This weeks entry marks the end of our reading of New Deal or Raw Deal by Burt Folsom, Jr.  I felt like this book was very timely and had many points we should consider today.  I had read about FDR before, and had a pretty low opinion of him.  However, this book lowered that opinion further still.

I get the feeling FDR was primarily concerned with getting and holding power.  Folsom outlines some of the lies he told the American public (such as running on reducing the size of government) and some of the lies he told his own staff (such as when he would play them against each other when they asked for funding).  He did everything he could to reduce the strength of the other “equal” branches of government.  When congress didn’t vote his way, he tried to out Republicans AND Democrats through the use of federal funds in their districts.  When the Supreme Court ruled some of his policies unconstitutional, he tried to pack the court by adding members to it.

However, this book is more than a simple attack  of FDR’s character.  It is also a close examination of FDR’s policies.  Many of these policies have echos in today’s world.  FDR was elected during the Great Depression.  He used massive government expansion and spending to attempt to cure the Great Depression. In our world today, President Obama has tried some of the same techniques to fix our own recession.  Those techniques have worked no better than they did for FDR. This book is important because of the similarities to our own world.  Once we recognize the problems with FDR’s administration, we can try to fight them in President Obama’s administration.

My Own Conclusion

This is also the last book I plan on leading for the Book Notes project.  This started out as a guided “book club” for Red State by Eric.  I picked up somewhere along the way.  I hope someone is ready to jump in and take over for me.  The book notes project has covered ten books to date.  I have gained so much by reading these books.  I have learned a lot about economics and conservative history I wouldn’t have otherwise known.  I also now recognize that conservatism, freedom, and faith are intertwined.  In our lives, we must continually water all each of these.

If someone picks this up, I will follow.  I will continue to be around the corners of Red State, and plan to write a little here and there.  I have enjoyed my time here, and reading the comments of my own fellow travelers  has guided me immensely.

Thank you,

Andy D

This weeks post is going to be short and sweet.  With our current recession showing more negative signs each week, I thought Chapter 15 had some useful advice for today’s leaders.  In this chapter, Mr. Folsom looks at some of the things FDR should have done to get the United States out of the Great Depression.  Two of those things stand out above the rest as useful for today.

Mr. Folsom spends Chapter 16 arguing when the Depression really ended.  From my own personal reading, I would have to argue that it ended sometime after the end of World War II.  However, that is a debate for another time.  Mr. Folsom argues pretty successfully that the Depression was still in full swing during FDR’s first two terms.  FDR radically changed our government, spent an incredible amount of money, and wasn’t able to get the United States out of the Depression.  So what should he have done, and what can this teach us about our own modern day recession?
First, a 79 percent top tax rate was never going to spur growth.  Much like today, if we want business to expand we must let people keep more of their own pay checks.  In both cases, lower tax rates were (and are) required to get the economy going again.  FDR new this.  He even campaigned on it in saying,

“Taxes are paid in the sweat of every man who labors because they are a burden on production and are paid through production.  If those taxes are excessive, they are reflected in idle factories, in tax-sold farms, and in hordes of hungry people, tramping the streets and seeking jobs in vain.”

While things aren’t as bleak today, I think lowering taxes today will do as much for our economy as lowering them in FDR’s day.  When people keep more of their own money, they are able to spend it in wiser ways than the government can.

Secondly, FDR pledged to cut or “reduce the cost of current Federal Government operations by 25 percent”.  He also stated that anyone entering his cabinet must take a pledge to support the Democratic Parties attempt to reduce federal spending.  Obviously, once he entered office he ignored this.  However, he made excuses for it every year as we read early in the book.  That shows that FDR knew when he was running for election the first time, and when he was campaigning every year after that, that what voters wanted was a smaller federal government.

This holds true today.  We need to reduce our spending.  For every dollar the government spends, many dollars are pulled out of the private sector.  These two steps, reducing taxes and reducing the federal government, would greatly improve our economy today.  FDR knew it then, and we know it now.

For Next Week: Finish the book!

I thought chapter 14 of this weeks reading was very interesting.  In it, Mr. Folsom chronicles many of the lies FDR told to the public and to members of his own party while in office.

FDR was guilty of using the same lies that we hear politicians use today.  For example, in 1932, Roosevelt promised to balance the budget.  He even made balancing the budget the centerpiece of a speech two weeks before the election.  Roosevelt said, “I shall approach the problem of carrying out the plain percept of our Party, which is to reduce the cost of current Federal Government operations by 25 percent.”  One could even believe these promises were on the minds of voters as they headed to the both.

However, once in office, FDR didn’t even attempt to pass a balanced budget. Instead he launched on his “First 100 days” and the New Deal.  These programs were almost impossible to implement under a balanced budget.  However, the lies wouldn’t stop with his election.  Folsom spends much of chapter 14 chronicling the list of lies that FDR told his staff and supporters. They are too numerous to recount here.  I would encourage you to spend a few minutes reading chapter 14 if you haven’t already.

What’s incredible about FDR’s lies is how well it’s been covered up since day one of his administration.  In FDR’s time, the press would hide everything from his disability, his affairs with other women (numerous women), and his lies to the press themselves.  In today’s world, FDR’s lying is rarely ever mentioned.  I know neither it nor the extra marital affairs where in any text book I read in school.  Because Roosevelt was widely known to lie to the press and to his own administration, he may have changed the very nature of the office of the presidency in one other role:  it’s need for men of character.  Folsom closes this chapter with the following passage:

In the 1790′s, George Washington had argued that morality, especially among leaders, was indispensable to the survival of the American republic.  Even before Roosevelt, of course, some presidents had fallen short of Washington’s high standard.  But during the 1930′s, the increased role of government made Washington’s pledge of morality seem antiquated.  Roosevelt, by centralizing power in the executive, by providing subsidies for votes, and by his charismatic radio addresses, took attention away form his character and focused it on his intentions in his dramatic New Deal.  After Roosevelt, fewer presidents would be bound by public promises, by constitutional restraints, or by providing exemplary conduct in their personal lives.

Perhaps the lack of  character in politicians is FDR’s true legacy.

For Next Week:  I plan on covering Chapters 15 and 16.  Have a great Memorial Day.

“My father,” Elliott Roosevelt observed of his famous parent, “may have been the originator of the concept of employing the IRS as a weapon of political retribution.”

This is the first line from this week’s reading of New Deal or Raw Deal.  I am going to spend my time today talking about FDR employing the IRS to silence dissent within the United States.  I’ve heard pundits talk about the government using IRS audit’s against people before, but never took it seriously.  Mr. Folsom has really opened my eyes to the reality.

In this chapter, Mr. Folsom points to a number of examples where FDR ordered the IRS to investigate people who were critical of his policies.  He also told the IRS to stop investigations that might harm those who were helping him (such as then congressman and future president LBJ).  The scariest part of this was that FDR was willing to use the IRS as a weapon against private US citizens.  Take for example William Randolph Hearst (newspaper publisher), or Father Charles Coughlin (priest and radio personality).  In both of these cases, Roosevelt had the IRS comb through the financial records of these individuals looking for something he could use against them.  Why?  They dared to oppose the New Deal.  Neither of these individuals were found guilty of anything.  Others, such as Moses “Moe” Annenberg, weren’t so lucky.

Moe Annenberg made a fortune as an investor.  He sold horse racing forms, wall sheets, and the wire service for horse racing.  ”He developed the largest horse-racing network in the country, and made many millions of dollars from that enterprise alone,” Folsom tells us.  Annenberg also owned and ran the Philadelphia Inquirer.  This is where Mr. Annenberg ran afoul of FDR and his IRS agents. FDR couldn’t allow Annenberg to continue to publish his ideas against the New Deal and the administration. Because Annenberg’s assorted businesses were complicated, it was difficult to file taxes and not have something wrong. The IRS alleged that Annenberg owed $8 Million in back taxes. He offered to pay all of it. However, that wasn’t good enough for Roosevelt. However…

…the Roosevelt administration wanted back taxes and and Moe Annenberg locked up in jail. As Elmer Irey told Morgenthau, “They are not going to have the opportunity to pay the tax [and avoid prison].” When Morgenthau and Roosevelt discussed the matter over lunch on April 11, 1939, Morgenthau asked Roosevelt if he could do something for the president. “Yes,” Roosevelt said. “I want Moe Annenberg for dinner.” Morgenthau responded, “You’re going to have him for breakfast – fried.” {all emphasis and notes in the original}

Roosevelt, the idol of today’s progressive movement, wanted Annenberg to be punished and he wanted an example made of him. He got his wish. Annenberg would be forced to pay $8 Million and serve a 3-year prison sentence. The prison term kept the paper from being as hard on New Deal policies as it had been with Annenberg at its helm. FDR got a political opponent silenced, and an additional $8 Million to fund New Deal policies. Everyone who wanted to criticize the New Deal got a pretty clear message.

For Next Week: I plan on covering up to the beginning of Chapter 15 for next week.  Have a good week everyone.

I am going to spend some time on my soap box this week.  I have always been against the minimum wage law, and this weeks reading has only reinforced that.

This weeks reading of New Deal or Raw Deal? included a discussion of FDR’s push for a minimum wage.  FDR citied the need for the poor to have more money.  If businesses were required to pay employees more, then the poor would have more money to spend on food, clothing, and other items.  Minimum wage laws (in both the 1930′s and today) illustrate one of the greatest problems with liberal and progressive ideas:  They look good on the surface, but they fail the moment any real thought is put to the idea.

First, minimum wage laws violate the freedom of both employees and the businesses they work for.  Employment contracts represent an agreement between two parties that they both freely enter into.  If I am willing to work for $1.00 an hour bagging groceries, and an employer is willing to pay me $1.00 an hour, why should anyone else be involved?  Why should the government be able to step in and violate that contract simply to make a few elected representatives feel better?

Secondly, minimum wage laws don’t work.  Regardless of what laws are or are not passed in Washington, any employer can only spend so much on payroll.  If Washington insists that the employer pays his employees more, that employer will be forced to reduce the number of employees he has.  Worse, minimum wage laws hit the poor, and those with the least marketable skills the hardest.  A good business isn’t likely to fire his best employees.  He’s going to fire those employees that have the fewest skills.  Once those employees loose their job, it’s hard to find a new job.  Other businesses are also firing those employees with the least skills.

For Next Week. I want to read up to Chapter 13.   Also, this will be my last book leading the book notes project.  If you would like to take it over, let me know.  I expect to be done with this book in another three to  four weeks.  Have a good week.

I would normally post my thoughts here on the recent readings in New Deal or Raw Deal by Folsom.  However, I haven’t finished this weeks reading so I am going to put this off until next Sunday.  If you were better than me and finished the reading, feel free to post your comments here.

On a different note, this is going to  be the last book I cover for the book notes project.  I have enjoyed the work, and have learned a lot.  However, I have other things going on in my life that are pulling me away from this.  Therefore, I don’t believe I can do a good job leading this project any more.  I hope someone is willing to pick up this project.

This will be the ninth book we have covered here in the last year and a half.  All of the books were very well done, and great reads.  If someone wants to start guiding this project, I will send you my spreadsheet where I have tracked the original book list, and have taken notes of books that were suggested to augment the original list.

Have a great week, and I will see you here next week.

I thought this weeks reading serves as a very good warning to the dangers of the federal government getting involved in charities.  Mr. Folsom was looking back at the New Deal, but I believe we could apply lessons form the New Deal to today’s debate on federal spending.

First, federal charity retards private charity.  If individuals are taxed so that the federal government can provide charity, then there is less money going from private individuals to those same charities.  Since we all know that the federal government is a classic example of inefficiency, then we must also recognize that the money the feds spend on charities, or for “charitable” purposes is less than private individuals will spend on that same cause.

Mr. Folsom gives an example of this in Chapter 6 of New Deal or Raw Deal.  in 1887, a drought hit a number of counties in Texas.  Some of the farmers lost their crops.  Texan politicians pressured congress into giving Texas $10,000 in free seeds.  Once the bill made it to President Cleveland’s desk, he vetoed it.   President Cleveland’s reason?

“I can find no warrant for such an appropriation in the Constitution,”  Cleveland said.  Such aid would “destroy the partitions between proper subjects of Federal and local care and regulation.”  He added, “Federal aid, in such cases, encourages the expectations of paternal care on the part of the Government and weakens the sturdiness of our national character.”  As for Texas, Cleveland noted, “the friendliness and charity of our countrymen can always be relied upon to relieve their fellow citizens in misfortune.”

As Folsom points out, President Cleveland was correct.  Contributions to from across the nation exceeded $100,000.  This is ten times more than what Texas politicians were trying to take from federal taxpayers.  We can also look at the charitable giving after 9/11, the 2004 Tsunami, and the devastation  in Haiti to know that Americans do a good job providing charitable giving out of their own pockets without the help of the federal government.

We can take one other warning from these chapters too.  Folsom points out that the the Federal Relief Act and the Works Progress Administration became very political.  The money doled out by the federal government became less about what state or community needed it and more about what state or community might be needed in the next election.    Again, quoting Folsom:

The WPA hourly pay scale for skilled workers ranged from 31 cents an hour in Alabama, Kentucky, Tennessee, and Virginia, to $2.25 an hour in New Jersey.  New Jersey, unlike those southern states, was a swing state, and Mayor Frank Hague of Jersey City had been the key for Roosevelt narrowly carrying the state in 1932.

So tax payer funds were used by Democrats to try to repay for votes in past elections, and to pay for votes in future elections.  The Southern state were strong Democratic states, therefore they didn’t need additional money from the feds.  However, a state like New Jersey could vote Republican, so tax payer money was used to prevent that.

There is a lot of good information in these chapters.  As we look at the debate over current spending, we should remember these lessons from the New Deal.  We can cut aid to the poor and other charities because private citizens and charitable organizations will take care of this need.  There may be some out there that have the most noble of intentions when using tax payer money for charities.  However, I suspect most simply want to buy more votes for the next election.

For Next Week: I am going to read to the end of Chapter 10 for next weeks book notes.

I continue to be amazed at the number of parallels between the FDR administration and the Obama administration.  There were two important ones from this weeks reading that I wanted to spend time covering.

Causes of the Great Depression

During the 1930′s and into today capitalism is often pointed out as the reason for the Great Depression.  FDR campaigned saying that the rich were getting richer, companies were experiencing larger profits than ever before, and the poor were getting poorer.  It was said that while companies were making record profits, the average worker couldn’t afford the products they were making.

However, Mr. Folsom points to three reasons that were actual contributors to the great depression:

1. Lack of loan repayment from our World War One partners.
2. The Smoot-Hawley Tariff Act, which launched an escalating tariff war and drove up the prices of imports AND items manufactured in the United States.
3. The actions (or in-actions) of the Federal Reserve Bank.

Each of these contributed to the Great Depression.  Mr. Folsom does a good job of laying out each of these items.  They are well covered in Chapter Three, and would take too much space to cover here.  Mr. Folsom also explains how the “failed capitalism” line of thinking doesn’t work.  He points out that:

There was no upsurge of corporate profits during the decade.  However, the wages going to employees were capturing a larger share of corporate dollars during the 1920s than before.  Third, the percentage of GNP that went to consumption expenses did not fall, but actually rose from 68 percent in 1920 to 75 percent in 1927, 1928, and 1929.

This seems to show that capitalism was working fine during the 1920s.

The NRA

The National Industrial Recovery Act (NIRA then later NRA) became law in 1933.  This act, “…allowed American industrialists to collaborate to set the prices of their products, and even the wages and hours that went into making them.”  This gave the largest firms in industry the ability to write the rules everyone else had to play by.  If all of the automakers have to pay the same wages as the largest automakers, then the small firms can’t stay in business.

Worse still, the NRA was not a voluntary thing.  Non-partisipation could get a firm or individual fined or jailed.  Carl Pharis of Phairs Tire and Rubber Company described it as, “The Government deliberately raised our prices up towards the prices at which the big companies wanted to sell, at which they could make a profit,…where more easily, with much less loss, they could come down and ‘get us’ and where, bound by N. R. A. decrees, we could not use lower prices, although we could have lowered them and still made a decent profit.”  The Government got in the business of letting the biggest firms pick who would win and who would loose.

The Obama Administration

Which brings us to today.  The current administration continues to blame greedy capitalist and the free market system for our current problems.  It is using it’s own laws to circumvent the rule of law and the capitalist system.  Like FDR, President Obama believes that only the government can solve our problems.

For Next Week: I plan on covering Chapters 5 and 6.  Happy Easter, and have a great week.

This is the first entry for our new book in the Book Notes section of Red State.  I decided to go with New Deal or Raw Deal: How FDR’s Economic Legacy has Damaged America by Burton Folsom, Jr. because it seems very relevant for today.  President Obama came into office on a spending spree.  The Democratic controlled Congress and Senate showed no desire to reign in any of his spending.  The current Congress seems only slightly more willing to cut back on spending, but still only slightly.

So the question as we read Mr. Folsom’s book is this:  How did unprecedented spending affect America during the FDR presidency.  Much like today, there was “spiraling national debt,” threatening our nation.  However, in the 1930′s, it appeared to be entirely from the current administration.  As Mr. Folsom writes:

The United States had budget surpluses in 1930 and 1931, but soon government spending ballooned and far outstripped revenue from taxes.  The national debt stood at $16 billion in 1931; by the end of the decade the debt had more than doubled to more than $40 billion.

What did we get for this massive spending?  Unemployment in1931 was 16.3 percent.  By 1939, FDR’s spending was able to get that unemployment UP to 17.2 %.

Not only was it unprecedented, but many of today’s progressives feel FDR didn’t spend enough.  In discussing a future historian of FDR, Mr. Folsom writes:

What’s interesting is that most of these complaints are that Roosevelt should have done more than he did, not less.  ”The havoc that had been done before Roosevelt took office” Leuchtenburg argues, “was so great that even the unprecedented measures of the New Deal did not suffice to repair the damage.”  Therefore, to Leuchtenburg and others, the New Deal was only “a halfway revolution” that should have gone further.

Thus we hear the opinion of future generations of historians and progressives that would look back at FDR.  However, the most damning quote in this first chapter is not from a professional historian, but from a close friend and confidant of FDR’s.  Henry Morgenthau, Jr. was not just FDR’s secretary of treasury, he was one of the only people who could tell FDR ,”…he was wrong and get away with it”.  This man was in FDR’s inner circle and  would have known as well as FDR the results of the incredible spending.  Yet, when speaking to other Democrats, he candidly remarked:

We have tried spending money.  We are spending more than we have ever spent before and it does not work.  And I have just one interest, and if I am wrong…somebody else can have my job.  I want to see this country prosperous.  I want to see people get a job.  I want to see people get enough to eat. We have never made good on our promises…I say after eight years of this Administration we have just as much unemployment as when we started…And an enormous debt to boot!”

As much employment as when the President started, and an enormous debt.  Sound like any Democratic President you know?

For Next Week: I plan on covering through the end of  Chapter Four.

Conscience of a Conservative by Barry Goldwater turned out to be a very good book wrapped in a small package. Many of the sections touched on some of the themes we have seen through out the Book Notes reading. Others brought new ideas out. The section on foreign aid has me reconsidering my entire position on foreign aid. It never dawned on me (though it should have) that foreign aid isn’t mentioned in the Constitution. How can the federal government legally tax U.S. citizens to give their property to other nations?

The section on education put in writing some of my own ideas. However, Mr. Goldwater expressed them better than I ever could have. He writes:

“In the main, the trouble with American education is that we have put into practice the educational philosophy expounded by John Dewey and his disciples. In varying degrees we have adopted what has been called “progressive education.” Subscribing to the egalitarian notion that every child must have the same education, we have neglected to provide an educational system which will tax the talents and stir the ambitions of our best students and which will thus insure us the kind of leaders we will need in the future. In our desire to make sure that our children learn to “adjust” to their environment, we have given them insufficient opportunity to acquire the knowledge that will enable them to master their environment. In our attempt to make education “fun,” we have neglected the academic disciplines that develop sound minds and are conductive to sound characters.”

As much as I agree with this, I think the most important part of this reading was the introduction. Goldwater writes about why he decided to put his thoughts on paper. Much of this section explains why we should be participating in the Book Notes project in the first place,

“Conservatism, we are told, is out of date. The charge is preposterous and we ought boldly to say so. The laws of God, and of nature, have no dateline. The principles on which the Conservative political position is based have been established by a process that has nothing to do with the social, economic and political landscape that changes from decade to decade and from century to century. These principles are derived from the nature of man, and from the truths that God has revealed about His creation. Circumstances do change. So do the problems that are shaped by circumstances. But the principles that govern the solution of the problems do not. To suggest that the Conservative philosophy is out of date is akin to saying that the Golden rule, or the Ten Commandments or Aristotle’s Politics are out of date.” {emphasis mine}

This last sentence should be the theme of the Book Notes project: Conservative philosophy is timeless. It applies to the problems of the day, and is as relevant as the Golden rule. This is the message we should be communicating to our fellow conservatives, our elected officials, and our friends and family. If this lesson is learned by the voters and by our representatives, the other issues will work themselves out.

For Next Week: I am going to go with a suggestion from a previous post and start “New Deal or Raw Deal” by Hillsdale College’s Burton W. Folsom, Jr. It has been a while since we have looked into history. I think this might be a good time to read about FDR since many of his policies are being re-examined today. For next week I want to cover Chapter One. Have a good week.