Relearning Old Lessons at Our Own Expense

by on February 20th, 2009

Although sanitizing history in service to political goals is a timeworn practice of those who lack confidence in their ideas, every political season it’s dressed up in new garb as though it was opening night on Broadway. This time around it’s the Democrats who are reanimating the New Deal of the 1930s to support their $1 trillion spending bill, arguing that only through massive federal spending can we reinvigorate the economy, in the same manner, so we’re told, that FDR did some seven decades ago.

For a refresher course on the New Deal there’s no one better than Amity Shlaes, and her piece at brings needed sunshine to the dark falsehoods peddled by Democrats. Her conclusions are that “more pro-growth strategies, especially low taxes on business, less aggressive labor law and consistent regulation, would have brought recovery sooner in the 1930s, and would likewise do so today.”

Why this is difficult to fathom is perplexing. That politics trumps common sense is yet another one of life’s vexing paradoxes. Henry Morgenthau was FDR’s Treasury Secretary, and he staunchly opposed Keynesian economics and even disapproved of certain parts of the New Deal. That’s because he correctly understood that a dramatic infusion of federal dollars to correct market inefficiencies and distortions only protracts a depression or recession. As he stated in his testimony before the House Ways and Means Committee in May of 1939:

“We are spending more money than we have ever spent before and it does not work. I want to see this country prosperous. I want to see people get a job. 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.”

At the core of this lesson, one that President Obama and the Democratically controlled Congress are studiously ignoring, is the unambiguous fact that private enterprise and small businesses are the engine of economic recovery, not deficit spending, which will be like throwing sand into they gears of capitalism.

Peeling away the layers of this conundrum, we know that politics is driven by culture, which is informed by values and principles. Our age is the product of a post-modernism which was thoroughly convinced of its intellectual certitude, that iconoclastic ideas would become the new norm, and would create a freshly minted set of absolutes firmly grounded in relativism, underwritten by a summary rejection of historical precedent because, in view of the rebels, they were produced by subjugation and oppression.

A corollary of our arrogant dismissal of history and traditional values is the civically unsavory fact that judgment and authority have been deleted from our cultural lexicon. The result is that our elected officials are merely faithful proxies for the inbred stupidity that has evolved in the past fifty years. So, they provide smug assurances that two-thirds of the spending bill should be government-based, and that most of the remaining one-third that focuses on ‘tax relief” should actually be in the form of tax credits for those who pay no taxes whatsoever.

The confidence Mr. Obama exhibited yesterday as he signed the bill stands in stark contrast to the fact that no recession in history, and certainly not the Great Depression, was ameliorated by massive government spending. So this is not only a failure of leadership, it’s an abdication of responsibility to tell the American people the truth.

The word in Washington is that the Obama Administration is already hard at work on the second phase of the ‘stimulus’ program, because, not unlike all federal spending, the sky is the limit. But ultimately it will be the tax payers who bear the burden, beginning with us, and continuing with our children, and grand-children.

Mella is editor of

Philip Mella