Dismantling The New Deal Reforms
America and the whole world underwent a horrible economic depression in the late 1920’s and early 1930’s.
Wikipedia says that The New Deal was the title that President Franklin D. Roosevelt gave to a sequence of programs and promises he initiated between 1933 and 1938 with the goal of giving relief to the poor, reform of the financial system, and recovery of the economy during the Great Depression.
So these New Deal reforms were designed to reform and regulate the excesses of the robber barons and to help the economy recover and become more stable. The reforms also had the unambiguous goal of helping the poor. FDR came from an extremely wealthy upper class background. Perhaps this helped him see the desperate need for these reforms to the economy.
Among the things he did was to create the Social Security system so that everyone would have an adequate retirement income paid for by the government. It had become clear that in real life, not in someone’s intellectual fantasy, private free enterprise and personal savings could not possibly take care of adequate retirement income for most Americans.
Because of the runs on the banks and bank closures, he created the FDIC to provide government insurance guaranteeing most deposits in all WELL REGULATED banks in America.
His administration formed the Securities and Exchange Commission to make sure that the stock and bond markets operated fairly and were not controlled by unethical robber barons.
These reforms that were instituted in the New Deal operated effectively for 30 years. The government did its job of regulating the financial markets, the banks, and home mortgages. The middle class in America prospered, the super-wealthy were prevented from abusing their power, and people in need were given a helping hand.
But by the late 1960’s the Vietnam War was seriously draining the government’s resources and the first serious dismantling of the New Deal reforms began. To keep the federal government’s spending deficit and the national debt from appearing too large, Fannie Mae was “taken off balance sheet” but making it into a kind of government sponsored private company. But everyone knew this was done with the implicit assumption that the government would never let it fail. This was chicanery and smoke and mirrors of the worst kind.
Since then the Republicans and their fellow travelers have weakened Social Security by not making wealthy people pay their fair share. There have been continued attempts to privatize Social Security. In order to help out wealthy share holders, many corporate pension plans have been shut down.
The idea that the Market was sacred gained force. Markets regulated better than government bureaucrats, these right wingers thought, and there was a continuous effort to stop the government from doing what it is supposed to do, i.e., regulate and prevent abuse by rich people. This was called De-Regulation. These same Republicans did everything they could to water down any government funded help for people in need. Being supportive of the common working man was viewed as leftist, or communist, or in recent years by the newly pejorative phrase “liberal.”
Regulation of the banks and the financial markets was continually and gradually eroded. The upper financial classes prospered, and the middle and lower classes gradually lost ground.
During the two terms of the George Bush Jr. administration, all of these right wing moves accelerated. Tax breaks for rich people increased, spending for social programs which help out less fortunate people withered, anything that was viewed as “environmentally sound” was viewed with great suspicion, and spending on killing and warfare increased dramatically.
And not surprisingly the federal budget, which had been balanced during the Democratic administration of President William J. Clinton, became horribly unbalanced with the government spending far more than it brought in. The national debt increased. Many friends of the Bush administration (like Enron) got caught with their hands in the cookie jar. The value of the U.S. Dollar plummeted in world markets (devaluation). Countries around the world began getting out of the U.S. Dollar, and it no longer was considered the top reserve currency in the world.
The nation’s manufacturing base was almost completely moved overseas in the name of Free Trade. None of the right wingers brought to anyone’s attention that now that the manufacturing was done primarily overseas it no longer had to obey rules regarding child labor, work place safety, or the pollution of the environment. The press and the media were owned by for-profit companies, so instead of reporting things like this they were engaged in more lucrative and sensationalist reporting.
Fuel economy of the average family vehicle got lower than it had been 30 years earlier. The right wing Republican administration refused to admit that global warming was real, and they politicized the Justice Department by refusing to hire lawyers who were Democrats and firing others who were. The separation of church and state was gradually eroded.
Almost fifty million people in America did not have health insurance, and many others were under insured. Lots of people with full time jobs did not have health insurance for themselves or their families.
And now in mid 2008 people have begun talking about the meltdown of the American economy. America is no longer respected around the world, in fact it is widely looked down upon.
Clearly the ideas of the right wingers in American politics have been proven ineffective. In fact just as ineffective as the ideas of the Marxists in the U.S.S.R., just in different ways.
It probably is already too late to fix this problem. It won’t be fixed by old folks, that is for sure. If the youth of America get their act together they still have a chance to stop the decline of America. But like I say, I doubt it. I grew up hearing about the rise and fall of the Romans. I saw the Berlin wall fall down and the U.S.S.R. disintegrate. I am afraid that what I am watching now is the decline and fall of the American Dream.
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One of my smartest and funniest friends lives in Belgium. This is his response:
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Dear Paul,
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I think that your end conclusion is right. Americans need to start thinking differently. ;-)))
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In the 18th and 19th century, opportunism was a quality that allowed you to survive. No quarter was asked, none given.The American dream floats on grabbing, seizing... look at where " ye olde money" comes from. Selling poisonous substances as "snake oil" in a traveling show would get you executed in Europe while it was common practice in the Wild Wild West.
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America was built on a hard, cynical and unforgiving social concept. We were all told the romanticized story of the barrel of nails replacing the gold standard... but do we see the hardship that led to this? ( Was that under Adams?). What started out as a very strict and severe puritan colony rather quickly bended a knee towards practices like mail-order-brides, both male and female bigamy, people being shot for herding sheep instead of cattle or refusing to settle for disownment like in the great railroad building times...
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What was a quality for survival later became a quality that helped to attain this "American Dream". There is a certain amount of ruthlessness in American society.
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I'm sorry to see hardworking people being punished for the greed of the banking corporations because that is what really went on... The divide between the "have and the have-nots" gets bigger, more people get excluded from loans and thus no longer partake in the consumption that is needed to drive the economy. Then the threshold for getting loans was lowered without safety net. You can squeeze a stone but it'll give no juice. Debts accumulate in the lower income part of the population and there you go...
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It's refreshing to have friends in the US who actually see what's happening ;-)
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Best
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Axel
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Almost 40 years ago the Vietnam war was a reality, and I was in college majoring in Political Science. My mentor, and later the head of the Political Science Department at U.T. El Paso, was Ed Leonard pHd.
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He has been reading at my blog and here is his response:
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Paul-
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I haven't had the chance to read your whole message yet, but I felt compelled to reply to three of your early points (all of which I basically agree with):
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1st- It's interesting that the big appeal of the early SUVs was that drivers FELT secure in them, and therefore thought that they were safe. The secure feeling came from a perceptual illusion: Because the driver sat far above the road, he or she felt more secure. Perceptually, being further above the road made it seem to go by more slowly. (Having flown lightplanes, you likely recall that you made a good landing not by looking at your instruments, but instead you measured speed and height by referring to the perceptual speed of the runway boundary "going by." I am told that even World War II fighter pilots landed this way.) The early SUVs (especially the venerated Ford Explorer) actually had an awful safety record. Detroit was consciously decieving us! At the cost of thousand of lives! Especially in Explorer accidents.
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2nd- The Bush thing is similar. Junior and (especially) his PR staff know how to soothe the public, by using all the tools and tricks of the advertising/PR industry.
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3rd- I'm very interested in the Trinity Site explosion (in part because of having lived in Oak Ridge, where the early bombs were made). The various guesses by El Pasoans about what caused the blast were really far out!Incidentally, have you been to the site? It used to open to the public once a year,. (I went once.) Now it is inexplicably closed at all times. What on earth is the Army hiding in 2008?
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Ed Leonard
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