Let's start with something basic like, you know, food.
When FDR came into office he's got this tremendous agricultural bounty and because
of all this food prices on food keep falling.
Wait wait.
You're telling me it's a problem during a depression that food has become cheap?
I don't think it's a problem but FDR did because for the farmer it's not good for prices to
fall.
So FDR's Agricultural Adjustment Act paid farmers to cut back on production or even
to produce nothing at all.
Less food means higher prices so he paid farmers to destroy a huge amount of crops in order
to raise prices to make farmers better off.
So six million pigs were slaughtered; ten million acres of cotton were destroyed.
This sounds like a good idea, not the way you're spinning it, because the government
comes, it slaughters pigs from my farm, I'm the farmer, I get paid for the pigs, and then
that meat, that pork, goes to feed poor people.
No the pork gets destroyed.
The cotton gets destroyed.
All this stuff got destroyed to pull it off the market and raise prices, not give it to
poor people.
Mules were actually employed to destroy cotton; they actually had mules stomp on the cotton.
And at first they hesitated to do it because this is not what a mule normally does, they
had to be forced to do it.
The whole New Deal was about helping one group, and then another group, and then another group,
even though each time you help that one group you're harming everybody else.
And it turns out you didn't even help the farmers because other new deal programs were
even more successful driving up other prices, namely the prices of everything farmers buy.
Yeah but if prices are collapsing all around you for years at a certain point you want
to mitigate that damage.
But prices had been falling for about a century in American history and the United States
had become during that time the great industrial power of the world.
So it's actually not a bad thing for prices to fall, and to the contrary, it's much worse
to force them up by giving businesses the power to collude with each other so that all
throughout an industry nobody is allowed to sell below a particular price.
Ok.
So that's just for food.
But the new deal is about the whole nation and the whole economy recovering.
So yeah, some people are going to be negatively effected, but Americans had to make sacrifices
in the hardest of times.
It wasn't just for food, what I've described was actually the thinking behind the National
Industrial Recovery Act and it worked more or less the same, making it harder for the
poor to buy food, to get transportation, to be clothed and housed.
The National Recovery Administration allowed businesses in each industry to establish a
code of production which would set working hours, wages, and prices.
So what's wrong with that?
It means that upstarts can't compete on price.
The biggest businesses tend to prosper because if you're, say, a Goodyear Tire, well everybody
already knows Goodyear Tire. But if I'm Tom's Tire what's the only way I can compete with
Goodyear Tire?
Not on name recognition but on price.
But now I can't sell at a lower price because under the National Recovery Act the government
won't let me.
So FDR said the only thing we have to fear is fear itself, but a generation the fear
had been that big business monopolies in a certain industry are all going to get together,
and they're going to collude to jack up the prices and basically screw the population
out of as much money as they can get away with.
This was the nightmare concern of having an oligarchic system, that people were going
to be at the mercy of these big trusts.
And now they're codifying it into law?
That's pretty much the case.
The very thing we were taught to fear was now mandated by law.
I still think that under extreme situations maybe you have to rely on big companies and
rely on stable prices in order to make sure to cut down on that sky-high unemployment and make sure
everyone has a job.
That's the problem that needs to be solved.
A lot of people think of things like the Works Progress Administration when they think about
the New Deal that gave people jobs.
If we look at the work of economists John Joseph Wallis and Daniel Benjamin, they found
that the jobs created by the WPA and the other New Deal spending programs either just displaced
private sector jobs that existed already, or actually destroyed those jobs because these
programs just dried up capital that could have been used for private sector investment.
And we now know because of historian Bob Higgs that business at the time really held off
from investing because they didn't know what the federal government was going to do next
and nobody wanted to expose himself to an unpredictable federal government, so they
just bided their time and meanwhile the economy continued to suffer.
What it boils down to is there were a lot of programs, but they all shared the same
basic flaw: that a group of experts are going to direct resources better than you and I can.