The historian who sold his soul I

A commentary on Michael Barone's op-ed in the Washington Times, Feb. 17th:


Michael Barone once was a respected historian, one of the 2 main authors of the The Almanac of American Policies. But during the last election he joined the neo-conservative punditocracy and published articles that distort facts in an almost criminal way. As a fellow historian, I feel somewhat insulted. Anyway, the following article deals with the New Deal and combines all the conservative talking-points against it.

BARONE: Real lesson of the great depression

Michael Barone
Tuesday, February 17, 2009

""Not since the Great Depression." "Not since the 1930s." You hear those phrases a lot these days, and with some reason. Now that Congress has passed the Democratic stimulus package, it may be worthwhile to look back at Franklin Roosevelt's New Deal and consider how well it worked as policy - and politically.

There's a fairly broad consensus on policy that some of Roosevelt's actions made a positive difference but that they didn't get us out of the Depression. Amity Shlaes in her path-breaking "The Forgotten Man" makes a strong case that some of Roosevelt's moves blocked recovery, "

Alright, first a minor point. It's probably too early to call Amity Shlaes' new book "path-breaking". It's up to the future to determine whether it broke a new path, but that's a historic point of view. Amity Shlaes also defended Phil Gramm's "nation of whiners" commentary, so you know where she's coming from.


"and even his admirers admit that his policies led to a sharp recession in 1937-38".

That's very clever because Barone vastly overgeneralizes here. Yes, admirers like Paul Krugman admit that Roosevelt's policies led to a recession, but they also explain that this recession was a consequence of Roosevelt's abandonment of the New Deal in favor of fiscal conservatism. It's one thing to say that the New Deal prolonged the Depression (even though I think that's not true), it's another thing to cite people out of context.


"After eight years of the New Deal, unemployment remained at 15 percent in 1940 - double the figure for today. What really got us out of the Depression was World War II. The total number of employed persons and military personnel increased from 44 million in 1938 to 65 million in 1944. "

Of course, Barone doesn't tell that unemploment decreased by 10% in the years 1932-1940. And I'd also like to make a point that today's unemploment rate excludes a lot of people, criminals, immigrants, "hopeless" cases and other groups. The U-6 unemployment rate including all these groups was at 15,4% (!) in January. Check the Bureau of Labor statistics and see for yourself. (Check the U-6 unemployment rate, not seasonally adjusted.) These exclusions didn't occur back in the 30's, at least not at this scope.
The final point is true though, World War II ended the Depression. It was a huge government spending program. Patriotism defeated any fiscal restraint. The US debt climbed up to 120% of the GDP but the US was rewarded with the role of a commercial, industrial, military super power. The 50's rewarded America with peace, prosperity and American suburbia.


"So it would be unwise to copy the New Deal as a recipe for economic recovery. And the policies that produced the wartime boom are not replicable today. We are not going to have rationing, wage and price controls, government spending nearly half the gross domestic product, 91 percent tax rates and a 12-million-man military (the equivalent today would be 27 million)."

Well, the first sentence just isn't true. GDP grew from 1933-1937. It also grew again from 1938 on. And to say that the policies are not replicable today just isn't an argument if you try to refute the success of the New Deal. I am not promoting rationing or wage control, I am just saying that just because it wouldn't get through Congress today, it isn't necessarily a bad idea. It's true that we will never have a 12-million-man military, and it's also true (but that's not something Barone says) that America will never ever be in the dominant position of 1945 again. The American economy will never ever be able to control the flow of money as it did in those post-war years, and so we better get something else to show for the deficit. Tax cuts, by the way, don't create anything. They ALSO cause a deficit, but we get nothing in return. Tax cuts are a dead end street.


"There has been general agreement, however, that Roosevelt's policies were politically successful. Most of us in the political commentary business make frequent use of the phrase "New Deal Democratic majority" and tend to believe that Roosevelt's policies worked for his party for a long generation extending into the 1960s"

Ah yes, the crux of modern conservative thinking. The Democratic party supposedly made the American people addicted to government and so Republicans have to be against the government, against the New Deal, against anything that the New Deal did. To make this argument, you have to believe that the New Deal was a complete failure.


"I think the picture is more complicated than that. Democrats did win big in the 1934 and 1936 elections. They made big gains in large cities and factory towns, many of which were staunchly Republican in the 1920s. But these gains were not sustained, as the effects of some New Deal policies - high taxes on high earners, the unionization-promoting Wagner Act and jobs programs like the Work Projects Administration - became apparent.

In early 1937, unions engaged in sit-in strikes in auto and steel factories; they were plainly illegal, but Democratic governors in Michigan and Ohio refused to enforce court orders against them. Later that year, the "capital strike" Miss Shlaes describes led to a sharp recession.

The jobs programs were widely criticized as "boondoggles" and "leaf-raking." Allegations of political favoritism and corruption were widespread. In the 1938 off-year elections, Democrats lost 81 House seats, 51 of them in the industrial belt from Pennsylvania and Upstate New York west to the Upper Midwest. The Democratic governors of Michigan and Ohio were defeated for re-election. The congressional district that included Flint, Mich., site of the first sit-in strike, went from Democratic to Republican; so did most congressional districts in Ohio."

Barone makes the mistake of placing today's conservative ideology into the 30's. He basically says that already back then, people were against "high taxes on high earners", against "unionization-promoting" and against "jobs programs". So why exactly then did unions rebel against the government in 1937? Why exactly did the Democrats lose 81 house seats in 1938? Of course, because of Roosevelt's abandonment of the New Deal in favor of fiscal conservatism and the recession that followed! Why else should a union protest against the New Deal???

"As pro-New Deal historians have conceded, New Deal policies no longer had congressional majorities, given the opposition of many Southern Democrats. Nor was the outlook for Democrats rosy as the 1940 elections approached. Polling, then in its rudimentary stages, suggested that Republicans would win if the election were decided on domestic issues."

Roosevelt had to follow fiscal conservatism because the Southern Democrats pressured him to. But well, the South has always been against the federal government - a true constant of American history.


"But in September 1939, World War II broke out in Europe. In June 1940, France fell; Adolf Hitler and Joseph Stalin, then allies, seemed to have most of Europe under their sway. Just days later, the Republicans nominated Wendell Willkie, an attractive candidate with no experience in foreign policy. The Democrats met in July, and Roosevelt sent a letter saying that he did not want to be a candidate. But, with help from the Chicago commissioner of sewers piping over a loudspeaker, "We want Roosevelt!" the president was renominated. He won his third term in November not, as he put it later, as "Dr. New Deal," but as an experienced leader when the nation was facing grave peril.

"The American people in their righteous might will win through to absolute victory," Roosevelt declared in his Pearl Harbor speech, and so they did by September 1945. In my view, it was the war effort, the mobilization of big government, big business and big labor, that much more than the New Deal enhanced the prestige of the state. It got Americans proud of thinking of themselves as small cogs in very large machines. It made them amenable to statist policies that they would never have accepted in the 1920s and at which many of them were bridling in the late 1930s."

This might be true, or might not be true... we don't know what would have happened without World War II. It's interesting to note that Barone has gone completely astray of what he wanted to say. He's not interested anymore in the economic consequences of the New Deal, he has turned towards the political implications. That's actually a Barone speciality. He cites a few numbers, throws ina few conservative talking points and comes to a conclusion that almost ignores the numbers and serves no purpose. His argumentation is just barely covering the conservative axiom that government always is the enemy. A successful government makes people like it and so it needs to be rendered ineffective. Barone argues that World War II made people "amenable to statist policies". That basically says that as a consequence of World War II people wanted big government. That might be true, but here Barone is moving into the eras of Truman and Eisenhower - basically the pinnacle of American economic power. He assumes that the policy post-World War II was statist and that people liked it (what exactly does statist mean in this context? American wealth grew, the deficit shrunk, and the world was secure, after the Korean War) He completely leaves behind the problematic year of 1938 that constitutes his only argument.

"No two political times are ever the same. But as we watched the stimulus package moving to passage, we got the whiff of bailout favoritism and crony capitalism that was also present in the New Deal. The forced unionization envisaged by the card-check bill may prove to be no more popular than the unionization forced by the sit-ins was in Michigan and Ohio in 1938. Today's Democratic programs may get as mixed a political reaction as the New Deal did in the years before World War II."

And here we are at Barone's "conclusion". We don't get the "Real lesson of the great depression" promised to us by the headline. Instead, we get shrill conservative talk, or does the Employee free choice act (what conservatives call "card-check") really force unionization? Of course, it doesn't... Please also remind me how the sit-ins in Michigan and Ohio forced unionization. Please also show me the mixed political reaction to the New Deal, or do you forget that the Republicans were down to 16 senators in 1936? And don't come to me with 1938, that was already wrong when George Will said it, and it will be repeated by every conservative commentator, hoping that repetition makes it true (Actually, I believe that conservatives know it's wrong, but their existence depends on exploiting these views.).