Jim Powell, Roosevelt's folly, Essay on the New Deal

Résumé du document

Critical analysis of Jim Powell's Roosevelt's folly. Refute Powell thesis and defend the New Deal. This paper aimed at demonstrating that, instead, the New Deal did not only help tens of millions of Americans to overcome the Depression but also made tremendous structural reforms that had ?surely played a role in determining the degree and the duration of postwar prosperity?. Jim Powell's thesis is that Roosevelt's interventions in these sectors were counter-productive, weakening the banking system, especially the strong big banks, and increasing the cost of issuing securities what prevented small business from developing and creating jobs.

Extraits

[...] Restoring confidence was the leitmotif of President Roosevelt at the beginning of his first term. Powell himself admits that President Roosevelt's personality, communication skill and “fireside chats” helped to bring back confidence (Powell 55, Edsforth 121). The Federal Bank Deposit Insurance Corporation (FBDIC, later simply FDIC), created by the Glass-Steagall Banking Act of 1933, was a key element to put an end to bank panics. This new entity guaranteed individual bank deposit up to $5,000 and was funded by minimal subscriptions from Federal Reserve member institutions. [...]

[...] However, Powell's laissez faire thesis that the economy would have readjusted itself if Roosevelt had not prevented free market from doing well is more than doubtful. At least, FDR managed the reversal of the downward economic spiral in 1933 and the New Deal restored economic stability and achieved security for vulnerable individuals. Moreover Powell fails to acknowledge FDR's remarkable array of social innovations. To what has already been presented in this paper, should be added the so-called Indian New Deal of 1934, the great reduction of child labor and sweatshops, the principle of a federally imposed minimal level of working conditions, federal grants for the blind, for the incapacitated, and for dependent children. [...]

[...] Indeed, there is a large amount of truth in FDR's Folly and this paper doesn't aim to refute this large part of the book. On the other hand, Jim Powell has a very debatable analysis of some measures of the New Deal and even more important, he omits a lot of FDR's positive achievements. That is what enables him to conclude so negatively on the New Deal and that is what I am going to highlight. It might be well to begin by recognizing what the New Deal failed to do. [...]

[...] For example, he asserts that “much of the money was spent on materials” (p91) without giving any amount. But ninety percent of the Shelterbelt Project funds were used for labor expenses (Droze 43). Eighty-nine percent of WPA's 1935-43 expenditures were paid out as wages (Edsforth 223). As a result, although the New Deal relief programs did not take care of all the jobless Hopkins himself acknowledged have never given adequate relief” it responded to Depression with a level of public aid which was not even imaginable in 1929. [...]

[...] The New Dealers shared the purpose of building a country from whose basic benefits and privileges no one was excluded. Appendix Works Cited Droze, Wilmon H. New Deal's Shelterbelt Project, 1934-1942.” in Essays on the New Deal Ed. Hollingswoth, Harold M. & Holmes, William F. Arlington: The University of Texas Edsforth, Ronald. The New Deal: America's Response to the Great Depression. Malden: Blackwell Publishers Hamby, Alonzo L. For the Survival of Democracy: Franklin Roosevelt and the World Crisis of the 1930s. [...]