01/31/2005: Thought for the Day:
The theory that new taxes and regulation would inevitably hamper economic
growth and destroy America exerted a powerful hold on the minds of the business
establishment and the economic right in the 1930s—just as it does today.
FDR's proposals seemed to fly in the face of everything these experts knew
about how the economy works. In particular, FDR upended the hallowed equation:
taxes and regulation equals tyranny and depression.
But a funny thing happened on the road to serfdom. FDR may have gone too far on occasion. He was great, not perfect. And the consumer-based economy that defines our age emerged only after World War II. But the economy did come back to life. Gross domestic product rose 90 percent between 1933 and 1941. Far from turning the United States into a Western version of the Soviet Union or Nazi Germany, the New Deal allowed the United States to function as the world's bulwark against both. The institutions that stood at the heart of the American experiment—representative democracy, the separation of powers, a system of managerial capitalism, liquid capital markets—survived in a world gone mad.
It's difficult to discern the short-term political gain for Republicans to try to dismantle Social Security now. So the payoff must be more psychological or intellectual. Now that they indisputably control all three branches of government, Republicans finally have the opportunity to slay some of the liberal demons that have been bedeviling them for so long.
For 70 years, conservatives have been telling us that the American economy—whether it's in recession or whether it's booming—is laboring under the shackles of the burdensome taxation and misguided regulation placed upon it by FDR and his successors. Somehow, stocks would do better if the SEC were weaker and we'd all be wealthier if seniors weren't guaranteed a minimum income, funded through payroll taxes. But America's economic mastery since 1945 has served as an ongoing and constant refutation of their most dearly held beliefs. It still does today. As George Melloan concedes, "The New Deal basically expanded the reach of government, and things worked out OK." Actually, they worked out great. Some people still can't get over it.
Len on 01.31.05 @ 06:06 AM CST