Wednesday, November 13, 2013

Alan Nasser — How Franklin D. Roosevelt Botched Social Security


FDR not a progressive, or even a liberal?
The seeds of neoliberal economic policy were planted during the founding years of twentieth century liberalism. The Democrats’ current embrace of fiscal conservatism is claimed by contemporary self-proclaimed New Dealers to be a repudiation of the founding bequest, a capitulation to reactionary Republican dogma. Budget deficits, we are told, were legitimated by Franklin D. Roosevelt during the New Deal as a legacy to future Democratic regimes. The political obligation to enhance social welfare is supposed to have trumped the old-time Hooverian taboo against government expenditures beyond government receipts. 
Objections to this policy are thought to have been refuted not merely by Keynesian economic theory but mainly by successful practice: once Roosevelt put into place large scale deficit-funded projects like the Works Progress Administration, the economy was launched into its steepest cyclical expansion to this day, from 1933 to 1937. Reagan’s tirades against budget deficits are said to be a throwback to pre-Rooseveltian times and outdated orthodoxy. Imagine the chagrin of “the Democratic wing of the Democratic Party” when Clinton and Obama betrayed the heritage of the New Deal by seconding the Republican commitment to fiscal orthodoxy. The rustling sound you are supposed to hear is FDR tossing in his grave.
This story is the most recent supplement to the myth of the Democratic Party as the “Party of the working man.” It fails to recognize that fiscal orthodoxy and the correlative tethering of social benefit to work and wage level was central to Franklin Roosevelt’s political values and bequeathed to postwar American liberalism a distinctly conservative, anti-social-democratic thrust....
Counterpunch
How Franklin D. Roosevelt Botched Social Security
Alan Nasser
(h/t Dan Lynch)


5 comments:

Dan Lynch said...

FDR was elected in 1932 on a promise to balance the budget. His early legislation, like the National Recovery Act, was pro-business, not pro-worker.

FDR was forced to the left by Huey Long, who threatened to split the Democratic vote by running as a 3rd party in 1936. FDR's "2nd New Deal," which included Social Security, was a watered down version of Huey's "Share the Wealth" plan.

After the double dip recession of 1938, FDR seemed to learn his lesson and thereafter embraced Keynesian economics.

Then shortly before FDR died he proposed the 2nd Bill of Rights, which was basically the remainder of Huey Long's "Share The Wealth" plan.

My impression is that FDR started out as a pro-business fiscal conservative and then gradually evolved leftward.

Calgacus said...

Nasser presents a flavor of revisionism, a revisionism seen everywhere. FDR confronted the problems of his time with spectacular success. Is asking him to have solved the problems of the next few decades a request appropriate for grown-ups? (Notwithstanding that the New Deal solutions - as corroded and belittled as they are - are still there, working for the public purpose, still succeeding against the suicidal designs of the economic royalists.)

IMHO, the most simple-minded traditional story believed by the least "educated" is, as usual when it comes to economics, the most correct one. FDR and the New Deal was a Keynesian / MMT progressive/liberal success story. Period.

Nasser extolling "relief" - like a BIG - over the WPA - a JG - shows his lack of understanding. The plutocracy wouldn't like a BIG/ relief. But they vastly prefer it to what they are truly afraid of - a WPA/JG. Because they know a BIG will destroy itself, while a JG will work forever.

"Fiscal orthodoxy" is not ultimately what correlates with "the tethering of social benefit to work and wage level". Not being insane, living in the real world, not a dream-world is "what correlates benefits to work."

As Phil Harvey points out - FDR's primary 1932 address on the economy as a candidate is filled with deficit-terrorism, true. But at the end, FDR said if deficit spending is necessary to put people to work - I'll deficit spend.

Matt Franko said...

Let's not forget that when he took over, FDR (the US) was still under the gold...

So to have a deficit result he was actually borrowing so he was probably correct to be at least concerned about having a deficit as a result of fiscal policy...

Then he got us out from under the gold (domestically) and seems like then a deficit result became less bothersome to him as it should have...

rsp,

Greg said...

" FDR confronted the problems of his time with spectacular success. Is asking him to have solved the problems of the next few decades a request appropriate for grown-ups? (Notwithstanding that the New Deal solutions - as corroded and belittled as they are - are still there, working for the public purpose, still succeeding against the suicidal designs of the economic royalists."

Excellent comment

We have to fight our own battles and not look to the legislation of the 30s to bail us out. But its undeniably true that without SS, FDIC or UI (as weakened through the decades as they have become) our 2008 recession would have been much worse and more banks would have been bust.
We have to come up with our own New Deal. The template of the thirties may still offer a roadmap of sorts but we wont get what we had then. Too much animosity towards that stuff thanks to the miseducation of our generations. The modern plan better include more protections against losing all your wealth because your parents passed you a gene that gives you a sarcoma or something. A sickness is way more expensive today.

If businesses want more certainty to plan their present and future outlays, their customers need more certainty regarding their income potential as well. It all starts with Elm Street. If average American isnt in fear of losing his job or in fear of losing his savings due to factors completely beyond his choices, they will be much more reliable customers.

Tom Hickey said...

I view FDR's ambivalence in terms of his two major financial appointment, Marriner Eccles to head the Fed and Henry Morgenthau, Jr. to head Treasury. Kind of symbolizes the tug of war in FDR himself.