as I well as I would like.


32 posted on 06/27/2007 6:44:01 AM PDT by HEY4QDEMS (Sarchasm: The gulf between the author of sarcastic wit and the person who doesn't get it.)
[ Post Reply | Private Reply | To 30 | View Replies]

To: Just another Joe

***Do you REALLY think that over 10 years of the “Great Depression” was an accident?***

I agree with every word you said.

The Democrats are famous for keeping people down and in need of government help. That’s how they get votes.


33 posted on 06/27/2007 6:47:49 AM PDT by kitkat (I refuse to let the DUers chase me off FR.)
[ Post Reply | Private Reply | To 19 | View Replies]

To: sickoflibs
Milton Friedman has an analysis of the causes in his book “Free to Choose” far be it from me to gainsay him. It was bad monetary policy by the Fed.
34 posted on 06/27/2007 6:52:03 AM PDT by ALPAPilot
[ Post Reply | Private Reply | To 2 | View Replies]

To: 50sDad
What produced the Great Depression was unrestricted buying on “margin”.

What percentage of market capital was a margin loan?

35 posted on 06/27/2007 6:54:47 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
[ Post Reply | Private Reply | To 3 | View Replies]

To: AlaskaErik
Wait til his great Ponzi scheme (aka Social Security) collapses. He’ll go from revered to reviled in less than a generation.

Nope. Conservatives will get the blame.

36 posted on 06/27/2007 6:55:52 AM PDT by ModelBreaker
[ Post Reply | Private Reply | To 16 | View Replies]

To: 50sDad
What produced the Great Depression was unrestricted buying on “margin”. Everybody, EVERYBODY, got into the Market not as a long term investment, but on a “flipping” basis, where the last person in line gets stuck with the check. Too many people were buying with a lack of hard money to back up their purchases, so when the market naturally corrected itself, it fell apart.

I don't think the author is denying the cause of the Depression, but pointing out that FDR's leftist policies made it worse and made it last much longer.

If he had kept the government's meddling fingers out of it, the market would have smacked down the margin-buying Ponzi scheme and then recovered, much as the Dot Com bubble smacked a few people really hard, but didn't tank the whole market for a decade.

37 posted on 06/27/2007 6:57:30 AM PDT by TChris (The Republican Party is merely the Democrat Party's "away" jersey - Vox Day)
[ Post Reply | Private Reply | To 3 | View Replies]

To: NavyCanDo

Thank you, NavyCanDo, for an excellent post!


38 posted on 06/27/2007 7:03:08 AM PDT by mywholebodyisaweapon
[ Post Reply | Private Reply | To 15 | View Replies]

To: Kaslin

FDR did more to permanently damage the republic than any other single person in this nation’s history.


39 posted on 06/27/2007 7:09:18 AM PDT by newguy357
[ Post Reply | Private Reply | To 1 | View Replies]

To: Tallguy
Churchill did not have a lot of confidence in FDR’s intellectual abilities. And, in reading about Stillwell and our experience in China, it seems that FDR’s war planning for the CBI theater was not what it could have been.
40 posted on 06/27/2007 7:14:12 AM PDT by SMARTY ("Stay together, pay the soldiers and forget everything else." Lucius Septimus Severus)
[ Post Reply | Private Reply | To 6 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-77 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson