Tuesday, February 10, 2009

Why Stimulus?

In an Imprimis article in January 2009, Burton W. Folsom, Jr.: Do We Need a New New Deal? I found a couple of interesting quotes. First was on the efforts to keep prices from falling, they were destroying crops:
What's worse, some New Deal programs had terrible unintended consequences. The Agricultural Adjustment Administration, for example, overhauled agriculture by paying farmers not to produce on part of their land. After farmers took the federal dollars, the U.S. developed shortages of the very crops taxpayers were paying farmers not to produce. By 1935, for example, the U.S. was importing almost 35 million bushels of corn, 13 million bushels of wheat, and 36 million pounds of cotton. Simultaneously, we had an army of bureaucrats in the Department of Agriculture to inspect farms (and even to do aerial photography) to ensure farmers were not growing the crops we were importing into the country.
I remember hearing of a case during the depression when a farmer who grew more wheat than he was supposed to, although he sold none of the wheat, he was tried under the commerce clause. What an abuse of justice.

The next quote was on the success of all the New Deal programs:
Henry Morgenthau, FDR's loyal Secretary of the Treasury, was frustrated at the persistence of double-digit unemployment throughout the 1930s. In May 1939, with unemployment at 20 percent, he exploded at the failed New Deal programs. "We have tried spending money," Morgenthau noted. "We are spending more than we have ever spent before and it does not work. . . . We have never made good on our promises. . . . I say after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!"
So now people are calling for a "new new deal" when they don't look back at how poorly the previous one worked. Why don't we learn from the past?

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