Franklin Delano Obama

By Epstein, Richard A. | Newsweek International, September 3, 2012 | Go to article overview
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Franklin Delano Obama


Epstein, Richard A., Newsweek International


Byline: Richard A. Epstein

The New Deal, in 2012.

Eighty years ago, Franklin Roosevelt rode into office at the height of the Depression. In many ways the election of 1932 has much in common with the current American presidential campaign. The economic record from 1929 to 1933 was grim. Unemployment spiked to close to 25 percent from a pre-1929 figure of about 4 percent. World trade was down by a third, partly in response to the ill-advised Smoot-Hawley tariffs of 1930, which sparked retaliation from around the globe. And persistent deflation of 20 percent meant debtors could not repay their debt with these new expensive dollars. Today's situation is nowhere near as desperate, but there is little doubt that America is stagnant and uneasy. So what can we learn about the current election from Roosevelt's New Deal days? Comparisons race to mind, given the conscious efforts of President Obama's supporters to hark back to Roosevelt's rhetoric. Richard Trumka, president of the AFL-CIO union, used similar language at a rally recently in Philadelphia.

How will this effort to follow in FDR's footsteps fare? In 1932, Roosevelt could campaign as the outsider by attacking the record of the Republican incumbent, Herbert Hoover--who, ironically, was a progressive himself. Roosevelt pledged himself "to a new deal for the American people. This is more than a political campaign. It is a call to arms." The object was "a more equitable opportunity to share in the distribution of national wealth." Today, the shoe is on the other foot. Obama must now defend his record against an assault that will become more pointed now that Paul Ryan has become Mitt Romney's running mate. No longer can Obama plead for his team to be given a chance to implement an agenda of hope and change. Instead, he must argue that his old team needs four more years to implement a program that has generated so many dashed expectations. It will be more difficult for Obama to play defense in 2012 than it was for FDR to play offense in 1932.

Roosevelt's New Deal campaign was not limited to soaring speeches. Every campaign also needs villains whose misdeeds frustrate the will of the people. Today, they are the "1 percent." For Roosevelt, the villains were the "self-seekers." These "rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated." In Washington, Roosevelt used the language of war and religion to conclude that "the money changers have fled from their high seats in the temple of our civilization." His biblical reference could not be clearer, for when Jesus came to Jerusalem he too went into the temple of God to cast out the money lenders. The parable plays into the New Deal story that all financial transactions are sterile exchanges over which, Roosevelt insisted, government must impose "a strict supervision of all banking and credits and investments," in part to undo "the overbalance of population in our industrial centers." But "our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy"--as if the two could be separated.

Roosevelt's creation of public works programs to offset the decline in private spending did modest good, far more than Obama's bloated stimulus programs. But Roosevelt's enduring achievement was to put government muscle behind agriculture and labor cartels that persist to this day. He may not have understood why cartels are less efficient than monopolies--namely, because they set quotas to allocate some production to its least efficient members--but what he did understand was that cartels have a political pop that no monopoly firm can match. A cartel can muster a large membership base that works overtime to bolster its political allies. Trumka's rallies and Obama's backing of the ethanol coalition both take a page out of Roosevelt's New Deal playbook.

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