Was the New Deal really the golden age of government?
If you grew up, as I did, in the 1960s and 1970s, your history books taught you one thing about the New Deal: It was the high-water mark of American government, an era when Franklin D. Roosevelt took the country by the reins and led it out of the benighted greed and excess of the 1920s into a new age when the national government put the economy back on track, jump-started progress, and guaranteed its citizens a safe and economically secure future.
It is this classic portrayal of the New Deal that Amity Shlaes, a visiting senior fellow at the Council on Foreign Relations and syndicated columnist, takes on in her new history of the Great Depression out this month, The Forgotten Man (HarperCollins). The standard history, she writes, is that this was "the period in which Americans learned that government spending was important to recoveries" and that "the New Deal is the best model we have for what government must do for weak members of society, in both times of crisis and times of stability."
There's also a standard rebuttal to this history, Shlaes notes: that Roosevelt's predecessor, Herbert Hoover, was merely misunderstood, and Roosevelt himself was evil. Under this version, the New Deal programs Roosevelt created "accustomed Americans to the pernicious dole."
Shlaes sets out to chart a new course between these extremes. In her account, Roosevelt and Hoover aren't antitheses, but exist on a continuum of increasing government power and involvement in the national economy. Hoover, after all, rose to national prominence-and eventually, the presidency-on the strength of his work as Commerce secretary in coordinating the federal response to the massive Mississippi flood of 1927. (Imagine, by comparison, what an especially effective Federal Emergency Management Agency director would have gained from successfully responding to Hurricane Katrina.) One of Hoover's initial reactions to the stock market crash of 1929 was to boost spending on public works projects by $423 million in an effort to jump-start the economy. "Hoover and Roosevelt were alike in several regards," Shlaes writes. "Both preferred to control events and people. Both underestimated the strength of the American economy." And, she adds, both "overestimated the value of government planning."
Hoover's efforts and Roosevelt's New Deal, Shlaes argues, not only didn't end the Great Depression, they made it worse. The cure wouldn't come until World War II, and the massive drive undertaken by American industry to supply a global war effort.
So what is the New Deal's legacy? First, as Shlaes notes, it changed the definition of "liberal" from a concept centered on individual liberty to one involving support for the activist governmental approach underlying the New Deal and the social programs that have followed it. It also dramatically increased the power of the presidency and the federal government.
But there's another legacy, one only hinted at in Shlaes' book, which ends with the 1940 election. Many of the New Deal's programs and agencies-with some notable exceptions, such as Social Security and the Tennessee Valley Authority-went out of existence after America became involved in World War II. At that point, organizations such as the Works Progress Administration and the Civilian Conservation Corps were deemed unnecessary. This happened despite the fact that such programs were viewed in their time as critically important and had developed large constituencies.
That's something today's politicians might remember. In the post-New Deal era, it is difficult to impossible to end federal programs once they have been launched. Instead, programs and agencies that fall out of favor tend to be stripped of staff and resources until they can no longer function effectively, at which point they are cited as evidence of government's ineffectiveness.
As federal agencies continually struggle to meet all of their obligations, the question that the country's political leaders fail to answer effectively is what government should stop doing. That's especially true in an era when the appetite for government solutions to pressing problems-such as the threat of global terrorism-continues apace.
In that sense, maybe the New Deal was a golden age after all.