In his Neo-Com SOTU address last night, President Obama promised more of the same terrible economic policy that’s been holding the country back for nearly his entire presidency. A proposal to increase the minimum wage to $9 per hour is a perfect example. No more workers will get closer to making the much-desired-by-liberals “living wage” – in fact, more low-wage workers will lose their jobs (as has been amply demonstrated before).
So, it’s going to be more of the same: more job-killing tax increases (with nearly zero impact on the deficit) and regulatory schemes. And Obama, like his liberal-hero FDR before him, will march on -clueless- as he drags the country closer to financial disaster. Burton Folsom, Jr. explains why Obama and his cronies will continue to wonder “where are the jobs?”
Franklin Delano Roosevelt, 1933. Lietuvių: Franklinas Delanas Ruzveltas (Photo credit: Wikipedia)
The Great Depression dominated the 1930s, in large part because President Franklin D. Roosevelt’s New Deal programs failed to create jobs. In May 1939, shortly after learning that unemployment stood at 20.7%, Henry Morgenthau, the secretary of the Treasury, exploded: “We have tried spending money. We are spending more than we have ever spent before and it does not work.” Morgenthau concluded, “I say after eight years of this administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”
Why did Roosevelt’s New Deal fail so miserably? The larger problem is that federal spending can’t create jobs. It merely transfers wealth from taxpayers to central planners. But worse than that, most of FDR’s New Deal was driven by politics. It was economically unsound.
Take the National Recovery Act (NRA), for example, which was FDR’s program for industry. The NRA set the prices of thousands of products. Merchants who gave discounts to customers were subject to fines and imprisonment. For example, the fixed price to press a pair of pants was 40 cents. Jacob Maged of Jersey City, N.J., gave a 5-cent discount because his shop was far from the main shopping area. He needed to give discounts to attract customers and stay in business. “You can’t tell me how to run my business,” Maged insisted. Yes, they could, Maged discovered when he went to jail for charging his customers a nickel less. Neither FDR nor any of his New Dealers, however, could clearly explain why jailing merchants for giving discounts created jobs or made American industry more competitive.
FDR also supported the Agricultural Adjustment Act (AAA) for farmers. Granted, farmers suffered from low prices, but the AAA solution was preposterous—pay farmers not to produce on up to one-fourth of their land. Farmers would get instant cash, and also, because less land was being cultivated, prices for crops would go up. But of course those rising prices would make it harder for city dwellers to put food on the table. The farmer’s gain was the city dweller’s loss, and the AAA may have destroyed more jobs than it created.
via Does Obama Have Any Idea Why New Deal Failed? | Conservative News, Views & Books.
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