"The single most important jobs program we can put in place is a growing economy." So said Barack Obama at his surly press conference last week defending the tax deal he made with Republicans.
"The single most important anti-poverty program we can put in place is making sure folks have jobs and the economy is growing. We can do a whole bunch of other stuff, but if the economy is not growing, if the private sector is not hiring faster than it's currently hiring, then we are going to continue to have problems no matter how many programs we put in place."
It's hard to disagree. Robust economic growth solves a lot of fiscal and other problems.
But Obama's fellow Democrats, to whom he explicitly directed these comments, can be forgiven for being puzzled. The whole thrust of his first two years -- the stimulus package, the health care legislation, the vast increases in government spending -- has been to put programs in place that have done little or nothing to stimulate economic growth.
That's not accidental. The template for the Obama Democrats' policies, the New Deal of the 1930s, was not designed to stimulate economic growth, but to freeze in place a tolerable but not dynamic status quo.
The New Deal's father, Franklin Roosevelt, believed that the era of economic growth was over, just as many contemporaries believed that technological progress was at an end (how far could you go beyond the radio and the refrigerator?). FDR, like his cousin Theodore, was an affluent heir who had contempt for men who built businesses and made money. They were "economic royalists" and "malefactors of great wealth" -- sentiments echoed by Barack Obama last week.
The initial New Deal program, the National Recovery Act, set up 700-plus industry codes to hold up wages and prices. That made some sense in a time of deflationary downward spiral, but proved unsustainable over a longer term.
Later New Deal programs strengthened labor unions, in an attempt to protect current workers and freeze work rules in place -- which tended to block the flexible management practices that eventually gave a competitive edge to later foreign-based auto companies. New Deal transportation policy protected existing trucking firms from competition -- a policy overturned by the likes of Ralph Nader and Edward Kennedy in the 1970s.
High tax rates on high earners and continued uncertainty over increased regulation and unionization led to what economists called a capital strike. Job creation was dismal as the 1930s went on, and unemployment hovered over 10 percent until wartime mobilization began in the 1940s.
All that sounds more than a little familiar.
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