Saturday, April 14, 2012

A Bitter Harvest from the New Deal

The pain of the Great Depression made people willing to go along with FDR's New Deal. In hindsight, they probably began regretting it soon thereafter. National debt went up immediately, as did the deficit; but the unemployment rate didn't go down. But the tax burden to pay for it all began to crush Americans, both rich and poor. It has been doing so ever since. On January 18, 1960, almost thirty years after the New Deal began to take millions from American wage-earners, the New York Times printed, on its front page, that:

The President estimated that the expenditures of the Department of Health, Education, and Welfare in the fiscal year 1961 (including Social Security payments) would exceed $15,000,000. Thus the current results of New Deal legislation are Federal disbursements for human welfare in this country second only to national defense.

The huge amounts of money - back then, $15,000,000 was a lot of money - were spent in the name of "human welfare," but in fact only created misery in society. The net result of these expenditures was an increase in the divorce rate, the numbers of children born illegitimately, and the numbers of chronically unemployed. FDR's programs also created a dependency mentality, in which people saved less earnestly for their retirement, assuming that the government would pay for it all.

In the 1960's, LBJ's "Great Society" programs would extend the New Deal mentality, and Senator Barry Goldwater would note:

The currently favored instrument of collectivization is the Welfare State. The collectivists have not abandoned their ultimate goal - to subordinate the individual to the State - but their strategy has changed. They have learned that Socialism can be achieved through Welfarism quite as well as through Nationalization. They understand that private property can be confiscated as effectively by taxation as by expropriating it. They understand that the individual can be put at the mercy of the State - not only by make the State his employer - but by divesting him of the means to provide for his personal needs an by giving the State the responsibility of caring for those needs from cradle to grave. Moreover, they have discovered - and here is the critical point - that Welfarism is much more compatible with the political processes of a democratic society. Nationalization ran into popular opposition, but the collectivists feel sure the Welfare State can be erected by the simple expedient of buying votes with promises of "free" hospitalization, "free" retirement pay and so on ... The correctness of this estimate can be seen from the portion of the federal budget that is now allocated to welfare, an amount second only to the cost of national defense.

Senator Goldwater correctly projected the future tactics of certain politicians. Taxes would continue to increase, as would national debt, yearly federal deficits, and the promises made to care for various needs. In fact, domestic spending for such projects would soon exceed defense spending, and eventually the government would spend, annually, twice or thrice on domestic welfare what it spent on defense. Yet the class of urban poor and chronically unemployed would only grow with each new spending initiative. Even when well-intentioned, such programs only harm those they are supposed to help.