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Fear Itself, Con't:

In a recent post, Eric Posner asks a very interesting question:

No one who believes that the government exploited fears after 9/11 to strengthen its security powers is now saying that the government is exploiting financial crisis fears in order to justify taking control of credit markets. No one who thinks that government would use fear to curtail civil liberties seems to think that government would use fear to curtail economic liberties. Why not?

Putting aside the question of whether it's strictly correct to say "no one" (see Ilya's response, here), I think Eric is on to something important, and I think I have the "answer" (sort of). The answer is: the vast majority of people place economic liberties on a decidedly lower plane than they place "civil" liberties.

Examples of this are everywhere. It's one of the reasons why people who believe strongly in economic liberties get so angry in law school -- it's not just the way the Supreme Court has basically stripped away any constitutional protection for economic liberties while waxing poetic about civil liberties, it's the way pretty much all of the professors and students seem to think this is perfectly sensible. [And please note that I'm not saying that I endorse this state of affairs -- I was one of those angry law students, actually. Just that it is what it is]

I realize this doesn't really answer Eric's question (hence the quotation marks above); it simply restates it: So why do so many people think that economic liberties are of lesser significance than civil liberties?. But it does so in a useful way, because I think there's a reasonably clear answer to the question when it's posed that way. The answer is: 1933.

I was thinking about this a few days ago when I read Ilya's recent posting about why he is worried about an Obama victory, in the course of which he quoted (approvingly) from UCSD law prof Michael Rappaport:

"Before the financial crisis, there was a realistic chance that electing Obama and a Democratic Congress would be Jimmy Carter in 1976 or Bill Clinton in 1992 — presidencies that soon led to Ronald Reagan and Newt Gingrich. But with the financial crisis, there is a much greater chance that electing Obama and the congressional Democrats will be like electing FDR in 1932. Obama could use the emergency to transform the country in a very bad way. And, given the crisis and Obama's political skills, it is quite possible that the country would reelect him, even if he does badly — which, after all, is what happened when FDR was reelected during the New Deal in 1936." (my emphasis)

What struck me about this was that, surely, most people would view the Obama = FDR analogy as a favorable one - Obama would like nothing more, obviously, than having people think he is the second coming of FDR. I am fairly certain that the vast majority of people in this country think FDR and the New Deal saved the U.S. from ruin, transformed the country in a fundamentally good way, and laid the groundwork for 75+ (we should be so lucky to get that +) years of unprecedented prosperity. Did it interfere with our economic liberties? Absolutely. Was it worth the cost? Most people -- unhesitatingly, I think -- would say it was.

Obviously, that doesn't make Ilya's view "wrong" -- but it is what it is, the view of the vast majority of people in this country.

[I'm not sure, to be candid, which camp I'm in, myself; I find Ilya's position very powerful, conceptually - but I also think FDR saved the country from ruin. Notice that it's not "inconsistent" to place economic liberties on a lower plane than civil liberties, any more than it is inconsistent to say French food is good and English food (even though they're both "food"). It just requires construction of a meaningful distinction between the two types of liberty - way beyond the scope of this conversation.]

But regardless of my own position on the matter, I think it's responsive to Eric's original question. It's not that people think the government might not "use fear to curtail economic liberties," it's that they don't care as much about economic liberties; they're more willing to tolerate error in the assessment of the crisis when the cost is a curtailment of economic, rather than civil, liberties.

And a final thought: Eric's put his finger on the very thing that made FDR's famous "we have nothing to fear but fear itself" line so fabulous: It's hard to argue that the government is fomenting fear to enhance it's own power when the president is not only asking everyone to be fear-less, but suggesting that fear-lessness is the key to solving the crisis.

therut (mail):
I think you are on to somethng. I have thought this for a long time. I think it also has to do with schools not teaching ecomonic liberty. I was just telling my mother the same thing Sunday. People are afraid to be FREE. To be FREE on is free to fail and loose everything. Very few people anymore can stand Freedom. Sad really. And it all started with terrible Presidency of FDR. My nemesis. Even his statue is PC----they removed the cigarette. He is a false idol for many espically the brinwashed children and younger generation. Give people the freedom to do most anything hedionistic and they really do not care if you take care of them like a child. They are feed, clothed and have their diapers and bottle when they want them. As they say KEWL!!!
10.13.2008 10:54am
Pyrrhus (mail) (www):
Something that bugs me about defenses of the New Deal is the common lack of specificity.

What parts of the New Deal saved America? The whole thing? Parts were crucial and parts harmful? Parts helpful and the rest neutral?

Was it the massive work projects? The massive subsidies of crop burnings? Price fixing for many goods? The birth of social security? FDIC insurance of bank deposits?

All of these are different policies which if I recall correctly were part of the "New Deal". But they are all pretty different projects, and and their presence in the New Deal together doesn't really warrant them being assessed together as one "help or hurt" package.
10.13.2008 10:57am
David Warner:
"It just requires construction of a meaningful distinction between the two types of liberty - way beyond the scope of this conversation."

Then hire a subcontractor.
10.13.2008 10:59am
Andy C.:
I thought that almost all economists agree nowadays that the New Deal did nothing to stop the Great Depression, and, in fact, only worsened it.
10.13.2008 11:01am
paul lukasiak (mail):
I think the whole premise here is seriously flawed, because it assumes that constitutional "financial liberties" exist that the government can infringe upon.

But civil liberties are by and large delineated in the constitution, whereas "financial" liberties are not -- so there is a huge difference there.

And the "financial" liberties that were assumed to exist at the time the constitution were based on a small scale agrarian economic model that bears no relationship to today's economy.

indeed, the finacial/economic freedoms that you assume are really just part of a laissez faire philosophical framework rather than something enshrined in the constitution -- if anything, the fact that power of the federal government to regulate interstate commerce is enshrined in the constitution suggests that these "liberties" don't really exist in today's economy given the integration of the US economy as a whole (then, of course there is globalization of the economy, and the Federal Government's power in international affairs, which further erodes the assumption that the "liberties" you claim could be infringed upon exist in any form other than laissez faire theory.)
10.13.2008 11:13am
Bama 1L:
Didn't Holmes have this issue sorted out in 1905?
10.13.2008 11:15am
JB:
Don't underestimate confidence as a key element of economic recovery. Many provisions of the New Deal hurt recovery, but had FDR told everyone to panic and done nothing, it would have been worse.
10.13.2008 11:22am
paul lukasiak (mail):

Something that bugs me about defenses of the New Deal is the common lack of specificity. What parts of the New Deal saved America? The whole thing? Parts were crucial and parts harmful? Parts helpful and the rest neutral?


I'd suggest that it was the New Deal as a whole that "saved" America -- the whole was far greater than the sum of its parts.

The Great Depression represented the repudiation of the existing economic model at a time when the perceived potential for new economic models (socialism/communism) was at its peak. The Great Depression made people aware of the fact that they were not, and could not be, masters of their own economic destinies --- and that the "Robber Barons" who had controlled the economy did not serve the interests of the average citizen.
10.13.2008 11:23am
David Warner:
Which is it, Paul, "financial" or "economic"? Or do you only use "financial" to enhance your demonization efforts, then revert to "economic" to extol your social gospel views?
10.13.2008 11:39am
Whining is really hard work:
There is still healthy argument if the Depression was cured or solved by the second set of "New Deal" changes, however WWII stepped in and restored us to prosperity without any more discussion...
10.13.2008 12:01pm
MarkField (mail):
Speaking as someone who thinks that FDR was one of our two greatest presidents and that the New Deal very definitely did save America, I think David is basically right in his analysis here. I'd just add that there's a substantive aspect to the difference as well, namely that one's assessment of the significance of the threat. If one sees 9/11 as a tragedy and a crime, but not as an existential threat to the nation, then infringements on civil liberties are bound to seem unnecessary or even pretextual. Those who do see it as an existential threat will, of course differ. And the same holds true for this or any other economic crisis.
10.13.2008 12:04pm
NI:
What I'm about to say is a bit of a generalization so there will be exceptions, but in general I think it's less costly to society to protect civil liberties than it is to preserve economic liberties.

If a bunch of social rejects want to march through Skokie wearing Nazi uniforms, who really is hurt? How does society suffer harm by not allowing lynch mobs to hang without trial people accused of crimes that they may or may not have commited, or by not allowing the police to rifle through my belongings without probable cause?

On the other hand, a few wealthy people can really do a number on lots and lots of non-wealthy people, especially if they have social prejudice on their side. Anti-discrimination laws, for example, were passed because there really was a widespread problem of Blacks and women not being permitted to compete economically. We can have a conversation about whether those laws are enough of an affront to liberty that they shouldn't have been passed regardless, but nobody has ever seriously suggested that they weren't passed to address a real problem.

And that, I think, is the practical reason why civil liberties are treated more deferentially than economic liberties. If I want to stand on a street corner with a bullhorn preaching hate, the only real harm I've caused is to make a fool out of myself. If I want to use the economic clout I have from the (hypothetical) factory I own to suppress wages so that most of the town lives in poverty, that does cause harm. I sometimes wish libertarians would at least be honest about that.
10.13.2008 12:06pm
Elliot123 (mail):
If an economy recovers after a depressed period, wouldn't anything that happened during that period be credited for the recovery? It's a bit like the news stories about a rise or fall in the stock market on any given day. Just pick some other event of that day. If stocks move up, say it is because of that event. If they move down, say it is because of that event. People don't have a clue.
10.13.2008 12:17pm
Elliot123 (mail):
"If I want to stand on a street corner with a bullhorn preaching hate, the only real harm I've caused is to make a fool out of myself."

I suppose they laughed at Hitler, too. What harm can a guy with a bullhorn do? What harm can ideas do?
10.13.2008 12:20pm
Anderson (mail):
Criticisms of the New Deal and FDR seem to me to miss a couple of points:

(1) Economics is probably more advanced now than it was then, not least because of having the Depression and the New Deal to study. Judging FDR requires judging the advice he was receiving at the time and his basis for crediting one source over another. (Compare the issue of Truman's bombing Hiroshima and Nagasaki -- do we judge him by what we know now, or what he knew then?)

(2) FDR saved this country in large part because of what he did *not* do. The country was scared to death in January 1933, and had Roosevelt wanted to nationalize the banks and basically socialize a variety of industries, he quite possibly could've gotten away with it. When David Post says that FDR saved America, that's an important aspecct of what he means.

(3) Third of my couple of points, and related to (1) -- FDR was apparently skeptical of his economic advisors, not without reason. He was happy to try several contradictory programs at once and see what worked.

Post-game analysis about what FDR "should" have done may be correct or it may just be sour grapes, but it shouldn't diminish our appreciation for what he accomplished.
10.13.2008 12:24pm
NI:

I suppose they laughed at Hitler, too. What harm can a guy with a bullhorn do? What harm can ideas do?


Ah, but people only listened to Hitler because they were in economic pain, which goes to my basic point. In a society in which people were well fed, they would have laughed at Hitler.
10.13.2008 12:28pm
paul lukasiak (mail):
Which is it, Paul, "financial" or "economic"? Or do you only use "financial" to enhance your demonization efforts, then revert to "economic" to extol your social gospel views?

in terms of "liberties" that are likely to be infringed upon, "economic" and "financial" are pretty much synonymous. i.e. no one's talking about less "economic" freedom in terms of what job you have -- the theoretical "freedoms" that are theoretically in danger are those having to do with the use of assets. "Impinging on economic freedoms" is a scare tactic, because its really only the financial subset of economic freedoms (those affected by regulation of markets) that are likely to be affected.
10.13.2008 12:29pm
just a guest:

It's hard to argue that the government is fomenting fear to enhance it's own power when the president is not only asking everyone to be fear-less, but suggesting that fear-lessness is the key to solving the crisis.


The suggestion that there is something that could potentially be feared is sometimes enough to cause fear. If I'm walking in the dark and someone says "Don't be afraid of all the snakes in here," my reaction is more likely to be "There are snakes in here?!?!" than "Oh O.K., nothing to fear."
10.13.2008 12:29pm
Houston Lawyer:
On the other hand, I would like a clear recitation of the liberties that we American citizens have lost following 9-11. Most of the reaction to the Administrative's actions have been hysterical. Most of the alleged freedoms that are being shouted about being lost didn't exist during or prior to WWII and only affected non-citizens overseas.

The economic regulation that Obama, Pelosi and Ried may unleash will affect a great many of us directly and will not be easily overturned by the Supreme Court.
10.13.2008 12:31pm
Obvious (mail):
David P's final paragraph seems to me completely unaware of the rather habitual nature of political duplicity. Simply read biographies of FDR, Truman, LBJ, Nixon, etc. and it becomes clear that venal lying is a job requirement of the modern presidency. So there is NOTHING contradictory between telling the people to not fear (after all, the government is here to save them) while simultaneously working to propagate that fear, the better to enhance government power and authority. This is completely analogous to FDR's public statements to be "neutral in word, thought, and deed" concerning the European War (because the large majority of Americans did not want to fight in another European War) while simultaneously making promises to Churchill that he'd get us into the war as soon as he could.

Over the last two weeks, Robert Higgs has published many blog posts (History News Network) pointing out that none of the economic parameters support claims that loans are freezing up, credit is freezing, etc. Yet Paulson makes these claims to justify partial nationalization of the market, and the press simply unthinkingly repeats it. Fear is required to get the people to accept a massive increase in government power. If war is the health of the state, fear is its greatest friend.
10.13.2008 12:37pm
flyerhawk:
It should be noted that the Great Depression effectively ended in 1940 well before US entry into the war.

Obama, like FDR, is a pragmatist. He is not an ideologue and isn't going to govern like one.

If he pushes for greater regulation it is likely because the country wants that.
10.13.2008 12:51pm
Ken Arromdee:
And the "financial" liberties that were assumed to exist at the time the constitution were based on a small scale agrarian economic model that bears no relationship to today's economy.

The same can be said for civil liberties. They were assumed to exist at the time where "freedom of the press" meant printing a broadsheet, not the Internet or national newspapers, where freedom of religion had much different practical consequences than today given less diversity in religion and greater effect of religion in daily life, etc.
10.13.2008 1:00pm
SeaDrive:

I thought that almost all economists agree nowadays that the New Deal did nothing to stop the Great Depression, and, in fact, only worsened it.



And if the New Deal prolonged the economic depression but saved people from starvation, how is that reckoned?
10.13.2008 1:02pm
Left_Wing_Lock:
DP::: I think your analysis is off the mark. For the vast majority of people in this country (greater than 99.99%) FISA is totally irrelevant. We don't engage in terrorism, know any terrorists or ever plan to travel to the Middle East. In fact, I believe that the vast majority of Americans support reasonable governmental actions like FISA which help to catch terrorists. The reason that FISA is an issue is that the MSM and much of congress have decided to make this an issue as a means to weaken Bush (and strengthen themselves). On the other hand, things like the $700+ B bailout do affect the average American and they don't like it. Yet the MSM and a majority of congress are willing, on a few days notice, to increase America's debt by 10% on the hope that this bailout will work. I think the results on these two issues cannot be explained by looking at the average American. Rather, you have to look at what the controlling class (media/wall street/congress) want.
10.13.2008 1:03pm
Anon #319:

I think the whole premise here is seriously flawed, because it assumes that constitutional "financial liberties" exist that the government can infringe upon.

But civil liberties are by and large delineated in the constitution, whereas "financial" liberties are not -- so there is a huge difference there.


First, just because these rights have been read out of the constitution doesn't mean they weren't there. Lochner comes to mind. It's been a little while since I've read the Federalist papers, but I recall Hamilton discussing economic liberties.

Second, I am of the opinion that economic rights were the first rights that most of our European ancestors wrested away from their feudal lords. The landed lords became increasingly less wealthy, having to rely on taxing the wealth their former serfs were acquiring. Surrendering our economic rights gives us less power to bargain for the continuation or expansion of our civil rights. P.J. O'Rouke comes to my mind as someone who has written in this area.

Regarding David's post, I give FDR credit for resisting socialism as much as he did. As I recall, his programs became more socialist after that party began running serious candidates and earning a fair share of votes in the Presidental election. So maybe you could call that savinf the U.S. from ruin...But substantively I disagree, few of the New Deal programs actually contributed to the end of the depression.
10.13.2008 1:04pm
Tom in Houston (mail):
Um, the reason no one is currently questioning that is because we currently have a republican administration. This administration is clearly not averse to curtailing civil liberties based on fear or any other reason that works for them, but they do not like to curtail economic liberty for any reason if they can avoid it. All this blather about FDR and what an Obama administration would do is beside the point. If Obama wins and starts trying to use fear to nationalize private industries -- something that is as unlikely as Scalia and Thomas siding with a plaintiff in an equal protection clause case (woops, scratch that) -- then we'll talk.
10.13.2008 1:07pm
Richard Aubrey (mail):
I had a teacher in high school who said that FDR prevented a revolution. Whether or not the New Deal was working in any sense is secondary to the fact that many thought someone was In Charge who was on their side. So they elected to wait.
There had been a good deal of ructions in Europe within the adult life span, say, from the end of WW I, of many of the folks who were adults during the Depression. Few of the riots and would-be revolutions ended happily and many were strenuous and dangerous and killed a lot of people. Americans wouldn't have gone into the streets in any large numbers with those examples in front of them unless things were not only really bad, but obviously hopeless.
FDR could have peddled a solution heavy in snake oil and possibly have managed until things were righted in the usual way, war and catastrophe.
Still, there are guys around today who remember their dad's first WPA paycheck and buying food with it, clothes with the second, and rent with the third. Hard to tell them it was all wrong.
10.13.2008 1:08pm
Anderson (mail):
Still, there are guys around today who remember their dad's first WPA paycheck and buying food with it, clothes with the second, and rent with the third. Hard to tell them it was all wrong.

Well said.
10.13.2008 1:18pm
paul lukasiak (mail):
The same can be said for civil liberties. They were assumed to exist at the time where "freedom of the press" meant printing a broadsheet, not the Internet or national newspapers, where freedom of religion had much different practical consequences than today given less diversity in religion and greater effect of religion in daily life, etc.

Freedom of the press is a bad example, because the intent of the first amendment is not impacted by the nature of the media. And changes in what is covered under "religious freedom" have far less to do with changes in religion, and almost everything to do with changes in our idea of what the "religious freedom" clause means.

A more apt comparison would be to the US's role in the world, and its emergence as a military "superpower" -- I mean, the Framers didn't even want there to be a standing federal Army, and worded the constitution to prevent the creation of one.
10.13.2008 1:22pm
Esquivel (mail):
It amuses me that this event and the potentially disastrous regulation that will come out of it so closely follow Naomi Klein's disgrace of a book... it's funny to see the precise opposite of her point proven so conclusively and so soon. Of course, that doesn't make the regulation ok, and she'll spin it a different way, but at least it's satisfying in a small way to me that she so thoroughly embarassed herself.
10.13.2008 1:28pm
paul lukasiak (mail):
First, just because these rights have been read out of the constitution doesn't mean they weren't there.

other than the "due process" and "just compensation" clauses found in the fifth amendment (neither of which have been "read out" of the constitution except by amendment -- i.e. income taxes), can you provide some text in the document that says these rights existed -- especially in ways that override the enumerated Constitutional power of the government to regulate interstate commerce?

IMHO, its that "interstate (and international) commerce" clause that nullifies any argument of infringement upon assumed "economic rights", because (as I've noted earlier) the behaviors that are likely to be restricted as a result of "fear" in the current crises all far well within the boundaries of that clause.
10.13.2008 1:36pm
Dilan Esper (mail) (www):
Professor Post's post is good. I would add one other thing to this.

One of the reasons economic liberties (which I, by the way, despite my liberal politics, believe SHOULD get more constitutional protection than they do now) are seen as lower on the totem pole probably has to do with the bad facts of some of the big cases. A lot of the economic liberties caselaw concerns things like child labor laws, minimum wage and maximum hour laws, etc.

Nowadays, we sometimes see some much more sympathetic economic liberties cases, such as black hair braiding businesses who want to escape silly cosmetology and barber regulations. But I don't think too many people (even people who think cases like Lochner were rightly decided) can muster much sympathy for a sweatshop owner.
10.13.2008 1:41pm
Obvious (mail):
Dilan, whether or not you can muster much sympathy for a sweatshop owner should be related to what alternative options sweat shop workers have. Don't be too harsh unless you're willing to offer them all better jobs. Sweatshop workers in India, I'm told, have young girls working long hours for low wages making shoes. What they used to do was rent their bodies for even less.

Flyerhawk: "If he pushes for greater regulation it is likely because the country wants that." The country, back in the day, wanted chattel slavery. I certainly hope that Civil War thing wasn't premature. (But of course, "countries" don't want things. Countries are made up of millions of people, some of whom are willing to take work on certain conditions, and other people who want to legally prevent them from doing so, typically to bolster a privileged position of their own.)
10.13.2008 1:57pm
pmorem (mail):
IMHO, its that "interstate (and international) commerce" clause that nullifies any argument of infringement upon assumed "economic rights", because (as I've noted earlier) the behaviors that are likely to be restricted as a result of "fear" in the current crises all far well within the boundaries of that clause.

Paul, you've made a pretty solid case that there really isn't much protection for economic freedom, at least not from your camp. This does not fill me with warm fuzzy feelings. That people believe as you do demonstrates very clearly how dire the danger is.

The opposite of economic freedom is DPRK. You probably don't believe that. That's fine. You own your intellectual integrity, or lack thereof.

Some may say this is over the top...

What was the marginal tax rate under FDR again?
10.13.2008 1:59pm
Pyrrhus (mail) (www):
Here is what David Post said:

"I am fairly certain that the vast majority of people in this country think FDR and the New Deal saved the U.S. from ruin, transformed the country in a fundamentally good way, and laid the groundwork for 75+ (we should be so lucky to get that +) years of unprecedented prosperity."

Here is how the New Deal has been defended in the comments.

1) FDR saved the country by not doing something worse. (Anderson)

2) The New Deal saved people from starvation during the depression. (SeaDrive)

3) It gave people confidence that somebody was trying to do something. (JB)

4) It prevented socialist/communist revolution. (numerous commenters)

All of these points are well taken. But none of them provide any justification for a continuation of the New Deal policies beyond the Great Depression itself. Nor do they justify David Post's contention that the New Deal somehow "laid the groundwork" for the prosperity that followed it.

In a certain sense, everything that comes chronologically before something "lays the groundwork" for it. But we should be clear that arguing that the New Deal allowed the economy to grow faster over a period of half a century and arguing that the New Deal prevented the economy from collapsing at a particular moment in time are two entirely different contentions.
10.13.2008 2:04pm
Dilan Esper (mail) (www):
Dilan, whether or not you can muster much sympathy for a sweatshop owner should be related to what alternative options sweat shop workers have. Don't be too harsh unless you're willing to offer them all better jobs. Sweatshop workers in India, I'm told, have young girls working long hours for low wages making shoes. What they used to do was rent their bodies for even less.

Obvious, the issue isn't what I think. I was offering an explanation for why people don't value economic liberties as they do civil liberties. If the economic liberty being asserted is the right to pay your workers a tiny wage and work them 60 hours a week, very few people are going to sympathize.

I am not going to get into a debate with you about low wage workers. Suffice to say (and apropos of Krugman winning the Nobel Prize today, because he has written some nice columns on this), emperically, these sorts of workplace regulations, while certainly impinging somewhat on the freedom to contract, have not led to the parade of horribles (unemployment, throwing service firms into bankruptcy) that many of their critics have predicted. That, of course, does not necessarily mean they are constitutional, but, again, might have something to do with why they are popular (which goes back to my point about why economic liberty arguments may not be so popular).
10.13.2008 2:08pm
J. F. Thomas (mail):
But none of them provide any justification for a continuation of the New Deal policies beyond the Great Depression itself.

Well no. But WWII justified even more draconian economic regulation than the Great Depression warranted. And those policies made the U.S. the most powerful nation, economically and militarily, on the face of the earth, while practically every other major combatant emerged from the war broke and broken--both militarily and economically.

The U.S. rebuilt Europe and Japan after the war and responded to the growing Soviet threat. That would have been impossible with the economic freedom you so desperately crave.

If you want economic freedom, their are plenty of communities scattered throughout the middle of the country that practice what you preach. I really don't think you really want to become Amish though. Seriously, that is what economic freedom really means, because to have the economic freedom you are advocating we need to return to a world where the corporation does not exist and major infrastructure projects do not get funded.

When this country started building railroads, the economic policies that this website is so enamored of became obsolete. We traded economic freedom for the convenience of being able to travel from coast to coast in less than three months.
10.13.2008 2:18pm
Nunzio:
FDR was a pragmatist during the Depression and WWII (remember the camps for the Japanese Americans).

W. is no FDR but wire-tapping and Gitmo were pragmatists manuevers. Most Americans aren't bothered by them.
10.13.2008 2:31pm
Andy C.:

And if the New Deal prolonged the economic depression but saved people from starvation, how is that reckoned?

Did the New Deal save people from starvation, or did it help cause hunger in the first place? Didn't FDR slaughter millions of animals, spill millions of gallons of milk, and plow up millions of acres of arable farmland in order to raise prices for the farmers who voted for him?
10.13.2008 2:34pm
SeaDrive:

Did the New Deal save people from starvation, or did it help cause hunger in the first place?


Having been misunderstood twice, I'll clarify. My point was that an analysis of the depression based on macro-econometric statistics may be woefully incomplete.
10.13.2008 2:53pm
occasional lurker:
I think David's right that people are more concerned about government infringement of "civil liberties" than government infringement of "economic liberties."

[Even though, as some have noted, there weren't really very many people opposed to the PATRIOT Act when it was enacted -- the relatively few were relatively vocal. AND the PATRIOT Act dealt heavy blows to financial privacy -- reporting requirements that had earlier been defeated by a bipartisan left-right coalition (the infamous "Know Your Customer" stuff), expanded financial surveillance. Personally, I wish everyone cared more about financial privacy so that anonymous digital payment schemes could flourish. But social conservatives tend to oppose such things. ]

Part of this is transparency/accountability. Much of the government activity in this sector is highly visible and hard to hide. In contrast to covert surveillance or wiretapping or classified watch lists or torture.

But also, the public perception of who the villains are. On VC and other conservative sites, it seems de rigeur to blame the government for the economic crisis. Among the general populace, the primary villains are predatory mortgage lenders, greedy investment bankers, undercapitalized speculators -- the whole "shadow banking system."

For the people I know, whether retirees, small contractors (painting, electrical, you name it), the unemployed, or employed folks worrying about being laid off, no one sees the government as the big problem here. They don't have much confidence in the government as the solution either, but that's a different issue.

Constitutional rights and liberties are (state action) generally about protecting the people from the government. So here, when the government is framed as trying to solve a problem on behalf of the people that was caused by the private sector, it makes sense that there would be less concern.

Also, much regulation impinging on economic liberty is state or local regulation. So then you have the federalism/"police power" issue. Whatever one might argue against national regulation, the states have a decent case for public health and safety regulation, including environmental regulation. And property taxes, and eminent domain, etc.

Is there a coherent overview/sketch of constitutionalizing economic liberties that isn't utopian libertarianism? Something that could be used as the intellectual framework for, say, a legal brief aimed at Chief Justice Roberts?
10.13.2008 3:02pm
Malvolio:
To (try to) answer the original question, people value civil liberties more highly than economic liberties because they directly enjoy exercising the former. A person likes to write a letter to the editor, regardless of whether the letter has any political effect or even whether anyone reads the letter; people like to practice their religions (for whatever reason); and so on.

By contrast, people only value their economic liberties instrumentally. Nobody wants to earn less than the minimum wage -- and if they don't grasp that their choices are a low-paying job and no job at all, will therefore support a minimum-wage law. Ditto for trade restrictions, workplace-safety rules, every other economic regulation: people only want the prosperity that economic freedom brings, not the freedom itself, and don't necessarily understand the connection.

As for FDR -- the Great Depression and the World War it caused taken together are pretty much the Worst Thing To Ever Happen. 15 years of misery for the whole world; countless millions tortured, raped, and killed; totalitarian dictatorships over a third the world for another 50 years.

So it is unconvincing, to say the least, that without FDR "it would have been worse." Really? Worse? Extraordinary claims need extraordinary proof, and there seems to be nothing here but wishful thinking.
10.13.2008 3:06pm
byomtov (mail):
No one who believes that the government exploited fears after 9/11 to strengthen its security powers is now saying that the government is exploiting financial crisis fears in order to justify taking control of credit markets. No one who thinks that government would use fear to curtail civil liberties seems to think that government would use fear to curtail economic liberties. Why not?

As I noted in the other thread this is two different questions. One compares 9/11 with the financial crisis. The other is hypothetical.

The premise of the second, hypothetical, question:

No one who thinks that government would use fear to curtail civil liberties seems to think that government would use fear to curtail economic liberties. Why not?

seems to me to be plain wrong. I think plenty of people believe the govt would use fear to curtail both types of liberties. Whether the concrete cases of 9/11 and the current crisis are good examples is a different matter.
10.13.2008 3:12pm
24AheadDotCom (mail) (www):
Caring about "financial liberties" isn't exactly at the top of my list, but perhaps that's not what this is all about. I'm sure most visitors here are open-minded enough to fairly evaluate the claims made at various pages at this site. AJ is a showman, but that doesn't mean he isn't right about some things.
10.13.2008 3:19pm
Dilan Esper (mail) (www):
By contrast, people only value their economic liberties instrumentally. Nobody wants to earn less than the minimum wage -- and if they don't grasp that their choices are a low-paying job and no job at all, will therefore support a minimum-wage law. Ditto for trade restrictions, workplace-safety rules, every other economic regulation: people only want the prosperity that economic freedom brings, not the freedom itself, and don't necessarily understand the connection.

I think you have moved the ball forward, though I would suggest that one reason people don't perceive that connection is because it is a lot more tenuous than conservatives and libertarians claim it is. Minimum wages, for all sorts of reasons, don't necessarily lead to greater unemployment (the only circumstance in which they would necessarily do so is in a state of perfect competition, which does not describe the actual labor market). As for workplace regulations, again, the cost-benefit calculations are a lot more complicated than a simple assumption that greater regulation = greater unemployment or less prosperity.

So American workers don't see the cost of these regulations precisely because we have had them for many years and they do not seem to have had the effects that were posited by libertarians and conservatives. So they don't see the urgency of the economic liberty claims.

Again, the smart conservatives and libertarians know this, which is why the Institute for Justice is litigating business licensing cases (where the claims are MUCH more sympathetic) rather than workplace regulation cases.
10.13.2008 3:23pm
Fub:
therut wrote at 10.13.2008 9:54am:
I think you are on to somethng. I have thought this for a long time. I think it also has to do with schools not teaching ecomonic liberty. I was just telling my mother the same thing Sunday. People are afraid to be FREE. To be FREE on is free to fail and loose everything. Very few people anymore can stand Freedom. Sad really. And it all started with terrible Presidency of FDR. My nemesis. Even his statue is PC----they removed the cigarette. ...
In 1932, before FDR was elected, Louisiana governor Huey "Kingfish" Long signed a bill banning cotton planting in the state. The legislature thought cotton prices were too low, and the purpose of the ban was to raise them.

So, at least in Louisiana, abominable and stupid government economic policies didn't start with FDR.
10.13.2008 3:38pm
hattio1:
Malvolio states;

As for FDR -- the Great Depression and the World War it caused taken together are pretty much the Worst Thing To Ever Happen. 15 years of misery for the whole world; countless millions tortured, raped, and killed; totalitarian dictatorships over a third the world for another 50 years.

So it is unconvincing, to say the least, that without FDR "it would have been worse." Really? Worse? Extraordinary claims need extraordinary proof, and there seems to be nothing here but wishful thinking.


Are you really stating that the Great Depression caused WWII, and then, in the very next paragraph stating that extraordinary claims need extraordinary proof? Do you not see the disconnect there? How about starting with proving for us that the Great Depression DID cause WWII.
10.13.2008 3:55pm
juris imprudent (mail):
But also, the public perception of who the villains are.

Yes, of course, people need a scapegoat. If there isn't a real world one, we invent one. Which is good enough when all that matters is perception. Shouldn't we aspire to be a bit better than that?
10.13.2008 4:07pm
juris imprudent (mail):
dilan: Minimum wages, for all sorts of reasons, don't necessarily lead to greater unemployment

Care to see what happens if the minimum wage is set at say $50/hr? The minimum wage doesn't have the theoretical impact because it is low enough not to impact a significant segment of the labor market. It is a mostly psychological (perceptual) rather than effectual (i.e. "living wage") factor.
10.13.2008 4:16pm
Dilan Esper (mail) (www):
Care to see what happens if the minimum wage is set at say $50/hr?

That's a silly point, given that libertarians and conservatives often criticize any minimum wage, not just ones at $50 per hour, and the due process arguments in the Lochner era certainly were that any minimum wage infringed on the liberty to contract.

As I said, whatever you want to say about $50 per hour, the argument that ANY minimum wage is unconstitutional is not one that people find a lot of sympathy with.
10.13.2008 4:28pm
PDXLawyer (mail):
Is part of the reason the idea that political liberties are much closer to a zero-sum game than economic liberties?

An Evil Dictator, by depriving most Americans of their right to free political speech, can maintain perpetual party (and personal) dominance over the Government. This is, from his point of view, a good thing, because power taken out of the hands of the people ends up in his hands.

On the other hand, by nationalizing banks and the like, ED gains some resources (ownership of government run banks) only at he cost of giving up other resources (tax revenue from private banks). Whether this is a good deal for ED depends on whether he gains more than he gives up.

If you value economic liberty very much, you probably also think that ED loses more power than he gains in the long run by curtailing it. I think most current and prospective government officials, left and right, in the US ascribe to this view (though leftists may think the effect will be small).

In modern times, there is little danger that economic liberty will be curtailed for its own sake by a power-hungry government. The government would haveto be run by a complete ignoramus to try that. The real danger is that economic liberty will be curtailed as a byproduct of pursuing other goals (like "doing something," or punishing evil bankers, or rewarding political supporters).

Maybe this is just the inverse of Malvolio's point. Governments (or, more accurately, government officials) value political power (and distrust citizen's political liberty) as a per se matter. In the economic sphere, governments have no per se interest in depriving individuals of liberty.
10.13.2008 4:30pm
Whining is really hard work:
Hattio, the Great Depression helped to dry up American loans to Weimar Germany. That in turn helped to further destabilize Germany and aid the rise of Hitler vs the ineffectual Weimar government. Is that good enough for you? Look up the reparation agreements and American loans to Germany as one cause of WWII...
10.13.2008 5:23pm
Jay Myers:

"I am fairly certain that the vast majority of people in this country think FDR and the New Deal saved the U.S. from ruin, transformed the country in a fundamentally good way, and laid the groundwork for 75+ (we should be so lucky to get that +) years of unprecedented prosperity."

We can get another 75 years of prosperity if we completely destroy the infrastructure and industrial base of all the other industrialized nations. That's what happened to every other country during WWII. The US by contrast ended the war with massive industrial capacity that could be turned over to civilian commercial activity making the goods that the entire world needed but couldn't supply for themselves.

That advantage, and not FDR's boneheaded economic experiments or "draconian economic regulation" as J.F. Thomas calls it, is what lead to the extraordinary high level of American prosperity in the post-war period. Even Britain, which was never invaded and thus was relatively better off than most other industrialized nations, wasn't able to abolish rationing until 1954.

Not only did FDR's policies cause more harm than good, even if they had "saved the US" that wouldn't necessarily make them right. FDR and the Nazis came to power at about the same time and Germany was in far worse economic shape than the US ever was. Despite this, the German economy was out of its depression in just a few years. Does that mean we should adopt the Nazis' policies because they work?
10.13.2008 5:23pm
J. F. Thomas (mail):
Despite this, the German economy was out of its depression in just a few years. Does that mean we should adopt the Nazis' policies because they work?

And exactly what policies would those have been. You claim that FDR's economic policies (massive public works, protectionism, jobs programs, social spending) caused more harm than good and apparently blame him for making the depression worse. Yet, in an apparent attempt to demonstrate how bad FDR screwed things up, you cite Germany under the Nazis as recovering more quickly than the U.S. Yet how did Germany manage more quickly? They adopted the exact same measures, on steroids, that the U.S. did. They built the autobahn, invested in other infrastructure, expanded their military.

All your German example shows is that FDR's spending programs weren't aggressive enough.
10.13.2008 6:08pm
Whining is really hard work:
Jay, enabling consumption demand was a bigger Depression solution that raised the standard for America and many other countries well after WWII. I think that is the Keynesian solution? Can't remember from econ classes. Nixon had a quote about it as well, saying that we are all tied to that system in some respect.

I think it also points to the total failure of Communism as it never tries to enable consumption.
10.13.2008 6:09pm
Jeff K.:
Rappaport is at USD not UCSD.
10.13.2008 6:36pm
JFred (mail):
Being free to lose everything can do permanent damage to children.

----

FDR did not end the Depression. He raised taxes and prices, instead. See this report from UCLA.
10.13.2008 7:42pm
jpe (mail):
A lot of the economic liberties caselaw concerns things like child labor laws, minimum wage and maximum hour laws, etc.


That's the correct answer. No one is clamoring for the right to work in a factory for sub-minimum wage. Stronger: no reasonable person would value a right to market transaction if they get screwed in the deal (that's the idea underlying statutory protections suppression of economic freedom and doctrines like unconscionability). Nothing complicated about it.
10.13.2008 8:57pm
Grizzle Griz (mail) (www):
I don't see how there is a difference between civil liberties and economic liberties, though there may be a distinction. A civil liberty, by most measures promulgated by civil-libertarians, is any activity one can undertake in the state of nature without violating the liberty of another. Thus, playing the violin on a street corner for spare change is a civil liberty. So is playing the violin on the street corner to express oneself. The fact that the first amendment only protects the latter does nothing to change this analysis. It's just an indictment on the theory that enumerating our liberties changes their nature.
10.13.2008 9:21pm
Anderson (mail):
Re: the "oh noes!!" $50/hr minimum wage, isn't the anti-minimum argument that such a hike would make no difference?

Workers have more to spend, but higher wages result in higher prices, for a washout?

It would be an interesting experiment in applied economics to try it, tho first we would have to conquer the world -- er, spread democracy -- so that we can raise the wage in the Philippines and China too.
10.13.2008 10:31pm
Doc W (mail):
So--people worry less about economic liberty than civil liberty (accepting for the sake of argument that economic liberty is anything other than civil liberty) because they think FDR's policies saved the country. This is just another example of how government intervention in the market causes problems that get blamed on the market and become the rationale for further government intervention, etc. We get the Fed in 1913, and after 16 years its monetary meddling gives us the crash. That becomes Hoover's rationale for massive meddling with prices and wages, which gives us a depression, which becomes FDR's rationale for raising Hoover's interventionism to the nth power, which prolongs the depression. And government propaganda pumped into kids' heads in government schools is that we needed FDR's policies to save the country. Cripes.
10.13.2008 10:50pm
TGGP (mail) (www):
One of my favorite Catallarchy posts explains why many libertarians have the reverse order of priorities.
10.13.2008 11:33pm
juris_imprudent (mail):
Dilan-

I beg to differ about what impact the minimum wage has. It has little effect now because it is not significantly above what is likely the clearing price for unskilled labor (depending on the specific locale). Arbitrarily raising it to a price well above what unskilled labor is "worth" would have a very different impact. I read that your point wasn't so much about the constitutionality, but about the practical impact, and thus my challenge.
10.14.2008 12:01am
David Warner:
"Over the last two weeks, Robert Higgs has published many blog posts (History News Network) pointing out that none of the economic parameters support claims that loans are freezing up, credit is freezing, etc. Yet Paulson makes these claims to justify partial nationalization of the market, and the press simply unthinkingly repeats it. Fear is required to get the people to accept a massive increase in government power. If war is the health of the state, fear is its greatest friend."

I have a stupid question for any economists hanging around. If I'm running a little short of Busch in my double-wide and payday is three days away, I run down to the corner loan shark who'll kindly charge me a mere 700 billion basis points to tide me over. Credit hasn't dried up - the good times flow on.

Why is TED spread of 400 basis points such a big deal then?
10.14.2008 12:05am
David Warner:
Economic liberties are undervalued since all the smart kids these days grew up playing SimCity and Civ.
10.14.2008 12:06am
David Warner:
Doesn't history suggest that civil liberties flow from the securing of economic liberties?

Dilan,

"Again, the smart conservatives and libertarians know this, which is why the Institute for Justice is litigating business licensing cases (where the claims are MUCH more sympathetic) rather than workplace regulation cases."

Good point. But isn't there bigger game afoot these days than work rules?
10.14.2008 12:09am