Thursday, September 30, 2010

Again, you are right...

I have answered all these questions before. But, I'll do it again in an effort to show you why I think the way I do.

"When are things at "crisis" so as to justify a fundamental reordering of the role, scope, reach & size of government?"

As I have said before... when the very government in question feels the national security situation is "dangerous" enough to warrant putting gun emplacements on the White House lawn, the roof of the Capitol Building, and the US Treasury. When protest demonstrations (the Bonus Army) were seen as such a "national security threat" (that's Douglas MacArthur's term... not mine) that 40,000 protesters were violently dispersed by armed military troops, under the command of MacArthur, Eisenhower and Patton. When the mortgage foreclosure rate grows so high (nearly 50%) that enough people end up homeless and living in tent or shanty towns that the term "Hooverville" becomes part of the lexicon of American English. When the infant mortality rate climbs 250% in four years... entirely due to a lack of adequate housing and/or nutrition.

Like I said... I've said this a hundred times if I've said it once, but you continue to miss my point. I'm not saying that the need for a return to New Deal policies or programs will EVER occur again. I base this on the simple premise that it HASN'T returned in more than 80 years. It hasn't happened since 1929 (and you can continue to point at the 1937 Recession... the Roosevelt Recession... all you want, but 7 months of falling indicators does not a "depression" make), and the current recession isn't it either. I have not now, nor will I, call for a return to "New Deal" as envisioned by FDR in 1933... because there is no need. Your insistence on referencing this non sequitor in my argument is tantamount to my saying that States that refused to take stimulus money are in "defiance" of the Federal Government, and a return to Lincoln's policy of armed intervention in the maintaining of the Union is required. Its more than silly... its obtuse.

The reason I DON'T think "New Deal" works today is that we are not suffering from the same kind of economic crisis now as we were then. Disparate policies and agendas within the various arms of the Federal machine led to a US dollar that was artificially tied to a commodity whose market price was fixed... artificially. Gold was limited to a $35/oz price, regardless of what the actual supply/demand market price for the metal was globally. This meant that every dollar the US minted in gold was actually worth far more than the $1 value found in the global market. Thus, gold was being hoarded rather than traded... and to relieve this pressure on the value of the dollar, FDR and the Treasury STOPPED minting gold coins, collected the coins already held by banks and lenders, and DEREGULATED the dollar from "gold standard". Since that time, the dollar has become (and still remains) the benchmark currency of the world economic machine. It has weathered every single economic crisis since 1929, and retained far more of its value than any three other currencies combined. Look at what we have seen the Japanese Yen, the German Mark, the French Franc, and even the Euro go through in terms of contractions just in our adult lifetimes... and compare ALL of them to the dollar. THEN tell me that FDR's actions in removing the "gold standard" was a bad thing... a failure in economic planning and execution... an un-Constitutional power grab of unprecedented proportions.

"... given that the majority of New Deal either didnt survive the court purges or ended on its' own by 1941 (a point you've repeatedly made), how could it have been safe guarding us from a depression for the last 81 years?"

Besides what I've stated above, I find it hard to believe that I'd have to point to FDIC as another example. In 1933, America had seen one out of every two established banks FAIL, taking all their assets and holdings with them. 47% of all private savings and loan investments for John Q Public had vanished, and more than 64% of all commercial funds had turned to ashes. FDR and the Fed did not ask to "bail out" these failed banks. Instead, they established a means by which those surviving institutions could "buy" coverage for all deposits up to $100,000... building confidence in the public (and commercial) sectors to, once again, use banks as a means of protecting their money... and thus providing banks with the capital to invest in venture gains such as home loans, construction projects, business improvements and expansions, and all the other things that banks do in this country to pump funds that "traditionally" would be locked in a safe BACK into the economy. Its almost sad to have to state here (of all places) that, since its inception in Jan of '34, not one single dollar in private or commercial deposits has been lost as a result of a bank or institutional failure. 77 years of guaranteed security, with the DEPOSITOR covering all costs through a very (VERY) small charge levied by the banks for every $1000 in deposits made. FDIC has only had to increase premiums to institutions (and, by extension, to the depositor) ONCE in those 77 years, and that was in 2008, when the latest financial crisis saw the largest number of bank failures since 1930. Color me crazy... but that sounds like a successful program that is firmly rooted in "New Deal".

Reforms to the Federal Reserve system, the SEC, FDIC, ending the "gold standard"... any or all of these may have been the cure for our cycle of depression/boom prior to 1933, but I'm not an economist. I'm not an expert. I'm simply convinced by the overwhelming volume of evidence that once New Deal "reform" went into effect, the cycle of "depression" ended in the US.

This segues nicely into your next point:

"But your recent comments seem to defend New Deal as merely necessary "relief." Yes that was one of the 3 R's, but the idea that New Deal was simply relief meant tie us over until the economy recovered is much different then arguing it acted to actually bring about that recovery."

I'm not at all sure what you mean here... I thought I was pretty clear about exactly where the New Deal fell within FDR's "Three R's"... relief, recovery and reform. Relief was over and done within the first 100 days of FDR's first term. Recovery was over by 1940. Reform was what we see today, in such institutions as SSI, FDIC, SEC, etc. None have "failed"... all have been found "Constitutional" by the Supreme Court (numerous times, in fact)... and all have provided a service to millions of Americans, in one way or another. Yes, like any other government service or program, there are examples of abuse or mismanagement... but the same can be said of ANY government service or program, including the military, the Post Office, FBI... et al. We can't negate the New Deal ones without negating the rest, can we? There is a case to be made that none of the New Deal programs that exist today are enumerated in the Constitution... and we can have that discussion if you want... but there is no allowance in the Constitution for the FBI, or the CIA, or the Interstate Commerce Commission, or the US Coast Guard, or even for the United States Air Force or Marine Corps as independent branches of the US military. Do all of these constitute "un-Constitutional" expansions of government outside of the Framer's intentions? I don't think so...

Finally, let me ask you a question:

"... I want to see the smallest government possible..."

Where is YOUR cut-off point? At what dollar amount is a government budget small enough? At what percentage of GDP is spending too much? How many agencies and programs can a government have before it is "too big"? When did the US Government cross that threshold into the realm of "Big Government"?

I can't be any more exact that I have been when it comes to "why" the US hasn't had a "depression" in 77 years, but I'm pretty sure you can't put a number to my questions either. Many areas of study and knowledge can be labelled "exact sciences"... but politics is NOT one of them. Otherwise, you 'd be able to explain why you can decry the reforms of a "progressive" like FDR as "expansionist" and "un-Constitutional", but you will adamantly defend a President like Jackson and his place among the "pantheon" of Great American Presidents. Did FDR continue funding and using NRA after it was determined to be un-Constitutional? Did FDR actually draft an amendment calling for additional Supreme Court justices when he couldn't get around the Court's rulings? Or did he comply with the findings of the High Court, and end the programs and policies that were determined to be illegal?

If you can't answer my first question, then perhaps you can answer this one:

Who was the more "Constitutional" President, FDR or Andrew Jackson?

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