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Nkrumahism, The Can of Worms I Opened-FDR

Sun, 9 Aug 2015 Source: Kwarteng, Francis

WHAT MR. PHILIP KOBINA BAIDOO, JR. SAID THEN AND NOW

Mr. Baidoo writes:

“The serious question that anybody reading this piece should demand from Mr. Kwarteng is as follows: how can the establishment of these institutions be influenced by Keynes’ book when it was published in 1936. I have said already and I will repeat again that these people falsify evidence to fit into their narrative, like Noam Chomsky, Al Gore, Rachel Carson and their fraternity. They lie and cheat, and it doesn’t matter whether other lives are at risk, so long as it will make their story look and sound nice…”

It is clear from the above that in Mr. Baidoo’s limited reckoning Keynes’ “The General Theory” did not in any way influence the Roosevelt Administration and the New Deal, apparently because of an anachronistic relationship between the book’s publication in 1936 and pre-1936 New Deal projects. Now it appears Mr. Baidoo has made a sudden turn, inexplicably, finding our partial thesis mouthwatering and even swallowing it wholesale.

Yet he refuses to see his glaring contradictions gracing his articles on Keynesian economics, the New Deal, and Franklin D. Roosevelt.

WHAT WE SAID TO MR. BAIDOO THEN

Quote: “We will not waste our time dismissing your fallacies and inaccuracies but we shall concentrate on only one (other readers may do the rest; we have decided to ignore you but a friend impressed upon us to respond. We see your articles but ignore them because they are not worth our intellectual resources and time): John Maynard Keynes’ “The General Theory.”

“The problem with you is that you always want to take a shortcut: Childish and analytic simplicity. You hate doing serious thinking and expanding your horizon on simple ideas.

“Let us re-iterate that you are wrong most of the time because you are not capable of doing the simple things right (we are not saying we are better or know everything. No one does. We make mistakes but yours seems to be over the top).

“We don’t think you are good at reading original texts (let’s ignore secondary and tertiary sources for now). But you are good at misreading texts, quoting texts out of context, and misrepresenting and mis-paraphrasing facts.

“We have always insisted that you are not a deep thinker and that you love to wallow in your general ignorance. We say this not as an insult but as fact. This is why:

“First, Keynes had been influencing the West (particularly Britain and America) since the 1920s and 1930s with such notable works:

1) The Economic Consequences of the War (1919)

2) Revision of the Treaty (1922)

3) The Inflation of Currency as A Method of Taxation (1922)

4) The End of Laissez-Faire (1926)

5) A Tract on Monetary Reform (1923)

6) A Treatise on Money (1930)

7) The Great Slump of 1930 (1931)

8) Essays in Persuasion (1931)

9) The Means to Prosperity (1933)

“In other words, Keynes’ impressive ideas spread throughout America, Europe and the rest of the world beginning in the early part of the 20th century. Even President Woodrow Wilson (1913-1921), the American President during the First World War, came under Keynes’ influence.

“Have you read the “Economic Consequences of the War” and “Revision of the Treaty” yet? Well, let me put that aside and proceed. Most of the ideas Keynes explored in the afore-cited works (and others we have not mentioned here) made their way into “The General Theory of Employment, Interest and Money.” Lest we forget, Keynes published “Treatise of Money” in two volumes in 1930.

“For instance, (3), (5), (6), and (8) deal with money, interest rates, and inflation among others on the “Interest” and “Money in “The General Theory.” (9) deals with issues of employment/unemployment among others in the “Employment” part of “The General Theory.”

“So for you to have understood the quote you attribute to me meant that, at least, you should have read the entire body of Keynes’ works prior to the publication of “The General Theory” in 1936. We are however convinced you did not do this because the shallowness of your article says it all.

“To make matters worse for you never bothered to find out how long it took Keynes to write “The General Theory” or how long it took him to research for the book? We have already said Keynes had been influencing America and its leaders and policy makers since the 1920s.

“Well, Keynes had been working on the connections between pricing mechanisms, money, and unemployment since the 1920s (see Steven Pressman’s book “Fifty Great Economists (2004)”).

“Remember we also said Keynes worked out his theories on unemployment and other such related topics in “The Means to Prosperity”? He sent a copy of this book to President Franklin Roosevelt in 1933 (see Robert Skidelsky’s book “John Maynard Keynes: 1883-1946 (2005”)!

“If you want to know how President and his Administration felt after reading this book, “The Means to Prosperity,” then read Skidelsky’s book.

“Remember this was in 1933. Also remember that “The Means to Prosperity” was important to “The General Theory.” Other world leaders who read the book in 1933 were impressed by its forceful arguments.

“In sum, putting everything together the central ideas of “The General Theory” were already “known” going all the way back to the 1920s in America before it was published in 1936.

“We can only say at this point that Keynes brought together all those precursory ideas into one place, “The General Theory,” with analytic and theoretical rigor. Therefore you would not have made that faulty conclusion if you a student of John Maynard Keynes, history of economic thought, and global history…

“Now readers can enjoy this letter which Keynes wrote to President Roosevelt in 1933… unquote.

The question is: Why did Mr. Baidoo say “The General Theory” did not impact the New Deal in any way because of the erection of pre-1936 New Deal infrastructures and institutions, only to turn around and inferentially say “The General Theory” impacted the New Deal? He even said we falsified evidence to fit into our narrative when we argued that Keynes influenced Roosevelt and the New Deal. Granted, if according to Mr. Baidoo’s claim that “the establishment of these institutions be influenced by Keynes’ book when it was published in 1936,” only for him to turn around swiftly and argue in the context of his self-made contradictions, the question then becomes: Who then is falsifying the evidence to fit into his or her narrative? Mr. Baidoo does not resolve this contradiction in his largely uneducated articles because he takes his readers, research methodology, context, and historical facts for granted.

In any case the aforementioned quotation, a summary of sorts, was a partial revelation of the facts in that our exchanges with Mr. Baidoo at the time were strictly about Keynes, Roosevelt, and the New Deal. Moreover, the narrow intellectual and historical focus of his essay in question informed our incomplete response to him. Given also that Mr. Baidoo was and still is not capable of informed complex and interacting ideas, we had no choice other than to resort to simplistic formulations of historical facts. But the question is a complicated one in that Keynes’ ideas and their collective impact on the New Deal and Roosevelt were merely one of many. Great Depression and Roosevelt historians and biographers have pointed this out.

For instance, in an interview with the PBS Prof. Andrew Dunar was asked:

Q: “Did the federal government play a role in any of the projects?”

A: “The federal government's role was indispensable to most of these projects, and this includes more than the New Deal programs initiated in the Thirties. The Bureau of Reclamation began planning in the 1920s for major dams, and supervised their construction in the 1930s. President Hoover's Reconstruction Finance Corporation remained a vehicle for financing projects under the Roosevelt administration. President Franklin Roosevelt's New Deal programs, of course, were crucial, in particular the Public Works Administration and the Tennessee Valley Authority.”

In other words, Prof. Dunar makes President Roosevelt’s New Deal programs a policy continuity or extension of President Hoover’s. It is interesting how President Hoover’s Reconstruction Finance Corporation continued under the Roosevelt Administration. This answer appears in academic texts on the subject. Again in response to the question: “Might the Thirties be considered a key era for engineering?” Prof. Dunar explained further:

“Well, actually, planning had begun on many of these projects before the 1930s, and some of this owes ironically to the vision of President Herbert Hoover. Historians now acknowledge his progressive inclinations, and his commitment to counter-cyclical planning and the belief that the nation ought to have a reservoir of big projects in the planning stages that could be executed when the time was right.

“Programs begun during the Hoover years, such as the Reconstruction Finance Corporation, were forerunners of the New Deal, and years later New Dealer Rexford Tugwell acknowledged that–even though no one would say so at the time–"practically the whole New Deal was extrapolated from programs that Hoover started."

“The impact of the automobile, which became affordable to middle-class Americans in the Twenties, is undeniable–note how many of these major projects are adaptations to the automobile age: bridges, freeways, and tunnels.

“At the same time, engineering advances and new technology made possible projects of unprecedented proportions: on Hoover Dam, for example, such innovations included cableways to transport materials and the means to cure massive amounts of concrete…”

Lest we do not forget, President Hoover’s Reconstruction Finance Corporation (RFC) was itself modeled on the War Finance Corporation (WFC), the latter going all the way back to the First World War. The U.S. Congress (with the Federal Reserve) capitalized the RFC to the tune of hundreds of millions of dollars.

MULTIPLE INSPIRATIONS FOR THE NEW DEAL

Prof. Dunar could not have been more right, given Rexford Tugwell’s characterization as one of the intellectual pillars behind the New Deal, because the latter’s statement to the effect that “practically the whole New Deal was extrapolated from programs that Hoover started” somewhat underscores the historical involvedness of the subject matter. President Hoover was not called the “Father of the New Deal” for nothing. One of President Roosevelt’s advisors noted: “When we all burst into Washington…we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself” (Horwitz). On the other hand this is not a widely known statement of some historical facticity. We knew this little-known history but left it out of our exchanges with Mr. Baidoo.

Yet some of the ideas of the New Deal originated with the British Fabians. The New Deal drew upon President Theodore Roosevelt’s “Square Deal” (Klopfenstein), going back some thirty-plus years prior to the formulation of President Franklin Roosevelt’s New Deal (readers should not confuse Theodore Roosevelt (1901-1909) with Franklin Roosevelt (1933-1945). The latter was related to Eleanor Roosevelt, the former’s wife). American Catholic priest John A. Ryan (PhD, 1869-1945), his ideas, activism, and books particularly “Program for Social Reconstruction (1919),” and the work of the National Catholic War Council (NCWC), of which he was associated, influenced the New Deal as well. It is important understanding the overall ideological and psychological predispositions of President Roosevelt’s Brain Trust, made of Columbia University professors (First New Deal) and Harvard University professors (Second New Deal).

These professors brought their own set of ideas to the policy formulation of the New Deal. The US Congress and the Supreme Court did their part as well, not glossing over the other fact that Americans indirectly and directly played an important role in all these as they endorsed President Roosevelt [and the New Deal] by consistently voting for him, thereby making him the longest serving president in America’s political history. Finally, others cite the progressivism of Woodrow Wilson as inspiration for the New Deal, decades-old tradition of American and European populism, etc (Rauchway; Cooper, Jr.). For instance, the latter mentions some important connections between the European welfare state, the European state system, and European politics on the one hand and the New Deal on the other, in part citing some specific examples of the New Deal which may have borrowed from their European counterparts. Indeed no rigorous scientific study of the period can ignore these facts.

In all, it is important stressing that Hoover’s laissez-faire policies contributed to the Wall Street Crash (1929), with some arguing that his “big-spending, interventionist policies prolonged the Great Depression…” (Horwitz). In other words a free market president Hoover’s attempts to deregulate Wall Street ushered in the financial crash that President Roosevelt came in to fix. Yet the same laissez-faire President Hoover would turn around to oppose the New Deal on political grounds, claiming that it was going to widen the country’s deficits, when, in fact, he laid the foundation for it [the New Deal]. Among other things, he questioned how President Roosevelt was going to finance the New Deal without, if we may also add, questioning how his own Reconstruction Finance Corporation had financed projects under his presidency. What Mr. Baidoo’s article did not say was that President Hoover abandoned his laissez-faire fantasies because they did not much in easing Great Depression suffering.

Finally, President Hoover primarily opposed the New Deal on political grounds because it became popular with the electorate and therefore threatened his re-election bid.

ADDITIONAL QUESTIONS TO PONDER

From the above we ask: How, then, could President Hoover have been an interventionist and proponent of laissez-faire market economy at the same time? This is no doubt similar to the self-induced contradiction Mr. Baidoo currently finds himself in with regard to his simultaneous rejection and acceptance of Keynes’ “The General Theory” as playing any role in the policy formulation of the New Deal! What a dilemma of unimaginable proportions! In spite of the varied intellectual, moral, ideological, political, and philosophical inspiration for the New Deal, it is only Keynes and President Roosevelt who Mr. Baidoo’s atrophied horizon or psychology directs his uninformed ire. We cannot blame Mr. Baidoo however, because, like we said before, he appears not to be capable of the discursive rigor of eclectic intellectualism, an intellectual defect that possibly limits his limping intellect to overly simplistic ideational formulations and jaundiced Orwellian fantasies.

In the main, lack of forceful articulation of methodological holisticization and of eclectic intellectualism in Mr. Baidoo’s structurally fatuous, illogical, and largely maudlin articles feed his uninformed prejudices and jaundiced valuation of the intellectual history of ideas. Resorting to ad hominem attacks on his intellectual opponents rather than to scientific valuation of issues based on the critique of historical facticity, has been a defensive mechanism which he has conveniently adopted to make up for his serious intellectual deficits and to circumvent uncomfortable facts of history that stand against his uninformed prejudices, general ignorance about basic ideas, and conformist psychology. His selective citation of “facts” and their staged minstrelsy manipulation, his misrepresentations and misparaphrasings of authors, and his purposeful quoting of sources out of context need no additional belaboring here. They are proverbial.

Apparently Mr. Baidoo cannot and is not thinking straight insofar as he allows these self-imposed hindrances to persist in and subsist on his stiflingly claustrophobic horizon. These self-imposed limitations do not permit him a chance at the scientific rigor of eclectic intellectualism and methodological holisticization, hence his mass-produced misinformed, illogical, clueless, and uninformed articles. He does not, for instance, take it upon himself to research into let alone provide data/statistics on the contributions New Deal projects, ideas, and institutions continue to make towards America’s GDP and sustainable development; how New Deal projects, ideas, and institutions contributed to post-World War 2 economic boom; how New Deal projects, ideas, and institutions contributed to the industrialization and modernization of the American West and South; how New Deal projects, ideas, and institutions contributed to bridging the deficits in infrastructural capital, growth, and development between the American South and West on the one hand and the Northeast on the other hand; and how New Deal projects, ideas, and institutions continue to provide employment to tens of millions of Americans including immigrant Africans and many others from around the world.

The ongoing contributions of New Deal projects, ideas, and institutions to America’s political economy in general have been enormous. African and non-African societies have directly or indirectly benefited from some of these innovative ideas we associate with the New Deal. Sometimes, it is easier measuring the impact of New Deal ideas on African societies, to mention but one, qualitatively rather than quantitatively in monetary terms. Yet the statistics/data are all there in the public domain, especially in America, even as Mr. Baidoo conveniently overlooks them and in doing so limits the impact of the New Deal to history without so much as his analysis taking holistic cognizance of the impact of New Deal programs in the long term (Leighninger; Smith).

Nevertheless, the New Deal chalked many positives in the timeline of Mr. Baidoo’s twisted narrative history on the subject matter.

There is no doubt in our minds that this undertaking requires a serious mathematical and scientific mind to include the long-term economic impact of New Deal projects, ideas, and institutions to bear on any analysis on the subject matter (Leighninger; Smith). Paul Krugman was correct when he wrote: “The truth is that the New Deal wasn’t as successful in the short run as it was in the long run… About the New Deal’s long-run achievements: the institutions F.D.R. built have proved both durable and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would be if the New Deal hadn’t insured most bank deposits…The New Deal brought real relief to most Americans.” But Mr. Baidoo always takes the easy way out when confronted with the denseness and valuation rigor of eclectic intellectualism and methodological holisticization.

Other writers provide data/statistics on the stock market and GDP yearly from 1932 through 1936 and then from 1938 through 1942 (Walter & Brechin; the authors provide graphics for their data for easy reading), surprising statistics/data that some critics of the New Deal do occasionally ignore in their appraisal of the New Deal (Hiltzik; see also Romer), as well as provision of data/statistics on increased multi-factor productivity (total-factor productivity) from 1929 through 1941, including an analysis of the technological advancement of American industry and society (during the course of the New Deal) in American history (Field; see also Walker & Brechin).

SOME NEW DEAL CONTROVERSIES AND THEIR REPERCUSSIONS FOR DEAL HISTORIOGRAPHY

Importantly, while Mr. Baidoo places the unemployment rate in 1937 at 14% other writers put it at 9% (Walter & Brechin; Miltzik), with an accompanying explanation that individuals in work-relief programs were classified as unemployed and that the rise in unemployment rate in 1938 was “not because New Deal stimulus spending failed but rather because Roosevelt did not go far enough in pursuing these policies “(Wallace). As probably expected, Mr. Baidoo does not discuss controversies surrounding the difficulties of collecting unemployment data/statistics at the time. Meanwhile Prof. Eric Rauchway has this to say: “Except in the 1937-38 recession, unemployment fell every year of the New Deal. Also, real GDP grew at an annual rate of around 9 percent during Roosevelt's first term and, after the 1937-38 dip, around 11 percent…”

He continues: “So on the numbers, the U.S. economy briskly improved during the New Deal. Things that are moving quickly and in the right direction, but still haven't reached their destination after a while, are things that have a long way to go—which is true of the U.S. economy recovering from 1932. Historians disagree on which part of the New Deal most encouraged economic growth, but at the least the New Deal did not prevent this recovery” (see also Walter & Brechin for unemployment data 1933-37, p. 11).

In another context, Mr. Baidoo ignores a cogent argument Paul Krugman made for the sharp unemployment dip in 1937-38, writing thus: “And F.D.R. wasn’t just reluctant to pursue an all-out fiscal expansion—he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections…” Admittedly, Krugman’s allusion to “double digits” may support the 1937 9% unemployment rate we pointed our earlier before the dip. A UCLA economics professor who has studied the period provides the following unemployment data for 1937 in a technical paper (Darby): Lebergott (14.3%), BLS (14.3%), Corrected Lebergott (9.3%), and Corrected BLS (9.2%) (Note: BLS stands for the Bureau of Labor Statistics. For more on Darby and his critics, see Margo).

Among other things, Mr. Baidoo’s 14% unemployment ratio (its equivalent Corrected BLS 9.2%) does not take account of the portion of three-and-a-half million Americans who should have been classified as “employed” but were instead “misclassified” as “unemployed” for a number of reason including, but not limited to, technical ones, issues of conflicting definitions and of data collection and analysis procedures (For more information on the technical controversies surrounding unemployment rate estimates, see Smiley; Lebergott; Coen). In other words three-and-a-half million “employed” Americans were added to the “unemployed” data from 1934 to 1941, the years of the researcher’s study (Darby), hence the Corrected Lebergott 9.3% and Corrected BLS 9.2% as opposed to the Lebergott 14.3% and BLS 14.3%. In this light Rauchway shows how certain critics of the New Deal exclude Americans who were employed in 1937 through government-supported relief programs. Such writers characterize them as “unemployed” instead. In doing so however, Rauchway argues, these writers manage to avoid using the different means or methods of measuring unemployment. Rather, they use those means that ignore and hide aspects of unemployment data.

Thus after reviewing Amity Shlaes’ work on the New Deal, particularly on aspects of her 1937 unemployment statistics, he concludes: “But that number hides something: A third of people Shlaes counts as unemployed had a job that the New Deal gave them through its relief programs” (Rauchway). Even so, Shlaes seems to contradict her position by ignoring another measure of unemployment, namely “private, nonfarm unemployment,” which measures, in the words of Rauchway, “the real, industrial economy,” a statistic obtainable from the “Historical Statistics of the United States” (ibid). In fact Shlaes admits excluding certain data in her work on the New Deal. These data she now admits to have overlooked come from the work done by the aforesaid UCLA professor (Darby). Rauchway thus gives qualitative significance to Darby’s scientific study of the era. These comparative data for unemployment categorically some of the key issues of 1937 and what they mean to the ongoing debate on the New Deal. Thus: “Yet of all the ways to measure unemployment, Shlaes chooses the only way that hides the effect of New Deal relief programs and makes it look as though the economy performed as poorly under Roosevelt as under Hoover” (ibid).

Rather insidiously Shlaes avoids using GDP, which looks at the general health of an economy, and instead focuses her study on the Dow Jones Industrial Average, which concentrates on a tiny fraction of employees who owned stock, to advance her arguments, though she admits the New Deal stimulated the economy (ibid). She selectively quotes an unemployment number and ignores other measures of unemployment, which Rauchway discusses as part of his critique, covering the duration of the New Deal. Granted all that, we may have to point out as an aside that unemployment cannot be pushed or forced below its “natural” state or level, because doing so may have serious consequences for the health of a political economy, with inflationary distortions of a political economy constituting one of such potential negative consequences. Generally, there exists a certain degree of agreement between critics and supporters of the New Deal that, perhaps, the Second World War brought Great Depression unemployment rate to its “natural” state at the 1929 level and also that we owe this commendable achievement to the visionary leadership of President Roosevelt.

Thus, we cannot overemphasize the importance of the fact, that, among other things, the same president who had pursued the policy objectives of the New Deal and Keynesian economics among others would admirably return the unemployment rate to its 1929 level. On the other hand President Hoover’s Reconstruction Finance Corporation would come to play an important role in the Second World War, including such things as boosting investment, productivity, and creating opportunities for employment. Further, these facts may explain the mathematical basis of the professor’s arguments that account for some of the “missing” data in New Deal literature. Mr. Baidoo apparently missed these comparative data. Thus, some anti-New Deal writers who had initially missed or ignored these corrective data have come to the realization that a revision of statistics/rations/data in the upcoming editions of their texts must include this new update.

Mr. Baidoo himself needs to revise his old notes, in part explaining why Krugman and other New Deal scholars and historians think some writers are consciously distorting some of the facts on the New Deal.

Even so, whatever the actual unemployment figure for 1937 the fact remains that the New Deal did a good job of fighting unemployment progressively from year to year, as Prof. Rauchway’s commentary indicates, his data coming as they are from the “Historical Statistics of the United States” (see also Leuchtenburg). The fact also remains that controversies abound with regard to data analysis of the period depending on whether the data analyst in question was/is critic or supporter of the New Deal. That notwithstanding, one may wonder how the unemployment data under President Roosevelt went from 1940 (Lebergott 14.6%, BLS 14.6%; Corrected Lebergott 9.6%, Corrected BLS 9.6%) to 1943 (Lebergott 1.9%, BLS 1.9%; Corrected Lebergott 1.8%, Corrected BLS 1.8%) (Darby)

(For additional information on how statisticians and economists discovered flaws in Lebergott’s work and their modification/correction, see Romer).

WHERE DO WE GO FROM HERE?

Mr. Baidoo’s articles overlook thus important fact. Still important is the fact that critics and supporters of the New Deal accuse each of ideological biases and of selective adoption of facts and data to make their case either in support or criticism of the New Deal. Discussing the biases of New Deal scholars and historians, as well as intended and unintended exclusion of factual data on the New Deal by some writers, would have at least gone a long way to minimize his own biases and enriched his intellectual treatment of the subject. Some influential writers have admitted not including certain vital statistical data of the period in their written works, thereby distorting the historical picture of the era. Even more important is the notion that no monolithic literature exists on the New Deal. There is a body of literature in support of the New Deal and there is another body of literature against it.

Perhaps what matters the most is that students of political economy, global history, and the intellectual history of economic and political thought might as well read both. It also turns out some of the major critics and supporters of the New Deal are associated with purely ideological research institutes, think tanks, and other organizations funded by the two major political parties (Republicans, Democrats) and by powerful individuals with strong ties to the parties, Wall Street, and media outfits such as the Wall Street Journal (conservative) and the New York Times (liberal). These are simple caveats readers should know. This knowledge makes a difference in how scholars, historians, politicians, and researchers re-interpret the New Deal.

All of the foregoing facts including employment/unemployment statistics/data, GDP, stock market statistics, and data on multi-factor productivity, inflation, consumption patterns, earnings (wages and salaries), job creation, national expenditure, etc., are important in evaluating the relative success of the New Deal in how they solved the Great Depression. Therefore measuring the policy failures or successes of the Great Depression, any depression of recession for that matter, is not only a question or matter of employment/unemployment statistics. That is lazy thinking for the most part.

Nevertheless, evaluating employment/unemployment data may probably be the most important but this metric is tied to a number of economic indices.

What is more, a strong argument has been advanced that most of the physical structures and other material achievements, for instance public artworks, chalked under the New Deal are still unmarked, and also that in the era following the Second World War critics of the New Deal did away with identifying markers on New Deal buildings, and so on (Phillips-Fine), thus making a reckoning of their contributions to American political economy difficult to track. Fortunately, there is a concerted effort by a team of scholars and researches across America to catalogue the achievements chalked under the New Deal (Walker & Brechin; see the website of The Living New Deal). In the end when things became so hard for the American people and the state President Roosevelt stepped in and provided some of the interventions Adam Smith required of the state and its institutions (see Book V in “The Wealth of Nations.” See also Part 2 of our essay “What Ghanaians Can Learn from Pope Francis”).

And as I hinted a while ago, Mr. Baidoo does not devote any attention to how President Roosevelt’s policies from 1941 to 1945 and the New Deal contributed to post-World War 2 economic boom, America’s emergence as a superpower, and the making of its middle class (Smith). Krugman has written: “What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs…” Other scholars have treated this subject with admirable sensitivity and analytic finesse, with one American historian showing how the New Deal benefited or impacted the Cold War, the World Bank/IMF, and the United Nations (Rauchway).

And yet there appears to be empirical support for Krugman’s position. Prof. Rauchway notes:

“As for being bad for business: The greatest knock on the New Deal is it did not end the Great Depression. The war did that. Open the authoritative reference work ‘Historical Statistics of the United States’ and you will find that the unemployment rate did not return to its 1929 level until 1943. But if the New Deal did not end the Great Depression, was it doing some good? ‘Historical Statistics of the United States’ says yes.”

CONCLUSION

All this is not to say the New Deal did not have its own share of failures in specific instance. It certainly did in the face of its successes/achievements. “Roosevelt did make mistakes,” notes one New Deal historian, adding “the National Recovery Administration–which let industry cartels set noncompetitive, prize-raising codes…Roosevelt admitted the NRA was ‘pretty wrong’…But the NRA lasted less than two years and did not typify the New Deal” (Rauchway). Rauchway does not, however, mention that Samuel Williams, the chairman of the NRA, proposed ending the mechanism of price control. However, most businessmen opposed it, thinking that such a move by the NRA potentially threatened an agreed-upon price for their products as well as their anticipated profits (Time Magazine). This omission aside, prominent and outspoken supporters of the New Deal, like Krugman, have not shied away from stressing this to the public. All the major writers whose writings we have reviewed, those who particularly support the New Deal, have done similarly.

Of course there are very good reasons to account for some of these failures. Perhaps a more general reason is that economics is an inexact science. Politics, ideological resistance to President Roosevelt and sabotage are the next three. Another major reason is the experimental nature of New Deal ideas given the lack of proven precedents to direct the Roosevelt administration (of course, other depressions/recessions had preceded the Great Depression but they were all unlike the latter in many ways). Neither should we ignore the decisions made by the U.S. Treasury and Federal Reserve, how they precipitated the Great Depression, and their negative impact on the New Deal (Parker). In fact in a technical paper and perhaps one of the first studies of its kind, a leading American economist questioned how the limited application of expansionary fiscal policy in the thirties could have underwritten America’s economic recovery from the depression (Brown).

Finally, there is a need to factor into the critique of the New Deal how the Supreme Court’s reversal or rejection of some of the major components of the New Deal may have affected the overall course of the program (Note: President Roosevelt tried to pack the Supreme Court with men sympathetic to his New Deal political philosophy). The other fact of the matter is that the New Deal (and Keynesian economics) continued unofficially under the leadership of President Roosevelt during the Second World War, a fact we have conceded elsewhere, thus underwriting the return of unemployment rate to its 1929 level. Again this happened under President Roosevelt. This is what Krugman seems to be saying. At this juncture we have to briefly mention for the record that though the New Deal officially ended in 1939, it continued after World War 2, a timeline which is itself divided into two timelines: 1946-1975 and 1976-present.

It continued under the Eisenhower administration (1950s) and the Kennedy and Johnson Administrations (1960s). “The post-1975 era, on the other hand, brought a considerable roll-back of New Deal programs under the banner of the Reagan and Bush administrations. The attack on New Deal policies was an unintended result of anti-government, free-market ideology of the Neo-Conservatives. The cutbacks on everything from corporate taxes to bank regulations have lent more recent times the name of ‘Neo-Liberalism’” (see “After the New Deal” on the website of The Living New Deal).

This sounds like an all-too-familiar story. A laissez-faire marketer President Hoover, a Republican, turned a glowing American economy into a depression even as the American people overwhelmingly voted a Keynesian President Roosevelt, a Democrat, to fix the mess, while the deregulation policies of the Bush and Reagan administrations, both Republican, contributed to the 2008 housing bubble. The American people voted a Keynesian President Obama, a Democrat, to fix the mess. What a coincidence? Why did the American people vote Keynesian presidents to fix the economy in these two particular instances? Was it by the penetrating will of transcendence or by the sheer weight of practical wisdom of the American masses? Well, the Bush administration even came in and squandered the surplus the Clinton administration left it!

Our question still remains: “Why did Mr. Baidoo say “The General Theory” did not impact the New Deal in any way because of the erection of pre-1936 New Deal infrastructures and institutions, only to turn around and inferentially say “The General Theory” impacted the New Deal?” In other words what actually caused Mr. Baidoo to suddenly change his conformist mind and make the ideas of John Maynard Keynes the centerpiece of the New Deal, while dismissing other potential influences some of which we have already mentioned in this essay?

We shall return…

REFERENCES

1) “Interview: 1930s Engineering.” PBS.

2) Mark Klopfenstein. “The Progressive Era: 1900-1920.

3) Steven Horwitz. “Herbert Hoover: Father of the New Deal.” The Cato Institute. Sept. 29, 2011.

4) Philip Kobina Baidoo, Jr. “Nkrumahism, The Can Of Worms I Opened–Keynesian Economics.” Ghanaweb. July 19, 2015.

5) Robert D. Leihninger. “Long-Range Public Investment: The Forgotten Legacy of the New Deal.”

6) Kim Phillips-Fine. “Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan.”

7) Jason S. Smith. “A Concise History of the New Deal.”

8) James S. Smith. “Building New Deal Liberalism: The Political Economy of Public Works, 1933-1956.”

9) Robert Leighninger. “Long Run Public Investment: The Forgotten Legacy of the New Deal.”

10) Michael Hiltzik. “The New Deal: A Modern History.”

11) Christina D. Romer. “What Ended the Great Depression?” The Journal of Economic History. Vol. 52, No. 4. P. 757-784. December 1992.

12) Christina D. Romer. “Lessons from the Great Depression for Economic Recovery in 2009.” The Brookings Institution. March 9, 2009.

13) Christina Romer. “Spurious Volatility in Historical Unemployment Data.” Journal of Political Economy. Vol. 94, No. 1, p. 1-37 (1986).

14) Time Magazine. “Recovery: Dollar Men and Prices.” Jan. 21, 1935.

15) Alexander J. Field. “A Great Leap Forward: 1930s Depression and U.S. Economic Growth.”

16) Paul Krugman. “Franklin Delano Obama.” The New York Times. Nov. 10, 2008.

17) John M. Cooper, Jr. “Reconsidering Woodrow Wilson: Progressivism, Internationalism, War, and Race.”

18) Robert A. Margo. “Employment and Unemployment in the 1930s.” Journal of Economic Perspectives. Vol. 7, No.2. p. 41-59 (Spring 1993).

19) Richard Walker & Gray Brechin. “The Living New Deal: The Unsung Benefits of the New Deal for the United States and California.” University of California (Department of Geography; Institute for Research on Labor and Employment). Aug. 1, 2010.

20) Richard Walker & Gray Brechin. The Living New Deal (Link: http://livingnewdeal.org/resources/websites/)

21) Stanley Lebergott. “Manpower in Economic Growth.”

22) Stanley Lebergott. “Annual Estimates of Unemployment in the United States, 1900-1954.” The National Bureau of Economic Research (see “Measurement and Behavior of Unemployment (1957),” p. 211-242).

23) Michael R. Darby. “Three-And-A-Half Million U.S. Employees Have been Mislaid; Or, An Explanation of Unemployment, 1934-1941.” National Bureau of Economic Research, Inc. Working Paper No. 88. May 1975.

24) Chris Wallace. “Fox News’ Wallace Falsely Claimed ‘Unemployment in 1937, 1938 Was Higher Than it Was in 1933.” Media Matters for America. Jan. 21, 2009.

25) Gene Smiley. “Recent Unemployment Rate Estimates for the 1920s and 1930s.” Journal of Economic History. Vol. 43, No. 2, p. 487-497 (June 1983).

26) Eric Rauchway. “FDR’s Latest Critics: Was the New Deal un-American?” July 5, 2007.

27) Eric Rauchway. “The Great Depression and the New Deal.”

28) Robert M. Coen. “Labor Force and Unemployment in the 1920s and the 1930s: A Reexamination of Based on Postwar Experience.” Review of Economics and Statistics. Issue 55, p. 46-55 (February 1973).

29) William Leuchtenburg. “Franklin D. Roosevelt and the New Deal: 1932-1940.”

30) E. Cary Brown. “Fiscal Policy in the Thirties: A Reappraisal.” American Economic Review. Vol. 45, No. 5, p. 857-879. Dec. 1956.

31) Randall Parker. “An Overview of the Great Depression.” Economic History Association/EH.net Encyclopedia. March 16, 2008.

Columnist: Kwarteng, Francis