Saving a Nation

President Franklin D. Roosevelt

My maternal grandmother was a young woman during the Great Depression—the period between 1929 and the eve of WWII, 1939. During those lean years she worked on the family farm in Danville, Virginia. The struggles and hardships of that decade were always in some way part of her life story. I can’t tell you how many times over the years I’ve heard people explain the thriftiness of their grandparents by saying “they grew up during the Depression.” Well, my grandmother was thrifty, hardworking, religious, modest in manner, stoic, had a low tolerance for nonsense, and seemed always grounded in basic realities.

I spend a lot of time with my grandmother (“Nanny”) during my adolescent years, and I don’t recall Nanny talking much about politics. She was a southern baptist, conservative in most ways, and a Democrat. I recall my father, a businessman and a Republican, sometimes making mildly sarcastic comments about Nanny’s support—“no matter what”—for the Democratic party. But of course dad was just as devoted—no matter what—to the Republican Party. “Once you touch the biographies of human beings,” Walter Lippman said, “the notion that political beliefs are logically determined collapses like a pricked balloon.” And so it was with both of them…and the rest of us.

Nanny’s politics was grounded in a very basic reality: who, or what party, really cared. As a kid, I do recall her and I sitting in her small living room in her Norfolk, VA, home and talking about her early years in Danville. Somehow we got on the topic of Presidents. “We would have starved to death had it not been for Franklin Roosevelt!” my grandmother said in a matter-of-fact tone. “Hoover almost destroyed this country” she added. Franklin Delano Roosevelt (FDR) was a progressive era style Democrat and Herbert Hoover a Laissezfaire Republican. Nanny never forgot, nor would she forgive, the cruelty of Hoover and his policies.*

So you understand, when the Great Depression hit, millions of Americans were out of work (about 25% of the working population), banks were closing all over, farmers were losing their farms everywhere, and millions were on the verge of starving. President Hoover, being a good Laissez-faire conservative, and echoing the views of Big Businessmen, felt it would damage the moral fiber of Americans to allow the federal government to expand and provide direct assistance. Charity, in his decided view, was a local thing. Of course state and local governments were in pretty bad shape themselves from the collapse of the economy. So things were really bad and getting worse by the day. And this was the case largely because Laissez-faire economics had failed in a big way. Something Hoover couldn’t bring himself to admit…and so he couldn’t act.

Not too surprising, in the 1932 election, FDR defeated Hoover in a massive landslide.

I thought of Nanny when I recently completed reading Nothing to Fear (2009) by Adam Cohen. The book is about FDR’s first 100 days in office and his inner circle of staff and cabinet members who helped draft the 13 or so major laws that comprised the core of Roosevelt’s New Deal, which started the slow climb out of the Great Depression. From a historical perspective, Nanny was right, FDR and his administration did save this country from a terrible situation. FDR’s various New Deal government programs started the recovery, and the massive government spending to defeat the axis powers in WWII, completed the recovery. From FDR forward we began growing the biggest middle-class in world history. There is no doubt this successful broadening of wealth wouldn’t have been possible to the extend it was without FDR’s progressive economic policies and programs. As one historian said, Franklin Roosevelt’s New Deal created the framework for the success of our modern day world.

Cohen’s book is mostly about FDR’s own “team of rivals” that helped him launch the New Deal. A team of people who knew the problems facing the nation couldn’t be resolved by waiting and hoping things just got better—just letting “the market” deal with it. The most interesting character in Cohen’s story is Frances Perkins, the Secretary of Labor in the FDR administration. She was the first woman to serve in any Presidential cabinet. She is the one who pushed the massive infrastructure spending that would ultimately put millions of Americans back to work. As she argued, this spending would “prime the pump” of economic growth. She was largely right. She’s important because at first FDR was reticent about the infrastructure spending (FDR was a fiscal conservative at heart), but she persuaded him to go with it and the rest is history.

FDR’s governing philosophy for the Great Depression, and in general, was pragmatic. Something had to be done and he, unlike Hoover, was willing to experiment, to try something, anything, to see if it would work. There was going to be no risk free success in FDR’s view. Doing nothing was not an option. FDR’s view, unlike Hoover’s, was that government had a responsibility to reduce suffering and address major social problems. A government IS the people acting through their Representatives. If, in FDR’s view, a policy or program didn’t work then he’d try something else. The important thing was to act, to do something, to use government to solve problems, not just sit on your hands and wait while things got worse. That’s not leadership, that’s surrender.

Business interests were not going to solve this big problem. In fact, a lot of Big Business interests resented FDR. Being a wealthy man himself, FDR was labeled a “traitor to his class.” But FDR was unmoved and took pride in the wealthy class’s distain of his loyalty to working families. FDR and his progressive allies in Congress put the government to work serving the people, not “organized money.” In thinking about how the rich business class viewed him, during one of his reelection campaigns, FDR wrote:

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred. 

Thus the New Deal was a social experiment—an attempt to solve a large socio-economic problem via government intervention. And for the most part it worked. In a flurry of legislative activity FDR put into effect over a dozen major laws during his first 100 days. The major departments and programs he established brought aid to millions and provided millions more with jobs…and dignity.

It’s important to note that Democrats controlled both the House of Representatives and the Senate with large majorities during FDR’s first 100 days. Something critical to remember. If a President doesn’t have their party in control of Congress then that President may not get the support for the major changes needed to address major problems. In other words, major New Deal programs, like Social Security, may not have been a reality today had FDR not had majorities in both the House and the Senate. Programs like Social Security (and later Medicare) for example, were not supported by conservatives in Congress at that time. They were attacked as a form of sovietism. Consider the example of Ronald Reagan. After having moved to the political right in the 1950s, he actually attacked the idea of Medicare as surrendering to “socialism.” But Reagan, of course, would eventually himself surrender to the overwhelming popularity of Medicare and convert to being a supporter of this socialist style program.

I was interested in Cohen’s book because I wanted to understand how and by what means FDR and his team tackled the Great Depression. The truth is we can’t say another Great Depression isn’t in our future, and so studying the 1930s, both economically and, given the times, politically, provides some important lessons and insights about issues we face today and may face tomorrow. Of course my hope is we’ve vanquished any chance of a 1930s style Great Depression for good. Certainly because of FDR and many subsequent policies since that time we’re not as likely to crash as hard as they did in those less regulated times…though we’re on a binge of deregulating Wall Street currently and that should cause deep concern for all Americans. The 2008 crash was largely the result of reckless behavior by deregulated Wall Street Bankers.

If you’re interested in FDR and his first 100 days or the New Deal in general, this is a good book to start with. Because how a leader and his team go about saving a nation is always a good story.


*Not all Republicans at that time adhered to Laissez-faire like a religion. From the start the Progressive Movement cut across party lines. For example, President Theodore Roosevelt, a Republican, was a champion of the Progressive Movement, and actually founded the Progressive Party. There were Progressive Republicans in both the House and Senate throughout most of the early and mid 20th century. Most of the progressive Republicans in Congress supported FDR and his New Deal legislative agenda.

The Retreat of Western Liberalism

41dqZWxy60L._SX330_BO1,204,203,200_Like many of you, I’m sure, I’m trying to better understand the various problems and agitations facing America and Western societies in general at this time. Of course there are always struggles to overcome, but I think it’s fair to say we face some unique challenges at this time in our history. The better we can get our heart and mind around them the better chance we have of overcoming them.

With that in mind, I recently completed Edward Luce’s new book, The Retreat of Western Liberalism. A very interesting read. It’s not a book meant to make you feel good. Titles like that shouldn’t. But it will cause you to do something we all need to do in moments (as a nation and as individual) like these and that’s pause to reflect on what truly matters. For those who don’t know, the word Liberalism in this context (the book’s title) is referring to a set of fundamental principles that constitute the basis of all Western democratic societies. We’re talking about things like a free press, religious freedom, equality, free speech, etc, etc. Western governments are in-fact liberal democracies.

Edward Luce thinks the Western liberal democratic model of governance, while not dead, is in serious trouble:

Western liberal democracy is not yet dead, but it is far closer than we may wish to believe. It is facing its gravest challenge since the Second World War. This time, however, we have conjured up the enemy from within. At home and abroad, America’s best liberal traditions are under assault from its own president. We have put arsonists in charge of the fire brigade.

Donald Trump, Luce argues, is a symptom not the cause of the disease in America. So naturally the question becomes: What brought on this disease? Well what holds liberal democracies together, Luce says, isn’t culture but economic growth. And when that economic growth stalls, leading to massive inequality and a loss of social mobility (U.S has the largest gap of both in the West), we begin to see this threat to the political order and ultimately the survival of liberal democracy.

By any numerical measure, humanity is becoming rapidly less poor. But between half and two-thirds of the people in the West have been treading water — at best — for a generation. Tens of millions of Westerners will struggle to keep their heads above the surface over the coming decades. The spread of automation, including artificial intelligence and remote intelligence, which some call the fourth industrial revolution, is still in its early states. So too is what the American journalist Fareed Zakaria has labelled the rise of the rest. The emergence of China is the most dramatic event in economic history. We are living in an age of convergence no less dramatic than the age of divergence brought about by European colonialism and the Industrial Revolution. The downward pressure on the incomes of the West’s middle classes in the coming years will be relentless.

So the lack of economic growth and social mobility has fueled this threat and the future doesn’t look good unless we return to policies that help build a prosperous middle class while avoiding policies that build a strong oligarchy—which is what we’re currently doing. That’s right, as one writer put, “No bourgeoisie, no democracy.” Being able to aspire upwards, the dream of upward social and economic mobility, is at the heart of the American (Western) dream. When economic growth sags, when wage growth stagnates (as it has for decades now in America), when large segments of the population are either unemployed or underemployed, or working multiple jobs just to stay above water, then personal investment in the current political system starts to weaken and you have a rich soil for rebellion and the rise of demagogues (i.e. the Donald Trumps of the world). Some Americans, as we witnessed in our last election, are fully willing to risk disaster, and we need to be mindful that we’ve reached the point where a Donald Trump could carry 60 million votes in the U.S. A Trump victory would have been impossible, say, 10 years ago. The idea that Americans posses some quality that exempts us from the forces of chaos can be dismissed now as nursery story. (It was never the case anyway.)

The economy has been improving steadily since 2009, but the massive inequality and lack of social mobility will not improve with current government policies and hence the problem will only continue to grow until we have yet another large economic shock or downturn (which will come eventually) and those millions of Americans, still treading water (for so long), will simply sink below the surface. We don’t have to imagine what they will try to drag with them under the waves.

Britain’s Decision to Leave the EU

uk-eu-brexit

Yesterday most of Europe, and the financial markets, were unnerved by the British people’s decision to leave the European Union (EU). The Brexit referendum was close, but those wanting to leave the EU ultimately triumphed over those wanting to “Remain.” And so the divorce notice has been served. Like all divorces, there’s a chance this will be messy and expensive—especially in the near term for the Brits.

What I found rather amusing, and yet totally unsurprising, was that after the polls had closed in Britain, Google Trends reported a high volume of searches related to questions about the Brexit referendum, containing phrases like “What is Brexit? or “Why should we stay in the EU?” These searches were being, as The Washington Post described it, “frantically” queried by the Brits.

This is humorous in a Saturday Night Live sort of way. It’s also just pathetic. I suspect that a lot of Brits didn’t really grasp the complex implications of their vote. Like many Americans, they probably listened to media pundits, rabid partisans, and rank propagandists, and didn’t take to time to read widely what the experts had to say and then try to determine how the outcome might serve or not serve their true interests.

This was a complex matter. The decision to leave or remain, in my view, shouldn’t have been decided by popular referendum. It should have been a decision of the ruling government. We elect representatives, called MPs or Members of Parliament in Britain, to examine these complex matters, confer with the experts and their constituents and then take a vote. That’s their job.

If an MP’s constituents don’t like the vote their MP has taken, they can remove the MP (or party) in the next election and install someone who supports their views. That’s the way representative governments work. The average voter, in complex matters like this, simply doesn’t have enough time (or background knowledge) in their busy lives to properly calibrate.

Personally I can respect and understand both positions, whether one voted to leave or remain. There are valid—though not equally persuasive—arguments to be made on both sides of the decision. Either way, the stakes were high. The opposing arguments both came with various consequences and implications for the political, social, and economic viability of Great Britain going forward.

In the short term this is likely to have negative impacts on the British economy. If Brexit leads to a break up of the EU entirely, we could see tremendous economic shock waves across the world that may cripple most of the European economies, especially Britain’s, for years. And we all know what long term economic problems cause politically: the rise of radicals high on rhetoric and emotions and short on real and lasting solutions.