Matt Davis — Remembering when bankers tried to overthrow FDR and install a fascist dictator

One of the bankers was Prescott Bush, later senator from Connecticut, father of President G. W. H. Bush, and grandfather of President G. W. Bush. The whistleblower was Maj. Gen. Smedley Butler.

Big Think
Remembering when bankers tried to overthrow FDR and install a fascist dictator

Matt Davis

Lambert Strether — The Jobs Guarantee, “Make-Work,” and FDR’s Civilian Conservation Corps (CCC)

One of the talking points deployed against a Jobs Guarantee[1] is “make-work.”[2] (I’m not proffering a complete sentence because deployment, in form of a jerking knee, is so fast that complete sentence cannot be emitted in time). This makes me crazy, because I was taught about FDR’s Civilian Conservation Corps (CCC) back in grade school, and while the CCC was not “A job for everyone who wants one,” the work the millions employed by CCC did was most definitely not “make-work.” So in this post, I want to take a quick look at the CCC, because not all readers may be familiar with it, and then take a quick look at what a modern CCC might do. (In other words, I’m recapturing a little history here — even perhaps doing a little bit of a rant — not doing serious policy analysis.)

Naked Capitalism
The Jobs Guarantee, “Make-Work,” and FDR’s Civilian Conservation Corps (CCC)
Lambert Strether of Corrente

Kate Aronoff — A Guaranteed Jobs-For-All Program Is Gaining Traction Among 2020 Democratic Hopefuls

Longish but worth a read. Covers a lot of ground.

The Intercept
A Guaranteed Jobs-For-All Program Is Gaining Traction Among 2020 Democratic Hopefuls

Kate Aronoff

Johnny Fulfer — It’s Time to Guarantee Jobs

The first half of the twentieth century was a challenging time for economics. The Great Depression wiped out incomes, investments, and most importantly, optimism. But when the traditional laissez-faire approach proved ineffective, the work of Keynes and FDR showed that there was another way. The New Deal employed American workers directly and restored confidence among business owners. Today, we could benefit from a similar program. It’s time for a new New Deal, or a Job Guarantee Program, that secures employment to all who are able and willing to work. We’ve done it before, and we can do it again....

Job guarantees are not unexplored territory. Maps exist.

The Minskys
It’s Time to Guarantee Jobs
Johnny Fulfer

Tony Wikrent — Rex Tugwell of FDR's Brain Trust: The New Deal in Retrospect

Rexford Guy Tugwell (1891-1979) was an economist and one of the most important and innovative members of President Franklin D. Roosevelt's first Brain-Trust. Tugwell studied economics at the Wharton School of the University of Pennsylvania under Simon Patten, at the time one of the leading economists in the USA and one of the last great economists to emphasize the difference between productive economic activity, and economic rent seeking. Patten was a founder of the American Economics Association. 

This was decades before Wharton was infested by neoliberalism and became an MBA mill.

This account by Tugwell provides an excellent short history of the pre-war Roosevelt administration. I greatly wish I had been aware of it nine years ago, in time to have posted it during Obama's first campaign. It would have served as a signpost to an alternative to neoliberalism, which Obama unfortunately followed steadily as he moved from one accommodation with Wall Street to the next. In addition to my reading of countless articles these past 8 years, I have read Obama’s two autobiographies, Plouffe’s book, and the biographies by Halperin and Heilemann, Remnick, and Alter, and the excellent book detailing the influence of Wall Street by Suskind, Confidence Men: Wall Street, Washington, and the Education of a President. One thing that strikes me is that neither Obama, nor Plouffe, nor anyone else close to Obama, ever spoke of Franklin Roosevelt and the New Deal as if they were actually familiar with them or wished to emulate FDR. I suspect they have never studied Roosevelt and the New Deal, at least not with the goal of learning how to govern as well and as dynamically as FDR did. Obama and his team certainly never discussed the heroic measures Roosevelt and Harry Hopkins took to get millions of people a paying job so they wouldn’t starve in the winter of 1933-34....

Obama, like Bill Clinton, modeled himself on Ronald Reagan rather than FDR. Actually, it was Jimmie Carter that began the turn of the Democratic establishment to the right.

The post contains a copy of R. G. Tugwell's "The New Deal in Retrospect," The Western Political Quarterly, December, 1948, Vol. 1, No. 4.

It also contains a link to Michael Hudson's article on Simon Patten on productive investment versus economic rent.

real economics

Rex Tugwell of FDR's Brain Trust: The New Deal in Retrospect
Tony Wikrent

Andrés Velasco — The Real Roots of Populism

In the 1930s, thinkers like John Maynard Keynes and political leaders like Franklin Roosevelt, with brave and eloquent words still worth quoting, discarded capitalism’s mindless orthodoxies in order to save the liberal democratic order. One world war and tens of millions of deaths later, they succeeded.

Today, liberal democratic values are once again under siege, and the path paved by Keynes and Roosevelt is still the only way out. We should follow it.

Project Syndicate
The Real Roots of Populism 

Andrés Velasco, | former presidential candidate and finance minister of Chile, is Professor of Professional Practice in International Development at Columbia University's School of International and Public Affairs

Miles Kimball — Peter Conti-Brown on Marriner Eccles and the Refounding of the Fed

New book on Marriner Eccles. How Eccles anticipated Keynes, as had Hjalmar Schacht in running the Reichsbank. Conventional economists still have not caught up with what savvy bankers knew then, even though Keynes explained it to them, Post Keynesians elaborated on it, and MMT economists delineated the operations.

Confessions of a Supply Side Liberal

Peter Conti-Brown on Marriner Eccles and the Refounding of the Fed

Miles Kimball | Professor of Economics and Survey Research at the University of Michigan

Patrick Iber and Mike Konczal — Karl Polanyi for President

This is making a splash. Polanyi, like Minsky, may be getting a second life. They were not well known in their time but both are being resurrected as prophets now.

Should health care and education be rights, or products that those with enough money can purchase in markets? About seventy-five years ago, in response to the Great Depression, Franklin D. Roosevelt offered, through the programs of the New Deal, an expanded definition of freedom founded on economic security—immortalized as “freedom from want” in his famous speech of 1941. In our own time, severe inequality and the most serious economic crisis since the Great Depression have once again brought the issue of what should count as a right to the surface of political debate.

One candidate, Bernie Sanders, has argued explicitly that health care and education—two things that the New Deal mostly left alone—should be rights and therefore accessible to all. While public policy pundits fight over the specifics, they miss that Sanders, by discussing these things as rights instead of just policies, has changed the nature of the debate. This key distinction helps explain why tens of thousands have turned out to Sanders rallies across the country—not to mention the millions who have supported him online and at the polls—demonstrating enthusiasm for a politics that he explicitly identifies as “democratic socialism.” But what kind of socialism?

The vast majority of Sanders’s supporters are not Marxists clamoring for a dictatorship of the proletariat or the nationalization of industry. Most are, probably without knowing it, secret followers of Karl Polanyi. Polanyi’s classic, The Great Transformation, was published in 1944—the same year that FDR promised a “Second Bill of Rights” guaranteeing employment, housing, social security, medical care, and education to all Americans. Today, Polanyian arguments are once again in the air. Since his ideas seem to be everywhere but he is rarely mentioned, a (re-)introduction to his thinking, and its relevance to politics in 2016, is in order.

Dissent
Karl Polanyi for President
Patrick Iber, assistant professor of history at the University of Texas at El Passo, and Mike Konczal, fellow at the Roosevelt Institute and a contributing editor at Dissent

Robert McChesney — Capitalism Is a Bad Fit for a Technological Revolution — Interview

The relevant historical period for what we are entering now is the 1930s and the Great Depression. In that period, like ours, the political establishment was increasingly corrupt, incompetent and incapable of addressing the core problems. This generated strong movements across the world to address the problems. On the left were calls for socialism or the New Deal in the United States. This meant the government would aggressively tax or borrow unused capital and throw it into production thereby creating jobs and raising wages. This then stimulated the economy and gave businesses a reason to invest, while making the societies more democratic and egalitarian. The high point of this approach came in postwar Scandinavian social democracies, but we certainly felt it here as well.

The other approach was the emergence of fascism, which was then and now very much a response to mass unemployment, corruption and economic stagnation. The fascist solution to mass unemployment and stagnation was militarism -- that allowed irrational fear and jingoism to become the civic religion and terminate democracy and liberty, while employing the one form of government spending that did not threaten the dominance of the wealthy.…

President Franklin D. Roosevelt characterized World War II as a war against fascism and he was obsessed with seeing that it never return to the world after it was defeated. His concern was not simply for Germany or Japan, but for the United States as well. He understood that fascism was the product of mass unemployment, an economy dominated by monopolies, and a governing system that was corrupt and deemed ineffectual. And it invariably generates militarism, because that provided the fear that kept people in line.…
In 1944, FDR gave arguably one of the most important speeches of his life in his State of the Union address. He said to prevent fascism in the United States and to put democracy on solid footing it was necessary to add a "second bill of rights" to the US Constitution, also called an economic bill of rights. This included the right to a job at a living wage, the right to health care, the right to housing, the right to food, the right to education, the right to not have monopolistic firms dominate the economy, and so on.

If we had a society where these rights were guaranteed, the nation would never need to fear the threat of fascism; it would be able to solve any problem before it.…

Now FDR died shortly thereafter, and the political climate of the Cold War terminated the most progressive thrusts of the New Deal, so these proposals never got very far. But they did become the basis of the Universal Declaration of Human Rights, as well as the Freedom Budget proposed by Martin Luther King Jr. and A. Philip Randolph in the 1960s. And Bernie Sanders identified FDR's 1944 speech as the foundation of his vision of democratic socialism in his speech at Georgetown in November 2015, on that subject.
John and I believe this is a very good foundation for what we should be fighting for today. We would add some other rights, like the right to vote in fair elections, the right to a sustainable environment for life and a right to free broadband, but for the most part this gets us to the point where we have a democratic infrastructure that makes credible self-government not only possible, but a very likely outcome. For young workers today in the most precarious of situations, imagine what having these rights guaranteed would mean – everything.

For society as a whole it would mean that as automation proceeds, the benefits could be shared. Instead of some enjoying all the benefits while most struggled, all would be guaranteed some of the benefits, and working hours could be cut across the board as technology revolutionized the economy. We as citizens would control the process. That has to be the goal, because all other courses lead to dead-end streets.

Truthout
Robert McChesney: Capitalism Is a Bad Fit for a Technological Revolution
Mark Karlin

Alexei Pankin — Russian James Bond Explains why Hitler Stood No Chance Against Stalin

• The Soviet Union defeated the invincible German army because it created a superior economy
• Uncle Joe borrowed his war preparation plan from FDR
• Only US-inspired liberal shock therapy prevented the new Russia from capitalizing on the American post-WW II experience of turning a highly militarized economy into a prosperous consumer oriented one
• First Russian oligarchs enriched themselves by plundering the resources accumulated since Stalin’s times - forgetting dropping oil prices.

Russia Insider
Russian James Bond Explains why Hitler Stood No Chance Against Stalin
Alexei Pankin
Translated by Sergey Malygin

Steve Randy Waldman — There’s nothing smart in surrendering bargaining power for policy details

While we are taking lessons from the ugly compromises FDR accepted in order to get Social Security passed, we might also consider other events. FDR, you probably don’t recall because it has oddly been erased from conversational history, pursued almost as an idée fixe a cap on incomes of $25,000 (call it $360K in today’s money). The idea was as divisive then as it would be today, and despite dogged efforts, the proposal did not succeed. But, as Sam Pizzigati reminds us.…

You always want to start negotiating from the strongest position. Count on counter-parties to do so.

Interfluidity
There’s nothing smart in surrendering bargaining power for policy details
Steve Randy Waldman

Hillary Clinton campaign rally speech transcript

Reaches back to Roosevelt.

Politico
Hillary Clinton campaign rally speech transcript

Bill Mitchell — The Balanced Budget silly season is upon us again

"Again" in the post title  refers to the US in 1936 when FDR was persuaded by Treasury Secretary Henry Morgentau to adopt a policy of fiscal conservatism after years of fiscal liberalism on the advice of Fed chair Marriner Eccles. While the policy recommended by Eccles had been working, its reversal was soon followed by a reversal in the economy, too, in the recession of 1937. Bill catches us up on the history to show why the supposed medicine of fiscal discipline is actually poison for the economy.

Bill Mitchell – billy blog
The Balanced Budget silly season is upon us again
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Austral

Jonathan Larson — Is the Fed REALLY out of bullets—Eccles and Depression history

How Marriner Eccles saved America By Laraine Blackham And Steve Blackham, Published January 15, 2011

real economics
Is the Fed REALLY out of bullets—Eccles and Depression history
Jonathan Larson

Can't Make This Up. Hoover & Roosevelt as DoppleKabukiGangers

   (Commentary posted by Roger Erickson.)

"Given later developments, the campaign speeches often read like a giant misprint, in which Roosevelt and Hoover speak each other's lines."

- Roosevelt adviser Marriner Eccles, on the campaign of 1932

and

The fight that just won’t die.

It was all an accident?

Roosevelt eventually unintentionally DID what Hoover originally? intended, but wouldn't/couldn't/didn't get DONE in time to matter?

In retrospect, it seems clear that as nations and populations grow, that their fundamental operations must be re-organized, as a function of sheer scale alone, if not context. "Experts" such as Hoover can easily do more harm than good by unnecessarily opposing required change that they don't understand, while "beginners" like FDR can do tremendous good simply by having the courage to allow change, regardless of whether they understand it.

There is a fundamental difference between understanding process, and understanding process change - and especially rate of change.

Above all else, we need our entire range of people & personalities to have more humility, so that they can embrace and explore the potential of our constantly increasing diversity?

Have aggregate options, will explore!

That should be on our national business card.

Ever faster change, from grandparents to parents to grandchildren, is something we all have to embrace, if that generational cycle is going to continue unconstrained.

This Hoover/FDR tantrum may be a great lesson on intentions, adjustments and allowances, where both players come away looking better than all originally thought, but for reasons entirely different than ALL initially presumed! :)

History is never what we're actually told?

There's a fundamental difference between a tactical officer, and a LEADER willing and able to let tacticians operate?

It takes a different kind of leader, for every scale (and tempo) of policy development?

FDR — Second Bill of Rights

FDR Second Bill of Rights

Asymptosis — Dean Baker on Piketty’s Capital: Or, How FDR Proved Marx Wrong

My comment there:

Picketty is correct. Capitalism is ultimately unworkable, and the name says it all. Capital formation, with land folded into capital, is placed in front of labor as a priority. This means that money and machines, and the people that own and control them, are placed ahead of ordinary people socially, politically, and economically, that is, culturally and institutionally. This creates the kind of “contradictions” that Marx pointed out in his day and which are now dated, but similar conditions always accompany capitalism regardless of its form in that it is in the interest of the elite to favor capital share over labor share. While this can be overcome temporarily, as it was for a time owing to the Great Depression and the aftermath of WWII, including the Cold War. But that was a special case due to the context of the times, and virtually immediately upon passage the wheels were set in motion by the elite to reverse the New Deal. That push is now in full swing.

The only way to overcome these internal contradictions that arise from class and power structure is to change that structure, which Marx, of course, realized. Marx is anathema for a good reason. He saw behind the veil and revealed the naked wizards holding the levers of power. Read sociologist C. Wright Mills, for instance. His work is still prescient.

The argument for the neoliberal variety of capitalism was summed up by Margaret Thatcher, TINA — “there is no other way.” This is the argument that the elite employ the press, academics, and other minions to make in order to dupe the rubes into voting against their own interests. It works.
The saving grace is the innovation in transportation and communications technology that is ushering in a digital age that is shrinking the world and favoring flatocracy over hierarchical organization. The problem is fundamentally a cultural and institutional issue rather than chiefly an economic one. Once the cultural context shifts, the institutional change will follow and with that social, political and economic organization.

It’s happening already. This kind of change takes time to diffuse and be incorporated into the cultural mindset. This involves a die-off of the present class and power elite. This transition will take place in the period in which the silent generation (mine) and the boomers (many of yours) retire and die-off, leaving a world in which everyone has grown up in at least the onset of the digital age and “thinks differently” that is flat rather than hierarchically.
What the new culture and institutions will look like is as yet unclear, but it will reflect the diffusion of knowledge gained after the 18th and 19th centuries, which is still setting the dominant paradigms of thought for those of the silent generation and the boomers that occupy most of the seats of status and power presently.

The debate is already becoming clear, however, as between libertarianism and authoritarianism on one hand, and, on the the other, right and left libertarianism. Capitalism and republicanism are authoritarian and hierarchical owing to the class and power structure. Marx and other socialists were libertarians of the left. Classical liberals were libertarians of the right, who sought to limit autocratic government at the time of the transition from late feudalism to early capitalism.
That dialectic is still in progress in a much changed context.

Looking at it in 18th and 19th century terms is anachronistic and even looking at it in 20th century terms is long in the tooth. We are in the transition to a new age, the digital and knowledge age from the industrial and machine age. The transition will be as profound and far-reaching as the transition from the agricultural to the industrial age. Just as feudalism did not survive other than as a remnant, such will be the fate of capitalism, especially as the West ceases to dominate global affairs as the global age becomes increasingly a reality.

Of course, this doesn’t mean that advances of the past like money, markets, and the like are going to disappear. It means that people are going to be recognized as the most important factor socially, politically and economically. Lincoln’s ideal of “government of the people, for the people, and by the people” may finally be fulfilled as the obstacles to it fall away, but not without strong resistance by vested interests. We are now in that transition.

Asymptosis
Dean Baker on Piketty’s Capital: Or, How FDR Proved Marx Wrong
Steve Roth

A Rigged Game. Pathetic. Played Only To Drain The Wrong, Unregulated "Reserves." :(

   (Commentary posted by Roger Erickson)



IDEAS Fantasy Economics league, a new game housed by the Federal Reserve Bank of St. Louis. It ranks living "economists" by ego? Useless diversion.

BI's hype for The Nerdiest Fantasy Sport Ever -- Fantasy Economics.

The players don't even know what charade they're making a pale imitation of.

What would Marriner Eccles & FDR think? Not much.

A game "matters?"
   How much?
   And to whom?

Only to those who don't participate in setting the rules "others" can play by ..... while the real "players" play by their own rules?

While it seems to matter a lot - nominally - to the gullible rubes, reality is that it doesn't?

While reality doesn't matter to the fake rules publishers ... the nominal scores seem to matter tremendously, to them. Merely as a divide & conquer diversion?

The deeper causality between all the fiat fills & drains?

It's all just a reserve drain of sociopathy!

Mon fiat! For JJSixpack's sake! There is a better way. 

You can't convince me that the entire population of the USA is this ignorant, dumb & listless. It's past time to put a stop to the excess nonsense & distracting games, America. It's no longer just nominal, and has spilled over into constraining our own reality.

Alan Nasser — Why FDR Did Not End the Great Depression – and Why Obama Won’t End This One

The crisis was not merely economic. Keynes had witnessed the rise of revolutionary movements in response to the protracted inability of capitalism to meet the needs of working people. He had written about both the Bolshevik revolution and the tendency of austerity to spawn revolt from the Right. Keynes was antipathetic to both fascist and worker rule, and feared revolutionary consequences should the New Deal fail. “If you fail,” he wrote Roosevelt, “rational change will be gravely prejudiced throughout the world, leaving orthodoxy and revolution to fight it out.” The political stakes were high, as they must be under conditions of protracted capitalist austerity.

The stakes are no less high now. The current contraction emerged from a political-economic settlement, the post-Golden-Age period from 1974 to the present, resembling in relevant respects the Depression-prone economy of the 1920s.

I want to review both those features of the 1920s which generated the economic debacle Keynes addressed, and the corresponding precipitating causes of today’s crisis. The similarity of the origins of both contractions is striking. If Keynes was right to argue -and we shall see that he was- that large-scale public employment is the only remedy for a severe and extended economic contraction, it will be clear that the same prescription applies to the present depression. We will then be in a position better to grasp the urgency of public employment as a policy without which the United States faces a future of long-term stagnation and intolerable unemployment….

The Summers-Krugman point confirms Keynes’s central claim that, contrary to the neoclassical theory that the free economy naturally tends toward full-employment equilibrium, the economy can reach equilibrium (the quantity of goods supplied is equal to the quantity of goods demanded) at any level of employment. Let there be 30 percent unemployment. Firms will then produce no more and no less than the lucky 70 percent are willing to pay for. Excess capacity will be wrung out of the system by the liquidation or destruction of redundant plant and equipment. But what about excess labor capacity?

Secular stagnation leaves the nation with a large number of permanently un- and unemployed persons devoid of hope for themselves or their children. But it is just this hope that constitutes the “American dream.” With the dream become a nightmare, we are on the path to social dislocation on a potentially terrifying scale: higher rates of crime, suicide, domestic violence, psychological depression and other forms of social disorder characteristic of periods of intense material insecurity. These are forms of unorganized resistance, and cannot be “wrung out” of the system like idle plants. They will be repressed. The powers that be have been putting in place for some years now, surely in anticipation of widespread social turbulence, the infrastructure of a police state. This comes as no surprise. Historically, capitalism in deep and protracted crisis and without an organized and active Left generates the makings of fascism. If the Left remains dormant, we are in for big trouble.

Counterpunch
Why FDR Did Not End the Great Depression – and Why Obama Won’t End This One
Alan Nasser | Professor emeritus of Political Economy and Philosophy at The Evergreen State College
(h/t Clonal in the comments)

Nasser explains why Keynes held that a permeant job guarantee program and public investment are essential for the continuance of modern capitalism in a democratic state.

"How Franklin D. Roosevelt Botched Social Security"

(Commentary by Roger Erickson)

The Paradigmatic Liberal as Fiscal Conservative

Fascinating read.

Will have to read this several times over to let it all soak in.

First comment, it's surprising that there's no mention of Luther Gulick's famous memo, admitting that FICA taxes were never a necessity, only enough politics to get the act passed against party-specific opposition.