F.D.R., the Dispossessed and the "New Deal" Social Safety Net

(Editor’s note:  This is the second and middle segment in a three part series which began last week under the title of “Herbert Hoover and the Crisis of the Old Order.”  This segment introduces readers to President Franklin D. Roosevelt and the New Deal.  To view the first segment, click here.)

Why is a social safety net necessary?  Is there at times a collective revulsion against a competitive system which competes at the expense of human decency?

From the failure of the private sector’s old order and out of its ashes, the 1932 election of Franklin D. Roosevelt to the presidency signified nothing less than a new order.  To be sure, the attraction of Russian communism to the left, and German/Italian fascism to the right, were carefully weighed by Americans but ultimately rejected.  Both are gone, a footnote to the past.  But F.D.R.’s “New Deal” experiment which saved capitalism from itself has survived, now in its 9^th working decade.

Today, some apparently need reminder that we have a social safety net only because the private sector once failed unceremoniously, ceased to operate, then refused to do anything about it.  In 1929, the class interest of business was mistaken for the national interest, resulting in both class and national disaster, which we have come to know as the Great Depression.  It really did happen - to both the vanquished and the dispossessed alike.  But the New Deal changed all that.

It has been proven time and again that the economic system of capitalism is indeed king when it comes to consolidating business systems, increasing productivity, vanquishing competition, establishing and maintaining the victor’s monopoly status.

But there is at times a collective revulsion against a competitive system which competes at the expense of human decency.  In an unregulated system, labor is the first casualty in an economic crisis.  Profits are preserved by cutting costs.  Therefore, the company that works its labor the longest and pays it least gains the greatest competitive advantage.  Cutthroat competition makes the unscrupulous employer the leader in its field.  Think how the Walmart model is (mis)shaping the global economy.  The rest unwittingly follow in a race to the bottom.  It is for others to clean up the mess.  But if others means government, then government means the New Deal.

Perhaps it’s easier to view the Great Depression strictly from the lens of the class interest of business and see in the big picture how that myopic vision leads necessarily down the path to failure.  From this perspective the one and only consideration is profit or private gain.  Neither human welfare in general nor stewardship of the environment is more than a mere balance sheet expense.  The public interest is an annoying distraction.  There is little in the way of a moral compass, such consideration being secondary.

Business leaders seem consistently to miss a critical component.  Today, as was the case in the 1930s, the central idea behind economic expansion is restoring the mass purchasing power of the ordinary citizen, who provides the best and most efficient means, in fact the only realistic means, to jump start the economy.

But the ideology of unregulated capitalism stands opposed, the class interest of business, in turn, foreclosing higher responsibilities to human beings and planet.  This is true in issues ranging from the minimum wage and employer provided health care - to protecting domestic jobs against outsourcing - to safeguarding a worker’s basic retirement benefit - to adhering to the wisdom of progressive income and inheritance tax rates - to stewardship of the environment – to protecting the democratic process at the ballot box through, fair, impartial elections.

The strictly pro-business agenda and the stock arguments behind it have been historically refuted.  For example, the assertion that tax cuts for the wealthy spur job creation is not supported by employment statistics over time.  It simply is not the case, to the chagrin of the sheep who genuflect at the foot of the private sector altar.  But thanks to self-serving, conservative right wing propaganda, these arguments linger with remarkable staying power.  For many, image is reality, and as a result stubborn dogma is propagated through familiar media outlets which are controlled by and for the benefit of the class interest of the profit motive only.

The path for the continuous responsibility of government for human welfare is seemingly barred.  But the ordinary citizen must despair not!  When all appears lost, into this toxic political environment interject F.D.R.’s New Deal, and the social safety net it introduced to American society.

F.D.R. took the oath of office with the simple confession that he did not have ready answers to solve the problems of the Great Depression.  But unlike his predecessor, he vowed that he would at least try to do “something” rather than nothing.  In short, he would improvise, experiment, see how the experiment worked.  And if it didn’t work, he would try something else.  The social experiment would become famous in US History as the “New Deal.”

The constitutional dedication of federal power to the general welfare, or the social safety net as it is better known, began a new phase of national history.  Gradually, the sharpest edges and cruelest effects of capitalism were softened.  The beast of capitalism was tamed, made more humane.  And so capitalism endures, a modified version from that which had existed under the old order to be sure, with modest, sensible regulation of an otherwise harmful concentration of economic power which benefits only the privileged few.  In the class interest of the nation.

(Editor’s note:  The third and concluding segment in this three part series identifies and analyzes what are understood today to be the four main components of the social safety net, as well as the larger consequences for the ordinary citizen.)

-Michael D'Angelo

Herbert Hoover and the Crisis of the Old Order

 (Editor’s note:  This is the first segment in a three part series.)

Some say the best measure of a society’s worth is how it treats its weakest members.  Adversity is revealing...

It’s easier in a sporting event.  Not long after the final seconds tick off the clock, the winning team receives a ticker tape parade through the canyons of --- and keys to --- The City.  The loser, in turn, must accept a bitter pill, the consolation prize of measured reflection.  Where did it all go wrong?  How do we improve our chances of success next time?  In the sports with the good sense to provide a level playing field, a team can and does live to fight another day.  Never is there consideration of whether there will be food enough to eat on the night of defeat.

In a free, democratic society that puts all its eggs in the economic basket of capitalism based on the British model, somehow it’s just not as simple. But the ordinary citizen has come a long way. Trials, tribulations and progress in the pursuit of happiness – real victories - can be quantified with consensus objectivity.

Let’s put economic considerations aside for the moment. It may have cost the nation almost 650,000 lives, but we were finally able to correct the one gaping injustice of our social contract. The simple idea of extending constitutional protection to the black man came to pass. About half a century later, women were granted the full right of participation in the voting booth. In another half century, due process and equal protection of the laws gave these basic civil rights some teeth. Today, we are yet another half century removed.

In economic terms, the Republican administrations of 1920-1932 represented the climax of total cooperation between big business survival of the fittest and laissez-faire government in partnership. A period of unprecedented material prosperity, especially for private business interests, culminated during the 1928 presidential campaign. Then candidate Herbert Hoover had stated that “We in America today are nearer to the final triumph over poverty than ever before in the history of any land” and “given a chance to go forward with the policies of the last eight years, we shall soon with the help of God be in sight of the day when poverty will be banished from this nation.” Stock prices were reaching what had looked like a permanently high plateau.

Upon Mr. Hoover’s election it was being said that national leadership could not be in safer or more expert hands.  Respected economists noted that for the first time in the nation’s history “we have a President who, by technical training, engineering achievement, cabinet experience, and grasp of economic fundamentals, is qualified for business leadership.”  For his part, President Hoover in his March 1929 inaugural address stated that “I have no fears for the future of our country.  It is bright with hope.”

No one, perhaps, was better suited to anticipate catastrophe than President Hoover.  Following a successful entrepreneurial career with an engineering background in the private sector, he served for almost eight years as Secretary of Commerce before ascending to the presidency.  This provided him with a unique opportunity to observe the workings and influence the policies of the American business system.  But seeing all problems from the viewpoint of business, the federal government which he now headed “had mistaken the class interest (of business) for the national interest.  The result was both class and national disaster.”

In late October 1929, a matter of just a few months following President Hoover’s inauguration, the stock market crashed, ushering in the greatest economic downturn in US History.  The Great Depression lasted a full, painful 10 years.  How bad did it get?  One statistic is telling.  The unemployment rate rose from 3% in the first year to 9% to 16% to an astonishing 24% in the fourth and final year of the Hoover presidency.  That’s a lot of vanquished ordinary people.  When asked whether he felt the capacity for human suffering to be without limit, a banker reportedly replied, “I think so.”  Invoking moral justification, many conservatives regarded federal aid to idle workers as spelling the end of the republic.

Consistent with these sentiments, President Hoover reminded the ordinary citizen of what had become the basic philosophy of the Republican Party: The Great Depression was nothing more than a “temporary slump in a fundamentally strong economy” and that government intervention to combat its baneful effects was both “unnecessary and unwise.”  Stubbornly, he refused to act.  Vilified over the years for his failure to act, perhaps rightly so, President Hoover believed that relief should come from the private sector, not the government.

As a result, a capitalist system which denied work or relief to the unemployed millions was increasingly called into critical doubt.  But rugged individualism was dead nonetheless.  Both real estate and farm commodity prices had collapsed.  Banks effectively ceased to operate.  While the heart of industry was only beating faintly, the private sector offered nothing.  It had failed.  The 1932 election would provide a last chance for politics.

(Editor’s note:  The second and middle segment in this three part series introduces readers to President Franklin D. Roosevelt, the plight of the vanquished and the creation of a new order, which the ordinary citizen has come to know as F.D.R.'s “New Deal” with its accompanying social safety net.)

-Michael D'Angelo