Customer Reviews

FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression

5 star:		(48)
4 star:		(15)
3 star:		(7)
2 star:		(3)
1 star:		(21)

 

 

A common historical misconception is that FDR's New Deal rescued the United States from the Great Depression. However, Cato Institute Historian Jim Powell argues that the New Deal exacerbated and elongated the Great Depression. With impressive attention to detail, Powell examines the long-term results of the New Deal and persuasively argues that they crippled the U.S. economy.

In this detailed book, you will learn about the numerous programs the FDR administration brought about, including the following:

* Programs that inundated private businesses with unprecedented waves of regulations, such as the Agricultural Adjustment Administration, the National Recovery Administration and the Securities and Exchange Commission.

* Programs that redistributed wealth from producers to consumers, such as the Federal Emergency Relief Act and the Reconstruction Finance Corporation.

* Programs that nationalized industries, centrally planned infrastructure or created make-work projects to increase employment such as the Civilian Conservation Corps, the Public Works Administration and the Tennessee Valley Authority. Powell argues that these programs typically led to poorly planned infrastructure that was more expensive than what could have been acquired in a free market.

The economic results of FDR's programs were devastating. For example, consider the Agricultural Adjustment Administration (AAA). The price and production controls of the AAA led to perverse practices such as millions of tons of domestic oat and corn being burned while the U.S. simultaneously imported oat and corn, millions of peaches being left to rot and millions of "excess" pigs being needlessly slaughtered while lard was being imported from overseas. The extent of economic regulation under the FDR Administration reached such absurd levels, there was even a government board organized solely to control the production and pricing of milk!

This book will also detail the oppressive controls on income and wages under the FDR administration. Under FDR, scores of private sector jobs were eliminated through minimum wage laws, personal income taxes hit 79% for certain brackets and how government spending during FDR's first two terms exceeded the total amount of Federal spending in the prior history of the United States.

Powell reveals how all of FDR's programs are based upon the fatally flawed premises of Keynesian economics, including the following:
* That government spending is always good for the economy, even if it is engaging in pointless ventures such as building pyramids.
* War is good for the economy.
* Gold (as a standard of currency) is a "barbarous relic" that prevents economic growth.
* A capitalist economy will inevitably slow to a halt without periodic bolsters from centralized planning.
* Consumption (i.e., the destruction of wealth) not production, drives the economy. Thus, government should redistribute wealth from those who would invest it to those who would spend it.

From reading this book, you will also learn that many of FDR's earliest programs, such as the AAA and the National Recovery Act, were originally ruled as unconstitutional by the U.S. Supreme Court. Unfortunately FDR stayed in office long enough to appoint 7 of the 9 sitting supreme court justices, which eventually opened the floodgates for New Deal reforms. Thus, is the unforeseen danger of having a President serve more than two terms.

Powell has done a fantastic job with this work. I am not surprised that FDR's Folly has been enthusiastically recommended by famed free market economists such as Milton Friedman and Thomas Sowell. I highly recommend this book for anyone interested in free market capitalism and learning the real history of the Great Depression.

(Note: I own and have READ all of this book) (...)
Short review:
A heavy read for us simple bears, written by an accomplished academic. It's bursting full of information, and very thought provoking. I like the lay out of the contents, where each of the 19 chapters asks a question, so you know what you are getting into. A must read for anybody willing to seriously set aside prejudices, and look at the underlying facts of FDR's often bizarre and haphazard "experimenting" with the US economy. I urgently need to go read an admiring book (any suggestions?) written by somebody who thinks FDR was a great president, because the more I read about him, I increasingly get the impression he was somewhat of an "economically uninformed klutz" and basically just a shrewd and manipulative bluffer. Who,behind the rhetoric and the "fireside chats" didn't give a hoot about anybody except (votes for) himself. Who only got saved by the distraction of the "crisis" (he provoked?)of Pearl Harbor and WW2. And whose policies and shadow haunt us to this day.
(Sorry, apologies to FDR lovers; I have looked at the dissenters' comments, who absolutely hated this book, and I AM shopping around for some PRO-FDR books. Let's check out the opposition's story...) (Bernanke's essays?)

Long review:
I put the book down a few times, and read other stuff. I went back to it again, and eventually finished it. That tells you either that I'm a dimwit who struggles with words with more than two syllables, or that it's just highly concentrated, heavy-heavy-heavy, with constant new names, dates and places, and lots of leafing back and forwards to follow the plot. Well worth it though. Some quotes for you, to get a taste of the goodies:
(page 57) "A major effect of deposit insurance was to transfer the cost of bank failures from depositors to taxpayers. The full consequences of federal deposit insurance didn't become apparent until the 1980's, when bailing out savings and loan associations cost $519 billion."
(Page 71) "FDR imagined he could fix the world gold price from his bedroom"
(page 75) "From the very beginning of his administration, FDR attacked investors and employers". This theme shows up clearly throughout the whole book.
(page 75) "The business community... was pitifully inept when FDR launched his moral crusade against free markets." FDR certainly interfered with the free markets, but he did so haphazardly, and seemingly on an ad-hoc,improvised, "Hey! Let's try THIS idea" experimental basis. The man, if nothing else, was remarkably high handed and conceited, it seems to me.
(page 77) "Like FDR, Mussolini believed that individualism was old fashioned, an obstacle to progress."
(page 79) "Confiscation of wealth may satisfy the vengeful in us. It may sooth a retaliatory spirit. But it is the path of national suicide.... There must always be the reward motive."
(page 82) "...FDR delivered a speech that again demonized investors and employers. He employed one attack after another..."
(page 86) "...in a November 1941 Fortune poll, 93 per cent of employers said they expected their property rights to be undermined and also anticipated the possibility of dictatorship". One wonders how much FDR maybe admired Stalin and Mussolini?
(page 87) "FDR tax adviser Randolph E.Paul had acknowledged much worse, that FDR's tax policies "intensified the depression they were working to correct". Shades of... January 2009?
(page 93) "Invariably, politics influenced the way PWA money was spent."
(page 185) "Experience everywhere indicates that politicians will hardly be able to keep their hands off such easy money".
There truly is a staggering amount of information in this book. The pace is relentless. What amazes me is that so much of the content is -intensely- relevant to the big debate going on right now, January 2009, in the incoming Obama administration. Some of his devotees come out with policy statements, and express "Big Government" "Federal" attitudes, that have an eerie similarity to some of the content of this book. If you read this book, here are only a few of the issues for you to assess, and take a view on:
1) that the debate issues raised in "FDR's Folly" are as topical today as ever. Supremely relevant.
2) Too many politicians, who delight in the sound of their own voices on national television, never read History or Economics, and never seem to learn from past US policy mistakes. They rarely seem to refer to History. And when they do, they come out with either vague generalizations, or really sweeping statements ("We need a NEW New Deal"), which make this bumpkin nervous. The implication seems to be that everything about the New Deal was GOOD. And that everybody AGREES. Right? Duh...
3) It's serious; are we once again going to see a US President and his "experts" prolong this depression by trying the SAME past failed remedies? Surely not. Mr Obama, please, you are way smarter than that, right?
4) And this is just my impression: Isn't it amazing how FDR had all sorts of people cheering wildly for him, when in fact there is so much evidence in this book and others that he basically...err... shafted them? That's a neat trick: get people to vote for you, and love you, whilst you cynically... spend that public money where it will get you the most votes? I know that doesn't sound kind, but DO read the book.
There's maybe more -much more- to FDR than many worshipful devotees would have us believe.
Just one of many examples in this book: so much money went to the richest states, because they were seen by FDR as 'swing votes'. The poorer states, which were already loyal to him, got a fraction of the funds. Seeing as we are dealing here with empirical evidence, (cold facts) I don't see how FDR lovers can explain that one away, but I'm more than willing to listen, ya hear?
5) FDR had complete contempt for the black race. That comes out with his treatment of the black tenant farmers, and above all his refusal to back an anti-lynching law. That amazes me. That alone paints a somber picture of the man who many revere as one of the greatest US presidents. Where was his "compassion" there? It seems FDR's colleagues were trying to prod him into action. From what I can see, he just thought it was funny. That is backed up by some contemporary private diary entries... Hard to avoid the conclusion that deserving black people, anxious to enter mainstream America, were treated with a cynical disregard. Simply... horrible. I will be reviewing some of those diaries in due course.

Good book. I shall be using it a lot as reference material. Now to look at what the "other side" says about it all. We MUST always keep challenging our own beliefs. Heck, maybe FDR WAS a great president. I just don't quite see HOW yet, but maybe somebody who is wise and patient will help this bumpkin into the New Deal light...
Peace. Enjoy the read.
PS: Please 'comment' constructively if you feel I am missing the point somewhere, or if you feel you can point me to further useful reading material to broaden my understanding of this time period, or to correct flawed reasoning - thanks...

Powell details many good criticisms of the Hoover and Roosevelt administrations as well as state laws that appear to have been counterproductive in solving the economic crisis. However, he ignores several key points in understanding the Depression. Firstly, there is a rough correlation between when a nation got off the gold standard and when their economy began to recover. Many economists believe FDR's most important positive action was to get the US off the gold standard as soon as he could. Secondly, massive deficit spending began in 1932(under Hoover), yet the GNP didn't begin recovering until 1934, in contradiction to Keynesian predictions. Thirdly, Perrson concluded it was changes in the real(not nominal) interest rates, as influenced by monetary policies, rather than government spending, that explains the ups and downs of the Depression economy....I criticise Powell for not including tables and figures of critical data to support his contentions, as well as ignoring what other countries did and how they fared. I suspect these omissions were often purposeful. After examining the data from various internet sources, FDR comes out looking much better in the big picture than the portrait Powell paints, whatever the seeming counterproductiveness of many of his policies. I should also point out that his basic viewpoint was first articulated by certain european economists in the 1930s, who were drowned out by the Keynesians.

I've only just begun to peruse this book, and have so far been disappointed. Having already read Schwarz & Friedman's _Monetary History of the US_ and Flynn's _The Roosevelt Myth_, the "groundbreaking" claims made by other reviewers seems a little overblown.

If you are going to write a book that contradicts widely held beliefs, I think that it is insufficient to simply show the other side of the story. It is well known that people will continue to hold on to the first bit of information that they hear on a subject long after they have been shown the error of that first impression. Therefore, if Powell's intent is to convince people who are either on the fence, or who are definitely Roosevelt admirers, I think it is incumbent on Powell to show both sides of the story and then explain how one side came into popular acceptance and how truth became a casualty.

Specifically, although I appreciate his uncovering the back room dealings on the Wagner Act, I think that his description of union violence lacks roundness. I don't think his work is wrong, I just think it is too one-sided, so much so that everyone except the already convinced will discount his conclusions.

I do like the way the book is arranged according to topic instead of in chronological order. It allows me to read those sections that cover topics about which I already have some knowledge in order to gauge the depth and breadth of Powell's coverage. As I continue to read more, I will add to this review. Right now, though, I think I prefer Flynn's book because (1) it is written by a Roosevelt contemporary, and (2) the arguments are more compelling. The Schwarz & Friedman book is far too technical and broad for a broad audience, though I understand that Friedman has condensed the information about the Depression period in another book. Powell's contribution is to be able to look back on the period with the power of the analytical tools that have since been developed.

One other note: it should be obvious to all that at least one reviewer has decided that the book is not valid without having read a word of it. That won't be the last such review of this book. It is the type of reaction that this topic is likely to provoke: knee-jerk closed-mindedness. Mencken would have a field day. I gave my father _The Roosevelt Myth_, and he - who considered Roosevelt to be such an unassailable icon - was amazed at the man's documented incompetence and carelessness. With an open mind, you should be able to criticize Roosevelt even from the left.

For example, there were actually at least 3 New Deals: The first, which he ran on in 1932, which was to cut government spending, blaming the initial recession on Hoover's reckless spending and borrowing. When he took office, he realized that he would have to come up with an actual plan to appease the voters, and his cabinet decided to both extend Hoover's policies and to copy an experimental system from Italy: the "corporative". This essentially meant that antitrust would be abandoned so the government could act as a cartelizing agent for each industry, allowing them to coordinate pricing and distribution in order to stabilize prices. When the Supreme Court struck this plan of action down, Roosevelt went into a tirade, demanding that his Brain Trust come up with something new (the 3rd New Deal), while threatening to pack the court. The Italian system was the brainchild of Benito Mussolini. The 3rd New Deal sent the country into another recession, that of 1937. Hence, Roosevelt, who has been credited with getting us out of the Depression, actually prolonged it (with the help of a number of state legislatures), but not before trying to introduce fascism.

A note of caution to the amateur statisticians out there: the fact that something happens after something else does not prove causality. To insist that it does is to engage in the post hoc ergo propter hoc fallacy. Also, it shouldn't be surprising that when something goes down as much as the economy did, that it should rise rapidly. After all, factories and knowledge don't go away just because they aren't currently in full use. Reagan and Clinton both benefitted from just such a bounce, and Bush's successor will, too. You should try reading the book and responding to the critiques instead of regurgitating tired old saws about "what every historian knows."

"FDR's Folly" is essentially a conservative's talking point guide to refuting any alleged "success" of FDR's New Deal policies of the Great Depression. The structure Powell uses to direct the reader along its points was very effective--each chapter title is a question that is then answered in the body of the text.

This is a relatively short book, but contains an enormous amount of statistics and factoids. While I agree in principle that many of the issues raised by the author, I hesitate in a full 5-star rating due to the extreme anti-FDR/Liberal slant. By this I mean that the author finds essentially no 'positives' from any of what was done. Although in the aggregate the New Deal policies were not efficient in allowing the free market to adjust to the economic downturn of the Depression, I think the author should've acknowledged some of the positives that have come out of that era to add some balance to his arguments. Overall, however, it is a very informative read that I still recommend to anyone wishing to understand the mechanics of the New Deal in greater detail.

In "FDR's Folly" you finally hear the other side of the story on the New Deal. Pro-New Deal historians obviously wrote the history of the Great Depression because most people have the understanding that FDR's New Deal pulled the US out of it. In this book, you'll read example after example of how New Deal policies actually prolonged the Great Depression and increased its negative effects. The underlying problem with the New Deal policies was the failure of politicians to centrally manage an economy. An economy is too complex to be centrally micromanaged, especially when you have to deal with the law of unintended consequences. This book is a great resource for gaining an understanding of the events of the Great Depression and the flawed thinking of those politicians that continue to try to micromanage the economy today.

Jim Powell has written an excellent, easy to understand, explanation of why FDR's New Deal economic policies of the 1930's and 1940's did much more harm than good. One does not need a degree in economics to comprehend Mr. Powell's delineation of why FDR's excruciatingly high personal and business taxes, anti-competitive business regulations, price supports, restrictive domestic and international trade policies did the economy, already in the midst of a depression, even more detriment. Oh yes, Herbert Hoover does not get off the hook entirely. He too increased taxes and signed into law the infamous Smoot-Hawley international tariff bill. However, FDR did not represent change from Hoover's mistakes. He, in essence, followed the same policies as Hoover, but only much more severely. In addition, FDR's economic advisors were a motly crew of pompous neosocialists, who thought only they knew what was good for the economy even though the vast majority of them were never themselves businessmen. Even if you do not agree with Jim Powell's conclusions, though the evidence is quite incontrovertible, I highly recommend that you read this book. Mr. Powell does what a good writer should. He makes you think.

Excellent book. It tackles the question, "if FDR pulled the country out of the Depression, then why couldn't he conquer the nemisis, chronic unemployment." The unemployment rate at the start of 1940 was still nearly 10%, a rate that would be judged catastrophic by anyone's standard, even after nearly six years of the "New Deal."

Powell brings out facts to tell the reader why FDR failed so miserably in an effort to put people back to work. He also went into the other economic programs and "improvements" which can be described as "Keystone Cops" philososphy rather than the "Brain Trust."

Whether FDR prolonged the Depression is debatable, since the Republicans did not have a philosophy which would have worked either, but tinkering with the economic system has left the common citizen with less liberty, higher taxes, and more beauracracy.

How FDR is hearalded as a great President is put under the microscope if you read this book. The only agreeable point is that FDR solidified the Democrat Party as the dominant party for the last 70 years. His use of the system to ensure the political dominance cannot be disputed. At best, you can only rate him as average. Anything above that would be ignoring the facts.

Where Powell fails to go in this book (which is a minor criticism) is the lack of the press to fairly report FDR. If a free press is the safeguard of liberty, where were they? If ANY other President had a fiasco like the NRA he would have been villified and riducled without mercy in the press. Yet, FDR got a pass and was reelected in a landslide. There would have been countless human interest stories of unemployed workers striving to make ends meet, yet the press seemed to be a mouth organ to the FDRfiles in power.

FDRfiles will villify this book, but I think it is important to look back and reexamine history and the way history is presented to get a complete view. We should not be swallowing the FDR story written by a favorable press. For an open minded history buff, this is a MUST READ.

We see the horror that Progressives have done, and now are doing again, this is a book that maps it out.....how the so called good intentions which are being done by Obama are really prolonging the recession and making it deeper. It shows the arrogance of Obama thinking that he knows best for Americans and should be making our choices. It shows that Big Gov't takes away our freedoms and retards our ability to grow as a country.

No big revelations here. If you've read Milton Friedman and Henry Hazlitt, you already know this information. This makes a nice twofer with the book "Silent Cal" -- read them back-to-back for an interesting contrast.

The tragedy is reading this book in the context of 2010 -- how many of these policies have been resurrected. So now we'll do it all over again. They still dismiss us as simplistic for defending individual liberty and property rights. They still sneer at us for reminding them that the federal government has no source of income apart from taxing the output of its citizens.

I would have given the book 4 stars, except for one aggravating factor: the inclusion of irrelevant physical descriptions of all the New Dealers. Honestly, you expect the next one to be Cuffy Meigs, Eugene Lawson or Kip Chalmers. I don't need to know that someone had a strong chin before I know that he advocated flawed policies. Stay serious.

Well footnoted, and good to keep on your bookshelf, but it doesn't add much that is new.