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Jewish World Review January 16, 2009 / 20 Teves 5769 Do we really want another New Deal? By Rich Lowry http://www.JewishWorldReview.com | Barack Obama's lefty admirers are agitating for a new New Deal. We'll know that we've achieved that blessed state when the government destroys 6 million baby pigs — turning many of them into grease and fertilizer (anything but food) — to prop up the price of pork. Or when it plows under a quarter of the South's cotton and slaughters pregnant cows. American agricultural policy remains perverse to this day, but nobody is calling for the willy-nilly destruction of American crops and livestock as a means of checking deflation and fostering economic recovery. New Deal nostalgics forget all the elements of Franklin Roosevelt's program that were frankly absurd and economically ruinous. Should we want Obama to propose a quasi-militaristic program to empower business cartels to set prices, on the model of FDR's National Recovery Administration? Should he take his cue from FDR and prosecute businesses that discount their products, giving strapped consumers a break? Should he triple taxes, hiking excise taxes on common consumer goods and imposing an entirely new payroll tax on employment? Should he crib from FDR's speeches and demonize business and investors? Should he create government make-work jobs and pay people to clear trails in the national parks and unemployed artists to paint murals in post offices? The New Deal has been much discussed lately as the country has plunged into its worst financial crisis since the 1930s. And an amazing event has occurred: The left has admitted that the New Deal did not in fact — as all Americans learned in their schoolbooks — end the Great Depression. For the longest time, the New Deal coasted on a glorious reputation that shielded it from its record. As Mark Twain remarked, "Once a man acquires a reputation as an early riser, he can start sleeping until noon every day." In 1938, the unemployment rate was back to 19 percent, as the country swooned into "the depression within the depression." FDR's advocates say the problem was that, after economic gains, he pulled back too soon on his program of deficit spending. As Jim Powell, author of "FDR's Folly," points out, this concedes that FDR had failed to foster a business climate strong enough for recovery. (Have any of Obama's boosters noticed, by the way, that a program of massive deficit spending that will be quickly rolled up as soon as the economy begins to recover is exactly what Obama is proposing now?) The worst mistake of the New Deal was keeping wages and prices artificially high, thus suppressing employment and consumer demand. UCLA economists Harold L. Cole and Lee E. Ohanian calculate that FDR's pro-labor policies kept both wages and unemployment 25 percent above what they would have been otherwise. (The old saw was the Depression wasn't so bad — if you had a job.) "Salaries and prices fall when unemployment is high," Ohanian has explained. "By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces." Most analysts agree that World War II ended the Depression. The left tries to appropriate the war for the New Deal by characterizing it as simply a public-works program writ large — as if global cataclysm, with millions killed, countries overrun by invading armies and major cities reduced to rubble, is just the thing we need to get an economy moving again. During World War II, 12 million men were conscripted into the military, food was rationed, and people couldn't buy consumer goods like cars and appliances. Suffice it to say, its utility as a model for economic recovery is quite limited. FDR was a prodigious political talent, whose high spirits and well-chosen words inspired the public, and a man of great personal courage. He left his imprint forever on American government, for better or worse. He was an exceptional wartime leader. Much can be said in his favor — except he didn't end the Great Depression. Barack Obama, take note. Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here. Comment by clicking here. Rich Lowry Archives © 2009 King Features Syndicate

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