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The Chicken and the Eagle

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23 Responses

  1. Frank says:

    Yes, but Whitman v. American Trucking (9-0) was the canary in the particulate mine.

    Admittedly, the chicken lives on in Justice Thomas’s dissent in that case.

  2. Patrick S. O'Donnell says:

    What are these conservatives and libertarians so worried about? After all the New Deal “did not,” as David M. Kennedy reminds us, “substantially redistribute the national income. America’s income profile in 1940 closely resembled that of 1930, and for that matter, 1920. [....] Nor, with essentially minor exceptions like the TVA’s electric-power business, did the New Deal challenge the fundamental tenet of capitalism: private ownership of the means of production.”

    As to the New Deal’s accomplishments, they include, by way of the Glass-Steagall Banking Acto of 1933, the “inject[ion] [of] unprecedented stability into the American banking system.” In addition, and not unrelated, it “put in place an apparatues of financial security that allowed private money to build postwar suburbia and the sunbelt. The New Deal’s “cardinal aim was not to destroy capitalism but to devolatilize it, and at the same time to distribute its benefits more evenly.”

    In addition, the New Deal “succored the indigent and patronized the arts. It built roads and bridges and hospitals. It even sought a kind of security for the land itself, adding some twelve million acres of national parklands, including Olympic National Park in Washington State, Isle Royal in Lake Superior, the Everglades in Florida, and King’s Canyon in California.”

    Myth indeed: no mention of the Schechter brothers’ violation of NRA wage and hour codes or their sale of diseased poultry (not without reason was it known as the ‘sick chicken’ case).

    In his fair, judicious and eloquent assessment of the New Deal, Kennedy writes,

    “For all his alleged inscrutability, Franklin Roosevelt’s social vision was clear enough. ‘We are going to make a country,’ he once said to Frances Perkins, ‘in which no one is left out.’ In that unadorned sentence, Roosevelt spoke volumes about the New Deal’s lasting historical meaning. Like his rambling, comfortable and unpretentious old home on the bluff above the Hudson River, Roosevelt’s New Deal was a welcoming mansion of many rooms, a place where millions of his fellow citizens could find at last a measure of the security that the patrician Roosevelts enjoyed as their birthright.

    Perhaps the New Deal’s greatest achievement was its accommodation of the maturing immigrant communities that had milled uneasily on the margins of American society for a generation and more before the 1930s. In bringing them into the Democratic Party and closer to the mainstream of national life, the New Deal, even without fully intending to do so, also made room for an almost wholly new institution, the industrial union. To tens of millions of rural Americans, the New Deal offered the modern comforts of electricity, schools, and roads, as well as unaccustomed financial stability. To the elderly and the unemployed it extended the promise of income security, and the salvaged dignity that went with it.

    To black Americans the New Deal offered jobs with the CCC, WPA and PWA and, perhaps as important, the compliment of respect from at least some federal officials. [....] Urged on by Eleanor Roosevelt, the president brought African-Americans into the government in small but unprecedented numbers. By the mid-1930s they gathered periodically as an informal ‘balck cabinet,’ guided often by the redoubtable Mary McLeod Bethune. Roosevelt also appointed the first black federal judge, William Hastie. Several New Deal Departments and agencies, including especially Ickes’s Interior Department and Aubrey Williams’s National Youth Administration, placed advisers for ‘Negro affairs’ on their staffs.”

    Please see Kennedy’s Freedom from Fear: The American People in Depression and War, 1929-1945 (New York: Oxford University Press, 1999).

  3. arthur says:

    It’s not quite true that “since 1935 no one in the United States has dared try anything on the scale of the NRA”. The most intrusive economic regulations in the history of the United states are oddly forgotten today, even though many of us lived through them. They just don’t fit in with any comfortable narrative about political parties or, the meaning of liberal and conservative, or standard U.S. economic history. In August 1971, President Nixon decreed that every single price of every possible thing that could be sold would be frozen for 90 days. Controls were gradually modified and then lifted over the next two years, but the petroleum sector remained price-controlled for a decade. There was no authorizing legislation. Bizarrely, there were no Court challenges to the constitutionality of the Wage and Price controls (either on economic freedom or separation of powers grounds), even though violators were prosecuted.

  4. Nate Oman says:

    The problem with the NRA — as I said — was not that it was redistributive, but rather that it was counter productive and economically perverse. The sin was not wealth sharing but government control of economic decision making. (As you point out, the New Deal was not wildly redistributive.)

    As for the glories of the New Deal banking system, it is worth noting that it was largely dismantled about thirty years ago, with the result that American finance is the most efficient and dynamic in the world, and we have managed to avoid bank runs. (Indeed, the bank runs immediately after the Crash were largely a government creation, as it was monetary policy rather than some existential failure of capitalism that caused the money-drought that led to the bank failures.)

    As for the Schechters their main sins in the eyes of the prosecutors were two horrible practices: the first was cutting prices (which the New Dealers regarded as inflationary) and the second was allowing consumers to pick their own birds (this was regarded as wasteful and violated “straight killing” regulations). In point of fact, the sick chicken at issue was thrown in as a sweetener. Indeed, the NRA folks had to labor mightily to find a sick chicken after they had made the decision to indite. In the end they were able to find an egg-bound hen, so it is hardly as though the Schechters were selling tuburcular chickens or the like.

    Finally, whatever its emotional and nostalgic appeal — particularlly for ethnic and religious groups that mark their inclusion in the New Deal coalition as a moment of political and cultural arrival in American society — the policies of the Roosevelt administration did comparatively little to get the country out of the Depression. The WPA, CCC, etc. were too small to act as any sort of a real Keynsian stimulus, and other New Deal strategies — such as price controls in response to monetary deflation — were simply without ecnomic logic. Furthermore if the rallies of the Dow are any indication, it was at those moments when the New Deal was defeated that capital had the optimism necessary to go back to work.

    I’ll grant that FDR had a first-class temperment, a streak of political genius, some wonderful speeches, and moments of great foreign policy insight and bravery. (Although from Yalta on I think that he showed a rather frightening niavete about Stalin; a fact that Churchill recognized at the time.)

  5. Patrick S. O'Donnell says:

    I think it’s a safe generalization that “the Progressive Era and New Deal Reforms established the legal framework within which the federal government regulates the marketplace, financial dealings, labor relations, and agricultural production. Although legislation has been amended, rules and procedures judicially revised or augmented, and some regulatory bodies eliminated, the basic structure and methods of economic regulation remain in effect.” Scott R. Bowman

  6. Patrick S. O'Donnell says:

    John Updike concludes his New Yorker review (July 2, 2007) of Shlaes’ revisionist history of the Depression with the “emotional and nostalgic appeal” you reference:

    “…[T]he two men of my snug household, my father and my maternal grandfather, had both taken deep economic wounds: my grandfather had lost almost all his investments in the stock-market crash, and my father had been laid off from his job as a happily peripatetic telephone lineman. He endured a long interval of odd jobs and no job, with summer stints on local W.P.A. projects. Fortunately, the town school board eventually hired him, for twelve hundred dollars a year, as a math teacher. The job saved him for respectability, but he never forgot the trauma of being out of work with an infant son and no home of his own, in a world with no economic safety net, just breadlines. Hoover in his obtuse aloofness later wrote of the crisis, ‘Many persons left their jobs for the more profitable one of selling apples.’ Shlaes’s account of economic-philosophy wars en haut in Washington could have done with a little of the gritty testimony Studs Terkel collected, for instance that of Peggy Terry, who remembered of a soup line: ‘So we’d ask the guy that was ladling out the soup into the buckets—everybody had to bring their own bucket to get the soup—he’d dip the greasy, watery stuff off the top. So we’d ask him to please dip down to get some meat and potatoes from the bottom of the kettle. But he wouldn’t do it.’

    My father had been reared a Republican, but he switched parties to vote for Roosevelt and never switched back. His memory of being abandoned by society and big business never left him and, for all his paternal kindness and humorousness, communicated itself to me, along with his preference for the political party that offered ‘the forgotten man’ the better break. Roosevelt made such people feel less alone. The impression of recovery—the impression that a President was bending the old rules and, drawing upon his own courage and flamboyance in adversity and illness, stirring things up on behalf of the down-and-out—mattered more than any miscalculations in the moot mathematics of economics. Business, of which Shlaes is so solicitous, is basically merciless, geared to maximize profit. Government is ultimately a human transaction, and Roosevelt put a cheerful, defiant, caring face on government at a time when faith in democracy was ebbing throughout the Western world. For this inspirational feat he is the twentieth century’s greatest President, to rank with Lincoln and Washington as symbolic figures for a nation to live by.”

  7. Nate Oman says:

    “Roosevelt made such people feel less alone. The impression of recovery—the impression that a President was bending the old rules and, drawing upon his own courage and flamboyance in adversity and illness, stirring things up on behalf of the down-and-out—mattered more than any miscalculations in the moot mathematics of economics. Business, of which Shlaes is so solicitous, is basically merciless, geared to maximize profit. Government is ultimately a human transaction, and Roosevelt put a cheerful, defiant, caring face on government at a time when faith in democracy was ebbing throughout the Western world. For this inspirational feat he is the twentieth century’s greatest President, to rank with Lincoln and Washington as symbolic figures for a nation to live by.”

    This is a really wonderful passage, and it captures the New Deal zietgiest and its subsequent myth-making wonderfully. It also captures why FDR was such a powerful figure and why his legacy remains so important, particularlly in its characterizations of business and government. I would simply point out two things:

    First, one can reverse one’s emotional attitudes towards government and business. After all, it is easy enough to tell stories about heartless government bureacracies and the flexible humanity of the private sector.

    Second, Updike’s summation (and the story of his father’s family) doesn’t come anywhere near making an economic apology for the New Deal. If, as Shlaes contends, the New Deal made no macroeconomic sense, delayed economic recovery for almost a decade, and caused the vicious downturn of 1937, then the fact that FDR made people feel loved may not be the end of the story. Of course, Shlaes may be wrong, but one will have to marshall real economic arguments against her analysis. Whatever his other talents, I think that it is safe to say that John Updike lacks the ability to do so one way or another.

  8. Nate Oman says:

    I would also point out that Shlaes economic arguments are hardly revisionist among economists. Political historians may still believe in the New Deal narrative of economic events in the Great Depression, but most economists jettisoned it long ago. For Keynsians the New Deal (as opposed to war) spending was not big enough, and non-Keynsians have had Friedman’s monetary story of deflation since the early 1960s. Her economics is only revisionist within the essentially ignorant and economically illeterate literary world inhabited by Updike. Yet another reason that novelists probably don’t make the best makers of macroeconomic policy.

  9. Patrick S. O'Donnell says:

    I thought you made plain the revisionist character of Shlaes’ work in your original post, hence the possible need for a libertarian “judicial pantheon” and the characterization of Shlaes’ story as “different.”

    Updike’s story speaks for itself, and he does not pretend to be an economist. I agree, “novelists probably don’t make the best makers of macroeconomic policy.” But economists in positions of political power (i.e., with influence on macroeconomic policy) often leave much to be desired on this score as as well, at least that’s the lesson I’ve learned from Hausman and McPherson’s Economic Analysis, Moral Philosophy and Public Policy (2nd ed., 2006), Amartya Sen’s On Ethics & Economics (among other works) (1987), and McCloskey’s The Secret Sins of Economics (2002). Economists are proficient in the economics of prudence, price and profit (‘p’ variables), for instance, but have tended to neglect such Smithian virtues as temperance and justice: “Smith (and Mill and Keynes and quite a few other economists, if not the ones who run the discipline these days) have replied that, no, you have forgotten Love and Courage, Justice and Temperance, Faith and Hope, in a word, Solidarity, the ‘S’ variable of speech, stories, shame, The Sacred. Economists have specialized in ‘P,’ anthropologists in ‘S.” But most behavior, ‘B,’ is explained by both.” McCloskey also writes of the economists’ institutional and historical ignorance, as well as the philosophical naivete that tops of this “cultural barbarism.” The latter is illustrated by a subscription to the crude positivism of a “high-school version of ethical philosophy,” that is, the belief that “scientific and ethical questions are distinct, the one ‘positive’ and the other ‘normative,’ and that real scientists ought to (hmmm….) stick to the positive. I know it’s hard to believe, but most economists really do think that the positive/normative distinction lets them out of any reflection on ethics.” My college level introductory courses on economics were organized just this way, as we were confidently and casually informed at the beginning of the term that the course would cover “positive,” not “normative,” economics. When I asked an instructor where I could take a class on the latter, he frankly admitted that he had no idea where such a course was offered! So, there’s macroeconomics and there’s macroeconomics, as the late and great John Kenneth Galbraith made clear:

    “[L]ike Keynes, Galbraith sought to define economics not as a scientific field of ‘positive’ assumptions that could be distinguished from the messier ‘normative’ issues of policy but as an instrumental practice that was designed to achieve central moral and political ends and that was at its best when economists educated and persuaded the public. [....] Democratic government relies on choices about social values, which can’t be made by markets alone. Freedom is essential, but so also are equality, security, social stability, reduced social tensions, and a quality of life that sustains creativity and that focuses the imagination on more than getting and spending.. Freedom for Galbraith had both a ‘negative’ dimension (the opportunity for independent action and autonomy) and a ‘positive’ one (provision of basic resources and a social structure that protects negative freedom while promoting individual and collective ends).”

    Both the rational allocation of resources via the private market and the macromanagement of private markets via guided “growth” efficiency remain disturbingly focused on maximization through private production for private consumption (see Juliet B. Schor’s work):

    “The result was what Galbraith called ‘social imbalance, in which the market for privately sold goods and services was being saturated, while the demand for public goods–clean air, more parks and schools, better health care, less crime, less crowded transportation systems–remained unfulfilled. The abundance of private goods and services was all the more anomalous because to a great degree, thanks to large corporations’ advertising and marketing efforts, private ‘wants’–consumer demand expressed through Samuelson’s ‘revealed preference’–which privately sold goods are meant to satisfy, are as much a corporate product as the goods sold to satisfy them” (From Richard Parker’s John Kenneth Galbraith: His Life, His Politics, His Economics, 2005).

    There’s macroeconomic policy and there’s macroeconomic policy: See, for example, Doug Henwood, Wall Street: How It Works and for Whom (1997), The Group of Lisbon, Limits to Competition (1995), Frances Fox Piven and Richard A. Cloward, The Breaking of the American Social Compact (1997) and, of course, Kevin Phillips, Wealth and Democracy: A Political History of the American Rich (2002).

    And yet the economist might learn something from a novelist like Updike, for “Stories can sharpen and clarify moral questions, encouraging a dialectic between the reader’s own experience and the trials of the characters he or she is reading about. A tremendous amount of moral thinking and feeling is done when reading novels (or watching plays and films, or reading poetry and short stories). In fact, it is not an exaggeration to say that for most people this is the primary way in which they acquire ethical attitudes, especially in contemporary culture. Our ethical knowledge is aesthetically mediated. There is a clear interplay between art and ethics in moral education: the artistic and the ethical are processed simultaneously and in complex and interpenetrating ways” (Colin McGinn, Ethics, Evil and Fiction, 1997). Incidentally, this was well appreciated in The Laws of Plato and in the Confucian tradition. Or, as put a bit differently by Martha Nussbaum, “With respect to certain elements of human life, the terms of the novelist’s art are alert winged creatures, perceiving where the blunt terms of ordinary speech, or of abstract theoretical discourse, are blind, acute where they are obtuse, winged, where they are dull and heavy” (Love’s Knowledge: Essays on Philosophy and Literature, 1990).

    Enough said from my end, I’ll leave the last word to you.

  10. Nate Oman says:

    FDR supported free trade, for which he deserves praise.

  11. Matt says:

    I’ve not read the book so can’t say much on it. Brad Delong, though, who obviously knows something about these matters, thought it was not that great and completely wrong about many historical and economic matters. He’s discussed it (and the Updike review, that he thought was incompetent and awful) on his blog. My tendency is to think that Delong is probably at least largely right on it.

  12. Nate Oman says:

    As I read him, DeLong agrees that the NRA suppressed competition (bad), that the New Deal Fed constricted money supply (bad), and that the New Deal should have been more aggressively Keynsian rather than mucky around with the regulation of securities and business practices. In this he agrees with Shlaes. He seems to have three points of disagreement:

    1. He thinks that Shlaes is a Red baiter. This is an unfair reading of her book, which goes out of its way to insist that New Dealers were not communists or spies, but were simply enamoured of the power of central planning in part based on their assessment of the early economic “successes” of Stalin’s Russia. She also, however, is quick to point out condemnation’s by New Dealers of Stalin’s contempt for civil liberties and the rule of law.

    2. He thinks that Shlaes was wrong not to insist more vocally that Mellon, Hoover’s treasury secretary, was a bad, bad man. This point is largely peripheral to her economic argument, since she also insists that Mellon’s allegiance to the Gold Standard helped cause the Depression.

    3. He seems to think on the basis of Updike’s review that Shlaes accuses FDR of supporting the Gold Standard. This is simply a misreading of her book, as she spends much of her time discussing FDRs abandonment of the Gold Standard. Her take away point, as I read it, is that despite the abandonment of the Gold Standard FDR and Eccles ultimately pursued (largely by accident in FDR’s case) a tight money policy.

    The big difference between Shlaes and DeLong seems to be that DeLong is still a committed Keynsian while Shlaes is not. On the other hand, DeLong has read his Milton Friedman and clearly seems — at some level — to buy into his monetary account of deflation, for at least some of it. Likewise, both DeLong and Shlaes seem to agree that if you are a committed Keynsian, the New Deal was not nearly Keynsian enough.

    In short both of them seem to agree about the New Deal’s faults and their point of disagreement lies in their assessment of a counterfactual world without the New Deal in the mid to late 1930s. Shlaes thinks that the New Deal slowed recovery and DeLong things that it speeded it up but not by enough. It is hard to assess either of these claims, as they both rest on assumptions about, among other things, government policy in the absence of the New Deal. I suspect that DeLong imagines a continuation of the tight-money protectionism of the 1920s, while Shlaes imagines a world where the free-trade, loose money policy she favors was pursued.

  13. Joseph Slater says:

    Re the New Deal, I’ll cast my vote with Patrick O’Donnell’s eloquent posts.

    Beyond that, while Shlaes and others are free to extol the virtues of any Supreme Court decision they like, I sense a bit of over-selling of the importance of court decisions in general, and underestimation of political culture.

    First, was Lochner overturned because FDR “intimidated” the court? That’s a return to the “switch in time” theory that has been seriously questioned by some legal historians recently. More broadly, one wonders if the Lochner era really could have survived, in the face of continuing, wide-spread popular and political support for laws, e.g., setting minimum wages, providing overtime for certain workers who worked certain numbers of hours, the right to form unions without being fired, etc.

    Similarly, one wonders if American political culture, whatever the court did, would have abided the type of semi-totalitarian regulation of the economy Shlaes fears. I think not. And if Americans really wanted such a regime, I doubt the Supreme Court would have been much of an obstacle.

  14. SVT says:

    Shorter O’Donnell: “Feelings matter more than facts.”

  15. Jason Steed says:

    Arguing that ethics matter and that free-market economic policies pursued without regard for how they impact the individual family are undesirable is hardly the same as saying “feelings matter more than facts.”

    Gimme a break.

  16. Joseph Slater says:

    Patrick O’Donnell posted numerous cites to economists as well as historians and others. Those experts might stress some different facts, or interpret facts differently than does Shlaes, but it’s absurd to suggest that his argument is that “feelings matter more than facts.

  17. David B says:

    So, getting back to the ACTUAL SUBJECT of Nate’s post, are all of you who are getting all teary-eyed for the New Deal actually defending the NRA? If not, then you are quibbling over details. Nate’s point is that the NRA threatened to make the United States into something like Peronist Argentina. The Supreme Court stepped in, and shut that down, an almost inarguably good thing. If the New Dealers later stumbled on to other policies that you think had a marginally positive effect on American society (which, at best, is all that can be said about them, IMHO), or even a very positive effect, that fails to detract from Nate’s correct assertion that the NRA was God-awful. BTW, the NRA was known among blacks as the “Negro Removal Act,” because of its vicious effects on their employment.

  18. Joseph Slater says:

    The “ACTUAL SUBJECT” of the original post was not whether people would get teary-eyed over the NRA would defend every part of it, or even defend it as a whole. The actual subject was whether conservatives or libertarians should induct Schecter into some sort of right-wing pantheon of Great Supreme Court Cases.

    To repeat myself, if you really think that all — or mostly all — that was standing in the way of “something like Peronist Argentina” in the U.S. in the 1930s was the Schecter decision, well, I don’t see political history as working that way. But if you want to, go for it. It’s your pantheon.

    As a big fan of significant parts of the later New Deal — the NLRA, FLSA, SSA — I could take you up on your “marginally positive effects at best” line. Also, the relation of blacks to New Deal programs was complex. But getting into all that would be, well, getting away from the ACTUAL SUBJECT of the original post.

  19. Don says:

    “For all his alleged inscrutability, Franklin Roosevelt’s social vision was clear enough. ‘We are going to make a country,’ he once said to Frances Perkins, ‘in which no one is left out.’ . . . ”

    Right. The government is going to make sure no one is left out . . . .

  20. Patrick S. O'Donnell says:

    Don,

    You’re not a careful reader:

    It was a SOCIAL vision, which doesn’t mean that government is necessarily going to be the sole vehicle by which such a vision is to be realized. It might mean, and did, that government can play a leading role in establishing and encouraging the necessary structural conditions for such a vision, for increasing the likelihood that such a vision will take shape. FDR is quoted as saying “We are going to make a country…”–a country and a government are two different things. So…your paraphrase is inaccurate and as a conclusion of sorts does not follow.

    In our time and place, a welfare state certainly helps realize the socio-economic conditions for such a vision. It serves “not so much [as] a grand plan for social reorganization writ small as it is a modest principle of interpersonal ethics writ large.” The quote is from Robert E. Goodin, author of one of the more articulate and sophisticated defenses of the welfare state, one that shares the ethical assumptions of FDR’s vision: Reasons for Welfare: The Political Theory of the Welfare State (Princeton, New Jersey: Princeton University Press, 1988). You might also want to read the four chapters that make up the section on “Ensuring Social Security” in Goodin’s Utilitarianism as a Public Philosophy (Cambridge, UK: Cambridge University Press, 19995).

    On the degree to which various welfare states have served as the skeletal structure for, or fleshed out aspects of, FDR’s vision, both here and abroad, see Robert E. Goodin, et al., The Real Worlds of Welfare Capitalism (Cambridge, UK: Cambridge University Press, 1999).

    FDR’s vision was a noble one and I shudder to think what this country would be like without such visions inspiring our nation’s leaders to work for the “common good” (If perhaps you’re unfamiliar with that phrase, I would recommend Marcus Raskin’s The Common Good: Its Politics, Policies, and Philosophy, 1986, and Liberalism: The Genius of American Ideals, 2003). On the importance of social visions in general, see recent works by Russell Jacoby and William A. Galston’s discussion of utopian thought in his Justice and the Human Good, 1980, for the best social visions partake of utopian imagination.

  21. Patrick S. O'Donnell says:

    Erratum: Goodin’s book on Utilitarianism as a Public Philosophy was published in 1995.

  22. Dr. Kenneth Noisewater says:

    Speaking of counterfactuals, consider what would have been possible if FDR _hadn’t_ taken drastic actions. Could a totalitarian demagogue have gained traction?

    I tend to think that FDR’s policies were seen by Joe Public as bold enough to give them, if not confidence, then at least hope for the future.. And perhaps they inoculated the US against nastier strains of socialism (such as what happened after WWII in the UK, with NHS and nationalization of industries and such..)?

  23. Amity Shlaes says:

    I just wanted to thank all for the conversation and Nate Oman for understanding the point about the Schechter case. The Schechters are the forgotten men of New Deal history. For work that supports the argument that the NRA was a problem see the lengthy tome by the Brookings Institution from the period that concluded that the NRA retarded recovery.

    In terms of econ we all seem more or less to agree on the monetary. In the postwar Age of Keynes the cost of uncertainty generated by the New Deal was overlooked. That uncertainty cost, well understood by economists, businesses, and newspapermen in the 1930s was what I tried to convey. (See the NY Times piece, “New Deal Policies Blamed for Slump,” Jan, 1938, about the anxieties of what they called “venturesome capital.”) The best thing abt THE FORGOTTEN MAN from my point of view is the level of conversation it has generated. Couldn’t have hoped for more interesting responses.