The Forgotten Man: A New History of the Great Depression (Amity Shlaes)

“The Forgotten Man” is both history and warning. It’s a great social/political history of the Depression. Rather than a recitation of economic facts, it emphasizes the personalities of relevant leaders in many fields and views the Depression through their interactions, with particular focus on the inability of the government to actually fix the Depression, despite their best (and not-so-best) efforts. The “forgotten man” of the title, in its usual historical frame, refers to Franklin Roosevelt’s use of the term—the politically weak voters on whom Roosevelt focused to get their votes, and supposedly rescued from economic despair. Shlaes resurrects in parallel the original and alternate meaning, of the man who bears the costs of government schemes directed at others.

As a readable, incisive history alone, this book is worth reading. I read this book after reading Shlaes’s similarly excellent “Coolidge”—while Shlaes mentions Coolidge in “The Forgotten Man”, she does not really contrast his times to the Depression, but reading the two together allows the reader to profitably do so. Her book is not a polemic, nor does it really take sides. (My review, on the other hand, is a polemic, but that has little to do with Shlaes.)

But “The Forgotten Man” has an additional benefit to the reader not visible when the book was published in 2007. It is effectively a warning about the limits of government competence. It was not malice as such that made a decade of government efforts to end the Depression fail, but a combination of ignorance and impossibility. We have seen the same since 2008 (along with heaping helpings of malice). And, finally, Shlaes’s book is also a warning about the inborn tendency of the powerful to erode the rule of law by “never letting a crisis go to waste,” in the immortal words of Obama’s proxy, Rahm Emanuel.

Shlaes organizes the book around a certain cast of characters. The main personalities, around whom Shales weaves a counterpoint through the whole book, are Wendell Willkie and Roosevelt. But also others totally forgotten today (and Willkie is essentially forgotten today too): Irita Van Doren; Rex Tugwell; Ray Moley; David Lilienthal; Andrew Mellon (unfairly tarred in HBO’s “Boardwalk Empire”). A few are not forgotten today, at least in some circles, in particular Felix Frankfurter, the architect of Roosevelt’s total remaking of the constitutional system, and Harold Ickes (whose son, also Harold Ickes, served Clinton in a similar saturnine, malevolent capacity).

Shlaes’s book also helps under understand the Depression by making it real, by explaining the actual impact of things that to us seem unimportant or abstractions. For example, to us, ending the gold clause in contracts seems largely irrelevant—who uses gold in contracts, anyway? As Shlaes says, in fact, it devalued the assets of contract holders, and it “was a primitive revenge . . . To end the gold clause was an act of social redistribution, a $200 billion transfer of wealth from creditor to debtor.” This kind of explanation really gives a flavor for the time.

Anyway, Shlaes follows these men (and a few women—Van Doren, but also Frances Perkins and others) from before the Depression, when they were mostly isolated and without influence, to their rise to various forms of power during the Depression, and their subsequent division into opponents of the New Deal or advocates and implementers of it. Shlaes traces, among other drivers, how enamored these people were, to various degrees, of Soviet Russia (to which many of them went on a 1920s junket sponsored by Stalin), though many abandoned that amour over time. But most of them were primarily enamored not of Communism, but as government as the hero of the age. The book follows their stories.

Many others have focused their reviews on the economic reality of the Depression and government actions in reaction. I’m going to focus instead on the numerous parallels to today that occur throughout the book. One such parallel is that Roosevelt and his henchmen were entirely unpredictable in their policy decisions, which had pernicious effects. “The trouble, however, was not merely the new policies that were implemented but also the threat of additional, unknown, policies.” Some of this was because they were desperate to try anything that might work to stimulate the economy, and also desperate to try anything to show they were doing something for the “forgotten man.” But many policy choices were cavalier, such as Roosevelt randomly setting gold prices, essentially by picking numbers daily from the air. (Gold prices then determined the money supply, so it was a critical number.) Similarly, much of our anemic economy today is the result of uncertainty over what oppressive policy or dictate will issue forth next from our government masters.

A second parallel is the obsession of those in power with taking over large segments of the economy, on the theory that it’s necessary for better government, and for more power for the government, which is benevolent. In Roosevelt’s case, that was primarily the power industry (coal and hydroelectric), through the prism of Willkie, David Lilienthal and the Tennessee Valley Authority. In the modern case, it’s Obama mandating the government takeover of health care.

A third parallel is the jobless “recovery” that occurred midway through the Depression. Roosevelt and his supporters made much of the (temporary) stock market increase in the mid-1930s, and the modest reduction in unemployment. But the creation of real, permanent jobs through private enterprise never happened until World War II and after. As of this writing (September 2015), we see the same thing—a chimerical decline in the unemployment rate, created by huge numbers of people permanently leaving the workforce, with fewer total jobs for native-born individuals than there were in 2008. Time will tell if things will get better or worse, but given today’s pernicious policies that attack private enterprise, similar to those of the 1930s, optimism isn’t warranted. (In some ways it’s worse today, because of the rise of crony capitalism, which was vastly less common in the 1930s, coordinating with government regulation and overreach to depress actual free enterprise.)

A fourth parallel is the vast amounts of paperwork imposed on the citizenry. “In twelve months, the [National Recovery Administration] had generated more paper [in the form of laws] than the entire legislative output of the federal government since 1789.” To be more precise, prior to Roosevelt there was a grand TOTAL of 2,735 pages of federal law. In Roosevelt’s first year, an additional 10,000 were created, and he was just getting started. Now, of course, it’s several hundred thousand new pages per year. The impact of this as a drag on American creativity and ingenuity can’t be overstated.

A fifth parallel is the use by the government of its power to split the country into favored and unfavored interest groups. This is, of course, the entire operating method of the modern Democratic Party, but Roosevelt was the first to do this. All prior Presidents would have thought it a gross dereliction of duty to steal from one set of citizens to engage in mass transfers to another set of citizens, with the goal of deliberately and permanently ignoring the needs and wants of the first set and obtaining the votes of the second set. Not Roosevelt, not most modern politicians, and most certainly not Obama.

A sixth parallel is that government men, trampling upon the ancient liberties of Americans, together with their private sector allies like Frankfurter, saw themselves not as partisans pushing a political agenda, but as Parsifal questing after the Holy Grail. They all had this bizarre view of government employees, particularly attorneys, as virtuous men fighting evil private enterprise and private evil (which they saw as mostly the same thing). Before Roosevelt, government employees were relatively few, and recognized for what they were—patronage employees no better and in most cases worse than any private sector employee. Even though this idea of government (or non-government, but allied, “non-profit”) employee moral superiority is so obviously false, it still is treated as a truism throughout the entire Left.

A seventh parallel is the wholly illegitimate use by the powerful of the machinery of government, criminal and civil, to attack and persecute any who oppose them, combined with the general politicization of the justice system. For Roosevelt, this was primarily (but not exclusively), bogus investigations and prosecutions for “tax fraud,” such as perfectly legal tax avoidance and of behavior indisputably legal when undertaken. The most prominent victim was Andrew Mellon, but many others were similarly attacked. As Henry Morgenthau said, the real target was not just Mellon, but “the privileged rich” (which he was too, but never mind). Similarly, today the Left attacks, through wholly illegitimate means, both politicians (Ted Stevens, Tom DeLay, Ray Donovan), and private citizens (Gibson Guitars, the Wisconsin investigations), and Obama’s Department of Justice under Holder is a howling wasteland of radical politics and totally politicized injustice. In fact, as with most things Roosevelt began, the attacks are worse today—because of the ludicrous lengths of threatened sentences and consequent ability to force plea bargains, along with the elimination of the mens rea requirement for many or most crimes, and the criminalization of innocent actions through incomprehensible and obscure regulations.

An eighth parallel is the unhealthy rhetorical and philosophical overreach characterizing those in power. In his 1937 inauguration, despite no real progress and 20% unemployment, Roosevelt claimed “We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world.” Similarly, Obama has repeatedly made such claims, as with Obama’s 2008 speech, “I am absolutely certain that generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs to the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal; this was the moment when we ended a war and secured our nation.” It’s true that all politicians exaggerate and lie. But it seems pretty clear that both Roosevelt and Obama believed and believe that they were different, special and unique, and the cost of their utopian delusions has been untold suffering in America and around the world (ISIS, anyone?)

The saddest thing of all in these parallels, true as they are, is the difference in the men between then and now. With a few exceptions (the Communists, of whom there were not a few), Roosevelt’s Brain Trust and other factotums actually loved and thought highly of America. They wanted to make it better for everyone. These men wanted progress. They wanted the poor to have power and appliances and lead more luxurious lives. Today, the Left wants the masses to live circumscribed, heavily taxed lives while their betters course around the world on (taxpayer-funded) private jets (while mewling about global warming). Today, Obama and his coterie, along with the Left in general, hate and despise America as a monstrous example to the world, based on and generative of racism, colonialism, and every other evil, and useful mostly as a punching bag to be abused and debased before all comers (while they, of course, retain power and riches for themselves and their friends). This is the source of Obama’s habit of literally bowing low to execrable Saudi sheikhs and other similar vile individuals; sucking up to effete and boneless Europeans; and groveling before any culture not English in origin, the more nasty the better. Roosevelt and his men, to their credit, would have been disgusted by this core quality of Obama and his minions.

Not to mention that Roosevelt’s men had more excuse for their behavior than the modern Left. In 1930s America, it was plausible that government was neutral or benevolent, and could scientifically approach and attack problems facing society. Public choice theory, recognizing that government employees are merely another player in making choices, with their own frequently pernicious incentives and goals, lay decades in the future. Hayek lay years in the future. And the miserable failure of a hundred years of a hundred different experiments in government control and centralization was yet to be seen. So Roosevelt and his people can be forgiven for actually believing that more government was the answer; and they could legitimately have believed that “government is just the term for things we do together” (which in the mouth of Obama is merely a perverse joke).

In case you’re still reading this, and haven’t shot yourself in despair or quit reading to instead pray and light a candle at the Obama shrine in your closet, I actually, paradoxically, think all this is reason for some limited optimism today. We see that Roosevelt was a malicious man who abused power and attacked the rule of law much more than any other modern President prior to Obama, Nixon included. We see the same behavior today by Obama and his allies in the federal bureaucracy—illegal activities designed to punish their political opponents in literally hundreds of different areas, a complete subordination of the government to their lust for political power and permanent domination.

So why do I say this is reason for optimism? We are rightly horrified by Roosevelt’s behavior, just as any non-partisan is horrified by Obama’s—because we think of that as not what government is supposed to do. But the only reason we think that is because after Roosevelt, for decades, that’s not what the government did. Between 1945 and 1995, while the government expanded, it was again subject to the rule of law that Roosevelt eroded. That means that even after the federal government plumbs the depths, it is at least theoretically possible for it to return to the rule of law. Yes, government is never going to shrink unless something very dramatic happens. But a simple return to the rule of law would be a huge win for America, and the return to the rule of law after Roosevelt’s lawlessness shows it can happen.

Optimism shouldn’t be over-stated, though. The problem, of course, is the ratchet effect. Each time it happens, we never return wholly to the firm structures of the past, and it becomes easier to create problems in the future. Obama and his allies are trying to achieve, and have achieved, a permanent expansion of government, and have massively eroded the rule of law. Let’s say a Republican is elected in 2016 and the rule of law is at least partially restored—the federal government no longer is used to punish political opposition. So Republicans might hold the line—until the next Democrat administration, whereupon the ball would be moved even farther toward whatever hellish Utopia is that administration’s goal, made easier by even less lip service being paid to the rule of law. Republicans can’t (and won’t) reverse the structural erosion of the rule of law merely by not engaging in the same vicious behavior as the Left.

The only way this endless downward trend can be stopped is if the American Right becomes as vicious and unprincipled as the modern American Left. The Right could jail not just Hillary, who’s an undisputed criminal by any objective accounting, but scores or hundreds of Democrats who are not guilty of anything but opposing Republicans. Ruin tens of thousands of Democrat-supporting businessmen with malicious regulatory prosecutions, bogus civil suits, and tax investigations and prosecutions (conducted by scores of heavily armed SWAT-geared bureaucrats). Roust their women and children at gunpoint from their beds in the middle of the night. Give their assets to political supporters. Ensure that social liberals are mass fired from their jobs for their views, and the rest are re-educated to keep their mouths shut. Eliminate tenure and fire any non-conservative academic. And so on. That’ll work to end the ascendancy of the Left. But the result won’t be a good society for any of us, except in the unlikely possibility that having crushed the Left, the Right restores America to her ancient liberties and once again enthrones the rule of law.

OK, I’m way off topic here. Back to the book—it’s great. Read it.


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