The ghost of FDR is everywhere, haunting both Washington and New York. The terrible trouble is that the minds in power have confused an economic wrecker with an angel of mercy. They are following his confusions and prescriptions day to day in an attempted repeat of the longest economic calamity in modern American history.
They have looked at the history of the New Deal and completely misunderstood it, believing the civics-book claptrap about how FDR saved us from the depression, whereas the fact is that FDR’s theories and policies lengthened and deepened it to the point that the only way out that the Roosevelt administration saw was war.
The great theoretical error of the New Dealers was to confuse the symptom of low prices with the causes of the economic downturn. The real problem was that prices were massively inflated before the stock market crash of 1929. The correction had to occur and would have occurred peacefully, if not wholly painlessly, had the government not intervened.
No government in all of human history that has waged war on prices has won. The Great Depression is exhibit A.
First there was Hoover with his attack on the “bitter-end liquidationists,” whose advice he summarily rejected. Instead he increased taxes, regulated against short selling, attempted to expand liquidity and the money supply, attempted to maintain existing wage rates, extended loans via government, and bailed out debtors with bankruptcy laws. For more on Hoover’s anti-market program, see Rothbard’s America’s Great Depression.
Roosevelt took office and extended this program, while rhetorically claiming that it was the free market policy of the Hoover administration that failed. Today we see Bush’s attack on speculators and the media-wide attempt to claim that the meltdown is caused by unregulated markets run amok. No doubt the next president, whoever he may be, will continue this crusade against markets, pretending as if the Fed and the Bush administration haven’t been trying anti-market means of rescue for fully two years, with each attempt backfiring.
But now let’s look forward to the next step in the war on falling prices in the 1930s. FDR took office under the promise that he would curb the big spending of the Hoover administration. The tune changed once he took office. Like Hoover before him, he denounced the rich and powerful speculators, bankers, and corporations he blamed for bad economic times. Even as he was saying these things, he called together the people he regarded as the most powerful and important corporate, banking, and labor interests – together with a gaggle of professors from Columbia – and essentially asked them what they wanted to get the economy going again.
This was the Brain Trust that set the pattern for all of Washington’s activities from then to the present day. John T. Flynn, in his masterful book The Roosevelt Myth, described the first round of the New Deal as:
that vast hippodrome, that hectic, whirling, dizzy three-ring circus with the NRA in one ring, the AAA in another, the Relief Act in another, with General Johnson, Henry Wallace and Harry Hopkins popping the whips, while all around under the vast tent a whole drove of clowns and dervishes – the Henry Morgenthaus and Huey Longs and Dr. Townsends and Upton Sinclairs and a host of crackpots of every variety – leaped and danced and tumbled about and shouted in a great harlequinade of government, until the tent came tumbling down upon the heads of the cheering audience and the prancing buffoons.
What did the elites gathered around FDR demand? Higher prices (of course), uniform industrial codes on labor and prices, production controls, an end to competition from below, security for labor unions, guaranteed credits, import tariffs – and also the police power they needed to enforce all this. The model here was Mussolini’s Italy, which was regarded at the time as an ideal system of industrial management. Of course, anti-trust laws were shelved as the government itself set out to create as many trusts as possible.
What came out of these meetings was the all-round industrial planning fiasco called the National Industrial Recovery Act, which created the National Recovery Administration. The head was former draft administrator General Hugh Johnson, who brought to the effort every propaganda trick he had learned from his kidnapping years. He began with a central plan of wages, working hours, prices, and production quotas. He went on the air, to the papers, to billboards, movies, and every thing else to whip up a frenzy.
There was a symbol of compliance: The Blue Eagle. FDR said on the radio that “soldiers wear a bright badge to be sure that comrades do not fire on comrades. Those who cooperate in this program must know each other at a glance. That bright badge is the Blue Eagle.” And, added Johnson, may “God have mercy on anyone who attempts to trifle with that bird.”
And you know what? It is a complete disgrace that business supported it all – for a while.
Flynn tells of police raids of factories, as workers were lined up and interrogated to make sure that they weren’t working overtime and weren’t accepting less than the government-approved minimum. Consumers were arrested for paying less than the approved minimum prices. A tailor named Jack Magid in New Jersey was arrested and jailed for charging 35 cents instead of 40 cents to press a pair of pants. In time, the NRA became unenforceable, as black markets sprung up in every industry. The crackdown became worse, with nighttime raids on factories, and bureaucrats chopping down doors with axes to make sure that no one was sewing clothes. The NRA staff ballooned from 60 employees to 6000 at the national level.
The entire thing became a war on production to benefit a handful of elites, all in the name of keeping prices up, all on the profound misunderstanding that boosting prices would boost production, whereas the opposite was true. Finally the Supreme Court came to the rescue and declared the whole Soviet-like scheme unconstitutional, but, by that time, it was clear that it was unworkable and doomed to failure.
At the very same time, other sectors such as banking and agriculture were being administered by other destructive schemes, all based on economic error. The result was fantastic waste, disastrous attacks on freedom and productivity, a regimentation of the entire country under a dictator, and a prolongation of the depression, which went on and on.
No matter how many disasters FDR created – and it was nonstop – and no matter how much his ridiculous “rabbits from the hat” were exposed as economically harebrained, with every new bureau, every new law, every new initiative, the economy continued to sink. The New Deal is a paradigmatic case of how to turn a downturn into depression. That U.S. leaders regard this as a model to follow does not speak very well of their economic literacy, and it doesn’t bode well for our future.
On the other hand, if you want to see how to handle a crisis, consider the Panic of 1819. Never heard of it? That’s because it came and went, and that’s because the government did nothing about it.
Wall Street Compensation, Our Near Meltdown
and
Who Speaks for America
By
Richard J. Garfunkel
9-27-08
Every one is running around in a dither wondering what is happening to our financial house, or is it house of cards? Of course, the simple answer is greed, and how does Wall Street satiate that greed? One of the easiest ways to make an incredible amount of money and keep it is to become the Chairman of the Board of a Fortune 500 company. But that alone doesn’t guarantee platinum parachutes at the end of one’s corporate tenure. You don’t even have to be successful. Just look at the records of recent beneficiaries of corporate send-offs, Ms. Carly Fiorina, who after almost destroying Hewlett –Packard was sent off to be an economic advisor to John McCain with a bank-roll in the scores of millions. She of course, for a short moment, was being considered for vice-president on his ticket. Unfortunately after not being chosen, the scorned woman decided to tell the truth, and in an interview she stated that Sarah Palin could not be a CEO of a major Fortune 500 firm. When she realized her faux pas, she quickly amended her remarks to include John McCain. Of course since “there is many a truth said in jest,” her honesty really did hurt, and she has been declared persona non grata by the Steve Schmitt/John McCain campaign machine.
But to be more current, yesterday Washington Mutual, a bank holding company, whose stock had traded as high as $45 per share collapsed. The stock had dropped in mid-September to as low as $2.00 and the price finally settled at 16 cents this week. The Chairman Kerry Killinger stepped down in June, but remained as the Chief Operating Officer. This month he was forced to resign because of pressure from the investors and Alan H. Fishman, a former CEO of the Sovereign Bank was named to head Washington Mutual on September 8, 2008. The depositors were not happy with what was going on and a massive run on their banks ensued as customers withdrew almost $17 billion in less than two weeks. Secret negations were started after the Office of Thrift Supervision seized the bank and placed into the hands of the FDIC. The negotiations over this past weekend proceeded and JP Morgan Chase became the new owner. The new CEO Alan Fishman, who was flying to Seattle when the transfer was consummated, was now out of job. He had held that position for 17 days, and for his time and effort he received a $7.5 million up front payment and a cash good-bye present for $11.6 million. As George Gershwin once said long ago, “Nice work if you can get it!”
So where does that money come from? Well for sure a good chunk of it comes from the boards of trustees at many of these firms who want to first ingratiate themselves with the company’s new “top dog” and later on, if he/she fails wish to rid themselves of these characters as painlessly as possible. Usually as a requirement to these “golden parachutes,” a written non-disclosure, and non-compete statement is a must. Quite often though, many of these “top-bananas” eventually select their own “cronies” as members of the board. These “grateful” trustees feel obliged to therefore shower excess compensation as a heartfelt expression of “thanks.” On the other hand, stock options being executed at the right market timing bring countless millions to the “golden parachute” beneficiary. Of course what better way to execute valuable options than to inflate the stock with non-existent assets of worthless paper on the books? Please note that when an initial public offering (IPO) hits the market, the inside folk, the CEOs, and other officers, have already been allocated millions of shares, while quite often, their employees were left out.
I recall vividly when John Hancock went “public” and the CEO David D’Alessandro was allocated millions of shares. Were the Hancock employees offered any stock? No! Were the Hancock employees offered any of the IPOs? No! Of course, D’Alessandro did an excellent job for Hancock, but he increased his own salary, making himself one of the highest-paid executives in financial services. His compensation of more than $21 million in 2003 placed him 79th on Forbes’s list of best-paid CEOs and increased debate at John Hancock over discrepancies between CEO compensation and shareholder returns. What else is new?
There are many, many stories out there on Wall Street and four years ago I wrote some of this piece about executive compensation. Often it has nothing to do with whether the company makes money, but most assuredly it is connected to whether the stock goes up. Ironically the public and the shareholders find out after the fact that the stock was run up on false assertions, pumped up figures, and cooked books. Also over the years, executives have tried to liquidate their massive holdings in an effort to cash in before the public is completely aware impending revelations. Most shareholders would be startled to see the company’s executives selling their own stock. In truth, the average stock investor has his/her holdings mostly in mutual funds, and has no idea when one of the companies, which make up that fund, has experienced an executive’s excessive sale of stock. Just look at what we are witnessing today with companies like Bear-Stearns that reached a high water market price of $172 per share. We all should wonder how many executives were bailing out as the stock began to slide in the year before its final collapse. Unfortunately in a great many of these situations, many of the employee 401K pension funds were overloaded with company stock, not unlike Enron and other recent collapses. These company pension accounts disappeared along with the demise of the parent corporation.
In the summer of 1969, I was a junior analyst with Bache & Co., which offices were located at 40 Wall Street. Right after I was employed, I was assigned to work with Ms. Mary DeSapio, whose sector, among others was transportation, which included railroads and railroad cars. My responsibility was to write evaluations of companies like St. Louis Car (closed in 1973) and its parent company General Steel Industries. This was the dullest, slowest and one of the worst sectors to cover on Wall Street. Ms. DeSapio had a young intern who tracked her stocks. I had heard through the office “grape vine” that she had made her reputation by discovering the emerging stock, the Indonesian company Natomas Oil. In those days Natomas was selling at more than 100+ times its earnings and when I had arrived the stock was in the mid 150’s. In talking to her young intern I found out that Ms. DeSapio still had a huge position. Coincidently, I read a story in US News and World Report that the top Natomas executives were liquidating huge amounts of stock. Being a good scout, I went to Ms DeSapio, a single wren-like woman in her forties, and mentioned the story I had read. She seemed startled that I brought up that stock. Maybe she was not happy that I had learned of her connection to that speculative company. When her initial surprise calmed down, she informed me that executive-selling didn’t indicate anything, and curtly cut off our conversation. Despite her dismissing of my information, knowledge is still king, and in that pre-Internet era, I believed that I had found something interesting that may have had potential value. Ms. DeSapio in her arrogant and condescending manner attempted to demean the value of that news and seemed offended that I would bring up her pet project. Within a few weeks the Natomas stock “tanked” dramatically, and if she didn’t sell her position, she was really burned. It wasn’t long after that meeting that she was fired. Eventually, in 1970, Wall Street experienced a huge recessionary problem of unusable leases to cope with the pre-computer backlog of “paper” that was generated in 1968 and 1969. Thousands were fired, including yours truly. Bache was eventually acquired by Prudential Insurance in 1981 and the 101-year old Bache name disappeared until it was brought back and re-branded in 2007.
In the Wall Street Journal’s Executive Pay Listing of April 12, 2004, all the Fortune 500’s top executives had their sources of income published. How ironic and fitting that this report should come out on the anniversary of FDR’s death, who understood quite intimately how poorly financial institutions monitor themselves, the need for transparency, and how greed drives our plutocratic “economic royalists.”
Salary and Bonus- some selections: Freeport-McMoRan-CEO- $5,540,000 in 2003 with $10M in stock options and $50M more in potential options, Merrill-Lynch-CEO- $28M in 2003 with $37M more in unrealized stock options, Time-Warner-CEO, $9.5M and $11.6M in stock options with another $18.9M in unrealized options. Also the front page of the NY Times’ Business Day section, bonuses top $41.4 million at troubled Interpublic for its executives. With Federal taxes at 35% for anyone over $300,000 per year they should cry? This compensation is way out of control. Where did they get all of their stock? They didn’t buy it!
Some critics of pay ratios, say formulas that exclude options are useless. “Usually it’s a charade,” says Mr. Alan Johnson of Johnson & Associates, managing director of pay consultants in NY. He says, “…employees see through it. They know the CEOs are making millions on stock, so limiting them on salary means nothing. It is a PR gimmick.” (The Wall Street Journal). It is a known fact that in and around 1970, CEO’s of Fortune 500 companies made in real dollars a ratio of 43 to 1 over the average salary of their employees. In real dollars, wages, taking in account inflation over the past 34 years or so, have gone up slightly. In other words, the $17,000 of 1970 is not worth much more than the $35-40,000 of today. Of course times have changed, and our economy has shifted greatly over the last 30 or so years. Our manufacturing has shifted to overseas, and we are much more of a service economy today. No question “freer” trade has brought more total prosperity to America. But where is that prosperity concentrated and what will be the affects. In that light, executive compensation is now 1000 to one! In “real” and tangible 1970 dollars, the average Fortune 500 CEO was making $731,000. By the year 2000 that same corporate CEO’s compensation went to between $35 and $40 million. While his worker’s income doubled in 30 years, their real income barely kept pace with inflation. But the corporate executive had his income go up 52 times. Inflationary worries were obviously not a factor. Besides all that good news, the top income tax bracket was reduced by Ronald Reagan and his buddies at Treasury.
So we have seen what has happened. The GOP/Right has encouraged the lowering of taxes, the conglomeration of industry, the exporting of jobs overseas, the deregulation of industry, and the accumulation of greater money in fewer hands. Now, as in 1929, less people own more of America! In the midst of this incredible increase in executive compensation, Ronald Reagan’s administration lowered the highest tax brackets by more than 60% from 71% to 28% in 1986, while raising the bottom tax rate from 11 to 15%. In reality the Reagan Administration created two tax brackets. The poorest earners paid up to 15% and multi-millionaires paid a little more than double? Did this increase revenue to the Treasury? No! No wonder we experienced record deficits. Did it increase wealth to the wealthiest? Yes! Recent articles have debunked the “urban myth” promulgated by the flat-taxer’s and other anti-tax groups that tax cuts increase revenues. In fact, tax cuts without expense reductions create greater deficits. With that in mind, the Reagan years offered some of the biggest deficits, (tripling the National Debt), continued high unemployment, averaging over 7% in his tenure, and great private sector increases in wealth.
On the March 17, 2006, broadcast of the PBS’ The NewsHour with Jim Lehrer, New York Times columnist David Brooks falsely claimed that “in the Reagan years, unemployment went from 13 percent to 5 percent.”
In fact, according to data from the U.S. Department of Labor Bureau of Labor Statistics, in 1981, Ronald Reagan’s first year in office, the U.S. average unemployment rate stood at 7.6 percent. During Reagan’s presidency, it reached a high of 9.7 percent, and had declined to a level of 5.5 percent when Reagan left office. The rate from when Reagan entered office through his last year declined by 2.1 points, far less than the eight-point drop for which Brooks credited Reagan. (Besides that obvious reality in November of 1981, ten months into the Reagan Administration, unemployment had risen to 8.5% and continued to rise to almost 10% through February of 1983.)
From the March 17 broadcast of The News Hour with Jim Lehrer:
BROOKS: I disagree a little. I think most people who call themselves independent are really partisan. They’re just lying.
And — and I think partisanship — one of the things political science shows is that partisan shapes the reality you choose to see.
People choose the reality that — that flatters their partisanship. For example, in the Reagan years, unemployment went from 13 percent to 5 percent. If you asked Democrats, at the end of that, did unemployment go up or down under Reagan, 60 percent said it went up. Republicans said down.
You choose the reality you want to see. And, then, the Clinton years, when you had the reverse, this time, it was the Republicans’ turn to be more pessimistic and wrong. People choose the reality that flatters themselves.
c/o Media Matter for America- http://mediamatters.org/items/200603210007
Along with Reagan’s tax cuts for the rich, we experienced the Stock Market crash of 1987, the Savings & Loan debacle and bailout for almost one trillion dollars, and the deregulation of broadcasting, which has led to the consolidation of ownership regarding thousands of previously independent stations.
1.
What we have seen in this country has been an explosion in private wealth and a crying need for public revenues. This drought in public revenues has resulted in an aging infrastructure, which includes; poor and deteriorating bridges and roads, an antiquated electric grid system, weak, porous and inadequate levee systems, un-dredged harbors and rivers, a deteriorating reservoir system and over-crowded dangerous airports. In the Clinton Years, taxes on the wealthiest bracket went up to 39.6%, three extra brackets were created, there were tax cuts for the middle class, surpluses ensued, and over 20 million jobs were created. A benefit of that expansion of the work force, especially in the center cities, resulted in a dramatic lowering of crime in the period from 1993 through 2000. (Another urban myth was that Rudy Giuliani’s police tactics alone lowered crime in NYC. What is conveniently forgotten was that crime dropped dramatically in urban centers throughout America without Giuliani’s help!)
Of course, one immediate result is that the “entitlements;” Social Security and Medicare are under attack. Certainly they are threatened by the demographics facing us. We have a large “baby-boom” population (64-74 millions) that is aging. This population emerged from parents that had 2.6 children per family. It is now being replaced by a generation that is composed of 2.1 children per family. Generally speaking this smaller population is not as wealthy and earns less in the service sector than its parents, the baby-boomers, earned in the manufacturing sector! Is the answer less taxes for this wealthiest of classes? It was said that to tax these people at previous levels would only bring in 4% more! Well 4%, if that is correct, will bring in $40 billion at least. Also, why is $75 billion being used from the Social Security Trust Fund to be used to help balance the budget and defray more deficits? These same antagonists of Social Security say it is “broke” and therefore people like John McCain and his leader, President Bush, have called for its partial or complete privatization. This would be another trillion dollar gift to our Wall Street “friends.” Conveniently they have forgotten that the Social Security system runs surpluses and that since Nixon’s time over $2 trillion has been borrowed from this Fund to pay for trinkets like Star Wars space missile defense systems, the 600 ship navy, and an all-volunteer army. I am sure that figure of $40 billion is probably incredibly low. I have also noticed that a recent report has stated that the IRS has been lax regarding the issue of corporate taxation. In fact, US Corporations are not paying their fair share, and many have been running to offshore tax shelters for years, while they drape themselves in patriotism! The case of Stanley Tool recently comes to mind! So with corporate taxes at all-time lows (post WWII) and the capital gains tax at 15%, and the highest marginal rate at 35%, one can readily see why we have a $500+ billion deficit that is growing. Should we continue down this path until we are broke?
By the way the myth regarding unemployment: Courtesy the United States Bureau of Statistics
Since 1928 there have been 13 presidents, 7 Republicans (Hoover, Eisenhower, Nixon, Ford, Reagan, Bush Sr, and Bush Jr) and 6 Democrats (FDR, Truman, JFK, Johnson, Carter and Clinton).
Six of the seven Republican Presidents had unemployment increase while in office. Ronald Reagan is the only Republican President since 1928 to leave office with a lower unemployment rate.
All six Democratic Presidents had unemployment decrease or stay the same while in office. The worst Democratic performance was Jimmy Carter, who had the same unemployment rate when he left office as when he entered.
Viewing the President’s 4 year term gives an even more pronounced effect.
Of the Repubilican President’s 9 terms, unemployment has increased in 7 of the 9 terms.
Of the Democratic President’s 10 terms, the unemployment rate never increased.
Here is the same list, sorted by decrease in the unemployment rate.
Civilian Unemployment Rate, U.S. Department of Labor: Bureau of Labor Statistics
period start end chng President Party
Jan 1993 Jan 1997 7.3 5.3 -2.0 Clinton I Democrat
Jan 1985 Jan 1989 7.3 5.4 -1.9 Reagan II Republican
Jan 1961 Jan 1965 6.6 4.9 -1.7 JFK/Johnson Democrat
Jan 1965 Jan 1969 4.9 3.4 -1.5 Johnson Democrat
Jan 1949 Jan 1953 4.3 2.9 -1.4 Truman Democrat
Jan 1997 Jan 2001 5.3 4.2 -1.1 Clinton II Democrat
Jan 1981 Jan 1985 7.5 7.3 -0.2 Reagan I Republican
Jan 1977 Jan 1981 7.5 7.5 0.0 Carter Democrat
Jan 2005 Aug 2008 5.2 6.1 +0.9 Bush, GW II Republican
Jan 2001 Jan 2005 4.2 5.2 +1.0 Bush, GW I Republican
Jan 1953 Jan 1957 2.9 4.2 +1.3 Eisenhower I Republican
Jan 1969 Jan 1973 3.4 4.9 +1.5 Nixon Republican
Jan 1989 Jan 1993 5.4 7.3 +1.9 Bush, GHW Republican
Jan 1957 Jan 1961 4.2 6.6 +2.4 Eisenhower II Republican
Jan 1973 Jan 1977 4.9 7.5 +2.6 Nixon/Ford Republican
By James K. Galbraith
June 8, 2004
One cannot begrudge Ronald Reagan’s personal admirers their moment of eulogy. And particularly not in view of the man’s wise embrace of Mikhail Gorbachev late in his term, his gallant departure into Alzheimer’s 10 years ago, and Nancy Reagan’s noble advocacy since then of government support for stem-cell research. There were moments beyond politics when those of us who opposed Reagan the most could, and did, tip our hats to him.
But let’s talk economics. It is not too early to contradict those who would elevate Reagan above Franklin Roosevelt, John F. Kennedy and Lyndon Johnson, or even Bill Clinton, on this score. Yes, Reagan did change the course of history. But his economic legacy was mainly destructive, and especially so for the world’s poor and our own working class.
Among postwar administrations, who had the best record on economic growth? The answer is Kennedy-Johnson (49 percent over eight years), followed by Clinton (34 percent), followed by Reagan (32 percent). Among postwar two-term presidencies, Reagan beats out only Eisenhower (21 percent) and Nixon-Ford (24 percent). Call him the best of the Republicans, if you want.
The unemployment rate stood at 6.6 percent when Kennedy took office and at 3.4 percent when Johnson left it. The average over their eight years was 4.8 percent. When Clinton came in, unemployment was at 7.4 percent; it averaged 5.2 percent during his two terms and fell to 3.9 percent by the end. And for Reagan? Unemployment stood at 7.5 percent at his inauguration, and it averaged that same 7.5 percent during his entire eight years. The jobless rate was 5.4 percent when Reagan left office.
Inflation did come down — from just over 10 percent in the oil crisis year of 1980 to just over 3 percent in 1983. But at whose expense? Here the correct contrast is with FDR, who controlled inflation while doubling output over four years in World War II. In the process, Roosevelt leveled the pay distribution and created the modern American middle class.
Reagan’s disinflation came from unemployment over 10 percent, from his attack on unions, and from high interest rates, which drove up the dollar and cheapened imports. Those measures bankrupted much of the manufacturing belt. They damaged the middle class. And they created a vast trade imbalance and a rising external debt whose consequences haunt us still. Precisely what Roosevelt built, in other words, Reagan did much to destroy.
Mythmaking especially surrounds Reagan’s economic ideas, where memory blurs reality into romance. In truth Reagan’s economic team was a shotgun marriage between ideologues, monetarists and supply-siders who couldn’t stand one another. There was even a good-humored (though conservative) Keynesian mixed in — Murray Weidenbaum, the first chairman of Reagan’s Council of Economic Advisors.
I remember Murray sidling over to me at a meeting of a deplorable group called the Gold Commission — an official assembly of nut cases, to be blunt about it — in the Cash Room of Donald Regan’s Treasury Department, on the day in 1982 when the CEA’s first “Economic Report of the President” for Reagan’s presidency was published.
American Economist- The son of renowned economist John Kenneth Galbraith and of Catherine (Kitty) Atwater Galbraith, he earned his BA from Harvard in 1974 and Ph.D from Yale in 1981, both in economics. From 1974 to 1975, Galbraith studied at King’s College, Cambridge.
In conclusion, whether one is a Democrat, Republican or an independent, or liberal or conservative, the one reality which should be most apparent to all is that we are way too much in debt. Our personal, corporate and government borrowing is out of control. Our personal savings rate is non-existent. Our economic society has been driven by debt, and the “greater fool” theory which postulates that there is always a greater fool out there who will pay a premium for what we own. We are running huge budgetary deficits, we are fighting wars that we are not paying for, and we owe over $11 trillion to ourselves and foreign countries. We are buying cheap imported goods from Wal-Mart, who once prided itself on only “selling American!” They have becomes the world’s greatest retailer and they are a conduit for our dollars to go straight to China. We are purchasing $700 billion on foreign oil, and much of it is going to regimes that do not like us and some of that money is going to finance militants and terrorists that are threatening our very existence. What we need is honest and strong leadership. And we need that leadership now! Our society will not long exist with an attitude of business as usual, and that we are the best because we are Americans. As Lincoln stated in his famous speech in Springfield, Illinois in June of 1858, “A House Divided Against Itself Cannot Stand!” He was talking about slavery, and today we have to be talking about economic slavery. It is the issue of the great economic and social divide that has arisen in our country and has the potential of ripping us apart.
I often quote FDR who said the following, “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” FDR, the Second Inaugural Speech, January 20, 1937
“The immortal Dante tells us that divine justice weighs the sins of the cold blooded and the sins of the warmhearted in different scales. Better the occasional faults of a government that lives in the spirit of charity than the constant omissions of a government frozen in the idea of its own indifference.” FDR, from remarks he made in 1936.
In the spirit of those remarks we have to pull together for the commonweal and address the fissures that are renting our nation state apart. This means sacrifice and cooperation. Let us hope it begins in January.
Letter to the editor of the US News and World Reports
Editorial about FDR and the most important election- 1932
September 11, 2008
Thank G-d for Franklin Delano Roosevelt! Ken T. Walsh’s column hit the nail squarely on its head. The three years of Hoover inactivity on top of the Coolidge five-year sleep-a-thon created, as Arthur Schlesinger articulated in his book, “The Crisis of the Old Order,” a climate of despair and a reality of collapse, panic and the inability to cope. One should read his great prose. The Great Depression threatened the very essence and survival of our Democracy. All over Europe, country after country turned to dictators, and desperation was changing into the distinct possibility of social disorder and revolution in America. Roosevelt stopped the bleeding, reversed the slippery slope of the collapse and engineered the greatest period of financial, economic and social reform in our history into 100 days. The recovery to the pre-crash inflated and unrealistic market numbers advanced every year until the Dixiecrat forces and the Wall Street plutocrats demanded a slowdown in New Deal spending. When FDR exceeded to their wishes the economy quickly reverted to almost pre-recovery status. FDR realized almost immediately that the pump must be still continued to be primed, and he reversed course quickly, and the severe, but short recession of 1938 was stopped. As to foreign affairs, FDR warned us of the totalitarian rise in Europe and Asia with his Quarantine Speech, but he was silenced by hundreds of editorials, egged on by the American First isolationists, which sought his impeachment for his warnings. Eventually with the passage of Lend-Lease, the repeal of the Neutrality Laws, and the authorship of the Atlantic Charter created from the essence of the Four Freedoms State of the Union Address of January 1941, the country started to take re-armament seriously. FDR beat back the Lindbergh hatred and the isolationist insanity, racism and xenophobia. After Pearl Harbor, he made the United States into “The Arsenal of Democracy,” created a winning strategy and partnership with Winston Churchill, and selected excellent military leaders to prosecute the war. He became truly “The Soldier of Freedom,” as named by James McGregor Burns in his award winning book of the same title. His leadership established the GI Bill of Rights, the Bretton Woods Monetary Reforms, the United Nations, and established the basis for Eleanor Roosevelt’s authorship of UN’s “Universal Declaration of Human Rights.” The future world is more in the image of FDR than any other person. It is his world we live in. Roosevelt’s dual leadership through the panic and recovery days of the Great Depression and the dark days of WWII made him the “essential” and “indispensable man.” Churchill said, “Franklin Roosevelt was the greatest man he had ever known.” President Roosevelt’s life, he said must be regarded as “one of the commanding events of human destiny.” Enough of the revisionism of the far right!
Richard J. Garfunkel
Tarrytown, NY
One can catch my radio show at http://www.wvox.com live-streaming Wednesday at 12 noon or listen to all the archives The Advocate Show at http://advocates-wvox.com
FDR was the single greatest elected politician in modern history and was able to overcome the devastating physical challenge of Polio. He was a vigorous man who overcame a lifetime of sickness. He had wonderful mentors, Theodore Roosevelt, Al Smith, and Woodrow Wilson. He took something from all of them, and was smart enough to avoid the problems they all experienced. He shaped his own destiny, built the new Democratic Party, halted the panic that paralyzed America after four years of Depression, created the New Deal, and led America towards recovery. He was labor’s greatest friend, created social safety nets for the average American. He restored faith in the market places, the banks and government. He created the Social Security, and rebuilt America’s devastated middle class. He was one of our greatest conservationists and he brought electricity to parts of rural America that had been ignored for 200 years.
He rallied the public, instilled great respect from the world at large, and inspired great enemies and opposition. He took on the Fascists when America wanted no part of that fight, created the United Nations, and built the “Arsenal of Democracy.” Through his actions at the Atlantic Conference in Argentia Bay, he put forth his vision of the world based on the “Four Freedoms.” His vision is the vision of today’s modern world; his vision is of the world community pulling together for the common good. FDR had to withstand an “American First” style isolationism that cut across almost all social and political barriers and subgroups. FDR had to use his unequaled mastery of the America political landscape to, on one hand, re-arm America, and on the other hand, battle the limitations of our Neutrality Laws and the passion of people like Charles Lindbergh, who were his most vocal critics.
FDR mobilized the American economy in an unprecedented way, as we fought an effective and remarkable two-ocean war. He selected and appointed our excellent overall leadership with his Joint Chief’s Command, led by Admiral William D. Leahy, who coordinated the activities of Generals Marshall and Arnold along with Admiral King. FDR’s selections, in all of the theaters of his responsibility, of MacArthur, Nimitz, Eisenhower, reflected excellent and carefully thought out judgment. Their choices of subordinates, which included Bedell-Smith, Clark, Bradley, Patton, Hodges, Simpson, Eaker, Doolittle, Stillwell, Halsey, Spruance, Vandergrift, Smith, Lemay and many others spelled eventual success. His speeches and cool leadership gave the people confidence after Pearl Harbor and the loss of the Philippines. FDR’s leadership of the wartime conferences at Argentia Bay, Quebec, Casablanca, Teheran and Yalta were the driving force behind victory and the post-war dominance of the West. His sponsoring of the Bretton Woods Conference had the most lasting effect on the future world’s economies vis-à-vis monetary stability. All in all FDR’s domestic leadership before and during the war were unprecedented. The late President, the architect of victory, won a hard earned election in 1944, with excellent majorities in Congress, even with his health suffering from advance heart disease and arterial sclerosis. One of FDR’s final achievements was the “GI Bill,” which brought educational benefits, training and opportunity to millions.
He was able to maintain his majorities in Congress all through his tenure in office, and even though the Democrats narrowly lost Congress in 1946, they quickly recovered their majorities until the Eisenhower landslide of 1952. But from 1954 until the 1980’s the FDR-New Deal coalition of Democrats maintained Congressional hegemony.
FDR’s legacy was one of not only unprecedented leadership, but of government innovation, reform and restructuring. Both have great-unequaled places in the history of our world and our time. Not only did James McGregor Burns write his wonderful book, “FDR, The Lion and the Fox,” but he followed it up with the award-winning, “FDR, The Soldier of Freedom.”
Both books still make great reading. FDR is the most written about man in history, and I had the pleasure of being at the Roosevelt Summer reading Fest at Hyde Park, NY this past June 21st. It was hosted by the FDR Library under the wonderful leadership of Ms. Cynthia Kock. I also had the pleasure of having a number of the authors there that day as a guest on my radio show, “The Advocates.” One can hear the broadcasts of those shows by accessing its archives at http://advocates-wvox.com.
Richard J. Garfunkel
Tarrytown, NY
Obviously, to all who have a sense of history, Franklin Delano Roosevelt will remain fondly in the hearts of all freedom-loving Americans. His remarkable leadership in confronting the Great Depression, and reversing the panic and our slide to oblivion should never be forgotten or deprecated, by the “fiction writers inside and outside of Congress.” The reforms instituted in the First Hundred Days of the New Deal should be a lesson to us today regarding the miscreants of greed who have brought our financial well-being and stability to a dangerous precipice. The apostles of de-regulation are now begging for relief as they hold the whole financial system hostage to their falsehoods and empty words. Wasn’t it in only April and May when our modern day Andrew Mellon and Herbert Hoover, declared “prosperity is just around the corner.” Hopefully come this November the American people will rise up in their “righteous indignation” and throw those rascals to the dustbin of history.
FDR conquered polio, saved our economic institutions, founded the Warm Springs Foundation that found the cure for that dreaded disease, and rallied the country in the wake of its “Day of Infamy.” FDR the “Soldier of Freedom,” aptly named by historian James McGregor Burns, made us “The Arsenal of Freedom,” authored the Atlantic Charter, created Lend-Lease, and cemented the alliance of Allied nations that brought the fascist totalitarians to their knees. He also brought us the GI Bill, Bretton Woods monetary reform and the United Nations. Churchill said of him that he, “was the greatest man he known.” No better site could be then on Roosevelt Island that flanks both the FDR Drive and is in the shadow of the UN. I look forward to visiting this memorial, and again “hats off” to Bill vanden Heauval and his great work.
Richard J. Garfunkel
Tarrytown, NY