Insanity – are we there yet?

A look at America’s current situation compared to the policies of Herbert Hover and Franklin D.
Roosevelt’s administrations.

Many have used the quote, “insanity is doing the same thing, over and over, and expecting
different results.” It has been attributed to Albert Einstein (1879-1955), but evidence is lacking.
Regardless of who said it, the principle is true and a good gauge for evaluation. How does the
current situation of America measure up? Are those in power repeating past policies, ideologies,
arguments, etc., and expecting different results? First, let us take a look at the past and then
compare it to today.

Hover, FDR and the Great Depression

One of the myths prevalent about Franklin D. Roosevelt and the great depression is FDR’s
miraculous decent upon the catastrophic past policies leading to the depression and saving the
day. However, history has show that this mythological personification of FDR and his
administrations are not only inaccurate, but a revision of history. From the writing of Amity
Shlaes, Jim Powell, and Jonah Goldberg, to name just a few, they have set the record straight.1
Not only did FDR not save America from the great depression but contributed to its prolonged
duration. To blame just the Democrats would be unfair and inaccurate. Herbert Hover, the
Republican President prior to FDR, was just as negligent.

Failed policies

Jim Powell, in his book FDR’s Folly, sums up by identifying ten factors that contributed to the
onset and continuation of the great depression.2 Let’s look at several of these and compare them
to what we are doing today.

First

Both Hover and FDR believed that government spending would get America out of the
depression. What they ignored was the fact that government spending can only come at the
expense of the people – taxation. Hover’s Smoot-Hawley tariff raised import duties on
agriculture and manufactured goods by an average of 59 percent. In return importing nations
raised their import duties, which raised prices on almost everything in the United States. FDR
raised taxes on liquor, tobacco, gasoline, flour, corporations, estates, money for investing in
your corporation, and the starting of the social security tax, just to name a few - and all in the
name of the redistribution of wealth. The only problem was the “wealth” dried up. What
employer, company, or corporation wanted to invest in the company (which also meant the
people), when most of their profits were going to go to the government. Thus, unemployment
continued to rise along with prices. Today we’ve seen government spending (by both
Republicans and Democrats) at unprecedented levels again in the name of wealth redistribution.
Obama, in true FDR fashion has not only declared that we (the government) can spend our way
out of our economic woes, but that only the government can fix the problem.3As history has
shown, taxation must and has followed.
Second
Public works and other “job” programs were one of FDR’s favorite experiments. The Civilian
Conservation Corps and the Public Works Administration were established to put thousands of
young men to work and to spend millions on public projects. However, money taken from the
private sector by taxation to fund these programs affected the private sector by decreasing their
money supply and caused higher unemployment. Many were employed by the government but
many lost their jobs in the private sector as well. After a year and a half of these social welfare
programs unemployment was still at 22 percent. Today billions have been spent by Bush and
Obama to provide employment on public projects funded by the government through the taxation
of the private sector. Again we see many unemployed because of the higher taxes business must
pay.

Third

FDR prevented wages and prices from adjusting to the prevailing circumstances through farm
subsidies, price controls, and wage controls. While many were starving during the depression the
federal government, in order to increase agriculture prices, paid farmers to pour thousands of
gallons of milk away and slaughter thousands of pigs. Because of the shortage now in supply of
milk and pork, caused by the government, prices did rise, however, people did not have the
money to pay the increased prices, thus sales plummeted. Also, falsely keeping wages higher
than the market level only caused business to raise prices to make up the loss. Because of Obama
“cash for clunker” program we now are faced with a used car market where prices are above
market level due to a shortage of used cars and new car sales at an all time low. History has
shown that raising wages and prices above the market level only causes business to either lay off
more employees or raise prices or both.

Fourth

Through the National Labor Relations Board established by FDR by the Wagner Act, unions
were now able to secure a closed shop, secure a bargaining monopoly, making it illegal for
companies to act in any way contrary to union interests, and forcing participation and payment of
dues of employees to unions. By negotiating contracts above what the market could bear led to
above market wages (thus higher unemployment and prices), and labor unrest. Because of union
monopolization, unions were able to segregate those they did not want in their work force
(mainly blacks). Obama’s close ties to labor unions is producing legislation to make it mandatory
to belong to a union, ban secret ballots in voting whether to unionize or not, and increased wages
above what the market can bear. Again, we see individual freedoms sacrificed at the alter of
unionism.

Insanity?

These are just a few of the policies and ideologies that enabled the great depression to last ten
years longer than it should have, and the actions of the current and past government
administrations. Again, if insanity is to keep doing the same thing yet expecting different results,
how are we doing? I would exclaim – could we please stop the insanity!
1
See Goldberg, J. (2007). Liberal fascism. New York, New York: Doubleday; Powell, J. (2003). FDR's folly. New York,
New York: Three Rivers Press; and Shlaes, A. (2007). The forgotten man. New York, New York: HarperCollins.
2
Powell, J. (2003). FDR's folly. New York, New York: Three Rivers Press, p. 271-274.
3
CNN News. (1998-2009). Obama: ‘Only Government’ Can Fix What Ails Us…. Retrieved from
http://www.cnsnews.com/Public/content/article.aspx?RsrcID=41688