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Source link: http://archive.mises.org/8014/please-not-another-fdr/

Please, Not Another FDR

April 11, 2008 by

Harold Meyerson, writing in the Washington Post, calls for a new New Deal. The old one worked just fine, and current times call for some of the same medicine.

Harold says it, and he’s not alone. FDR’s nanny-like visage has been showing up on left-liberal and neocon publications — web and print — by folks who don’t understand that their favorite New York patrician-president is the reason for this economic season. Why do economic downturns always produce a predictable supply of pundits calling for expansion of government power? FULL ARTICLE


Dennis April 11, 2008 at 8:52 am

Putting aside Mr. Meyerson’s lack of economic and historical knowledge, his call for ever larger and more controlling government should extend to increasing control of the media. Poetic justice would be partially served if writers such as Mr. Meyerson were given the same treatment that Garet Garrett and John T. Flynn were given by FDR and his cronies and apologetics. However, Garrett and Flynn generally spoke the truth, whereas Meyerson and those of his persuasion generally speak nonsense or deliberately attempt to mislead.

Bill April 11, 2008 at 9:09 am

Meyerson is absolutely correct! It is time for a refreshed new deal as the feigned free enterprise system and economy the operatives have created is at best a hybrid of a market economy by name and economic collectivism!

The model was failed from the beginning BUT to retain control of the masses and prevent them from gaining insight into what form their demise is taking and new deceptive deal is required!!!

One needs to only scrutinize Bernanke’s comments of Wednesday relevant to the depression and why out current dilemma is different to chart THEIR plans for us.

fundamentalist April 11, 2008 at 9:16 am

Reading this article, I couldn’t help thinking of Bryan Caplan’s book on the irrational voter. Caplan claims that voters are irrational not because they’re ignorant, but because the cost/benefit ratio of investigating economic issues is too low, so most people stick with their prejudices. So I wonder, how would Caplan explain the irrational views of people such as Robert Reich, Klugman, Floyd Norris, the economics writer for the New York Times, and many others on the left? Those people have invested many hours into understanding economics and still come up with the wrong answer. Are they irrational, too, and not just the average voter? BTW, if you read Caplan’s paper on why he isn’t an Austrian economist, you’ll find he is as irrational as anyone.

Inquisitor April 11, 2008 at 9:30 am

Caplan is a poseur in my view. I think Block, Boettke and Huelsmann have all disposed of him sufficiently.

Nat April 11, 2008 at 10:30 am

Not only is Meyerson ignorant of history, he is ignorant of current events.

We already have a new FDR. His name is George W. Bush.

Arend April 11, 2008 at 12:47 pm

@ fundamentalist who said “I wonder, how would Caplan explain the irrational views of people such as Robert Reich, Klugman, Floyd Norris, the economics writer for the New York Times, and many others on the left?”

I wouldn’t try to start guessing how Caplan would explain this. My explanation would be as follows: the views of Robert Reich, Klugman, Floyd Norris et al. just are NOT irrational. They are rational, i.e. purposeful for whatever reasons you can think of except for the aim of economic and historical scientific rigor and sound knowledge. This is also in a nutshell what Christopher Westley says.

Devin Snead April 11, 2008 at 12:58 pm
Byzantine April 11, 2008 at 12:59 pm

How long, O Lord? How long are we to be afflicted with these stupid Baby Boomers and their infernal schemes?

Steven Stipulkoski April 11, 2008 at 1:42 pm

Since no one has mentioned “fractional reserve banking”, I will. One of the chief arguments for the Federal Reserve System is that it is needed to prevent bank runs. But bank runs are impossible in an honest banking system.

Byzantine April 11, 2008 at 2:20 pm

More accurately, the purpose of the Federal Reserve is to keep dishonest bankers from being lynched.

Steven Stipulkoski April 11, 2008 at 3:48 pm


Good point!

TLWP Sam April 12, 2008 at 12:24 am

The only honest independent monetary system is precious metal coinage and I don’t see where banks would fit into all of this as they seem to get their existence from issuing paper money.

DS April 12, 2008 at 7:38 am

“Russ Roberts on Meyerson:


Unfortunately, Roberts makes a serious error in his assumptions when he uses the highly manipulated and often changed government produced CPI as the method for calculating “real” manufacturing output.

This is a shame because fundamentally I think his argument that manufacturing employment has declined due to productivity and that manufacturing output has increased, not that it was “stolen” by 3rd world countries employing slave labor.

But what is missed here is that malinvestment compounded over decades has lead to an over-supply of manufacturing capacity worldwide. Increases in the money supply fool capitalists into believing that there is more long term demand for their goods and services than is warranted by the under-lying economic conditions. When this manifests itself in inflation and then collapse, the world is left with too much competition due to the over-hang in capacity. Then the next step in the cycle where the government inflates even more as a response to the collapse leads to further malinvestment.

And the cycle goes on and on – and has really only been interupted once in the early 1980′s when the growth in the world money supply was restricted (it was never really contracted in any way) leading to massive failures of the businesses fooled into malinvestments during the inflation period. The industries that benefitted the most from the inflation and the industries that supported them (like equipment makers) were devasted during the 1980′s – agriculture, mining, oil, etc. The construction, agricultural and petroleum equipment makers – heavy manufacturing industries – didn’t hire anybody for 10 years and just barely survived. The public’s favorite whipping boy Exxon could barely make a profit during these years and had to merge with 3 of it’s largest competitors just to survive. To the un-trained eye this simply looked like “loss of competitiveness” or “hollowing out”, or a myriad of other ways to blame capitalists. But the cycle was the result of monetary expansion and contraction and the malinvestment-liquidation cycle. These industries basically took a decade in order to liquidate and grow into the capacity they built during the infation period.

The problem is NOT that these industries shrank, it was that they grew artificially bigger than the under-lying demand for their products because the monetary system was sending them false signals for so many years.

During the following years when the mone supply was again inflated the malinvestments moved to other areas like finance and technology. With all that paper money floating around and with nowhere to invest it the money flowed into things like financial services and technology. The tech bubble was partly the result of the futility of investing in the “goods producing” and commodity industries. But all this money was being created and had to go somewhere.

That somewhere was the financial services industries and the technology sectors. Now there was certainly a lot of value created by the tech sector during this time period that was funded by this process. But at some point all of the fruitful businesses and technologies were funded and there was still way too much money available. That’s when it started going into the rediculous inetrnet companies with no revenues, no profits and sometimes no business plans. There is still billions of dollars of telecomunications cable sitting in the ground un-used – a clear and plain example of mal-investment.

To make a long story short, the malinvestments moved into the housing sector and now have come full circle and manifested themselves back into the commodities sectors and finance. When will it end? I don’t know. I keep waiting to see if there is nowhere else for all that liquidity to go.

newson April 12, 2008 at 9:54 am

ds says:
“When will it end? I don’t know. I keep waiting to see if there is nowhere else for all that liquidity to go.”

very nice piece, yours. it ends when the papers are full of ads for seminars/public conferences along the lines of “investing in precious metals”, “diamonds – the new investment frontier”. i can remember 1981 and think this has got to be much bigger.

Second Coming of Communism April 13, 2008 at 8:57 am

I would normally not make such a pronouncement but in the New Deal Era the biggest check on the domestic ideas of Wealth Destruction Inc, ie Hoover and Rosevelt, was the Court. Now that is worse than the legislature in its lack of respect for private property rights.

Well I do not expect Bush, Ben, or McClintObama to do any better than Congress. It will take a whopper of a recession to undo this mess.

Paul Marks April 13, 2008 at 10:14 am

Meyerson “no doubt knows his history”.

Why do you assume that?

Even if Meyerson is a history academic that does not indicate that he “knows his history” – all it means is that he is good at reproducing what he was taught in school and college. No lies need be involved at this stage – as Mr Meyerson may simply be repeating what he has read in secondary texts and taking such ideas to their logical conclusion.

As Ludwig Von Mises was fond of pointing out – it is is the “good students” (the ones who listen to lectures and read the suggested texts) who become the most leftist. They get certain “facts” and opinions and base their thoughts upon them – taking them (logically, step by step) to collectivist conclusions.

Whilst the left controls education (and they do) they will influence opinion in this way.

Of course the key step (not enough on its own, but a foundation) of ending the left’s control of education would be to end tax funding of education.

Sadly politicians of both major parties compete to say how much more money they will give to the “education system”, and when a poltician does express doubt (as, for example, John McCain did over “no child left behind”) they are attacked.

Curt Howland April 13, 2008 at 1:38 pm

> Sadly politicians of both major parties compete to say how much more money they will give to the “education system”

My wife was balking at the $5K price for a year of private school. It is interesting to note that per student, public schools are twice that price.

Hiding the costs through taxation has allowed the “education system” to become absurdly inefficient, ineffective and bloated, and people in general just don’t know about it.

Hopefully the price tag will help me convince her to let me home-school.

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