Obama's War on Recovery

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Obama came to power with the idea of repeating the storybook-view of FDR’s presidency and how he saved us from the Great Depression. Had he and his friends read the history more carefully, he would have seen how FDR did nothing of the sort. His policies waged war on recovery, perpetuating the problem he said he was solving.

And there is another respect in which the official history obscures the real history: it is believed that FDR unseated the capitalist class from their seats of power, and turned public policy toward the common man. In fact, the reality then looked like the reality now. The bailouts, the monetary inflation, the crazed spending, and the regulations ended up cartelizing the economy on behalf of powerful and well-connected industrial giants.

It was an interesting moment in the ideological history of the 20th century. By 1934, the left that had supported FDR was suddenly confronted with a difficult fact. All the legislation that the administration had passed was clearly helping the class of citizens they had long despised: the biggest of the big businesses. They were given power by the National Industrial Recovery Act and they had the president’s ear.

A massive debate ensued within their journals and publications. People like John T. Flynn and Henry Hazlitt drew attention to the contradiction and turned on FDR, labeling him a fascist. Eventually, some of the old progressives came to realize that their highest ideals — fairness, freedom, opportunity for all, and service of the common man rather than the elites — are fulfilled within the free-market society.

But the rest of the left — the overwhelmingly large part of it — took their lead from the New Deal and adjusted their agenda. They came to terms with the corporate state and big government.

It’s something of a puzzle, isn’t it? I really think it comes down to this: leftists, in their heart of hearts, hate capitalism more than they fear the total state. They can put up with anything so long as people are not free to make as much money as they want in the service of others. The resulting inequality in wealth distribution in this system, and the manner in which the free society raises up a class of natural aristocrats, is morally intolerable to them. They prefer to risk the creation of the totalitarian society rather than put their core hatreds on the back burner.

This seems to be happening again with their savior Obama. He came to power amidst the hosannas of the left, who saw in him the capacity to achieve all their dreams, whatever they were. But all he has done is extend the corporate fascist policies of George Bush — the same way that FDR extended the corporate fascist policies of Hoover.

The current challenge concerns the $165 million in bonuses that A.I.G. is paying its top employees, even while it has received $180 billion in taxpayer money, and even while the recipients of that money have been the largest banking firms such as Goldman Sachs and Deutsche Bank. The populist anger is rising. The Obama administration is protesting, but claims that its hands are tied. You might think the left would bolt, and some surely have.

But there are always second thoughts on the left. We are starting to actually hear defenses of A.I.G.’s practices. Surely the company can’t just willy-nilly violate contracts. This would “put American business on a worse slippery slope than it already is,” writes Andrew Ross Sorkin of the New York Times. And who is better to manage A.I.G. out of its current woes than the smartest of the smart at the company itself? We “may need to keep some of these brainiacs in their seats,” he writes. You can’t do that by denying the employees — who have to suffer by having to “read about yourself in the paper every day” — their right to multi-millon-dollar bonuses. So, “despite how offensive and painful it might be,” we have to “honor the contracts.”

Reliably, then, the bulk of the left will support the policies of Obama, no matter how much they violate the supposed principles of leftist theory. The same is true of other policies, such as the bailout of the car companies, the banks, and the coming bailout of big labor. You can see how anti-elitist socialist rhetoric is easily turned to corporate fascist practice. The contradiction is more than obvious. But it’s not difficult to follow once you understand the core principle that anything is tolerated by the left so long as it is not free-market capitalism.

FDR was indeed the predecessor of Obama, as his White House eventually became one big open conspiracy of big banks, big corporations, and big unions working together to fleece the American taxpayer. They ate from the corpse of a once-productive economic structure as it grew ever thinner, making sure that they got theirs while everyone else suffered, all to the cheers of Keynesian-style economists, who have always believed that inflation offered the cure for all ills.

If you doubt that this is where we are headed, consider that the rise in wholesale prices reported on Tuesday was interpreted as great news. After all, this means that the evil of falling prices is being kept at bay. These people are actually hoping to create inflation! This they would consider a job well done!

Nothing harms the common person more than a policy of inflation. It steals people blind, and encourages the worst-possible financial practices by the individual and the family. It is a policy of wholesale robbery to benefit the elites, and it’s been going on systematically for 100 years. And yet you can scour the journals of the left and see very few complaints.

Some people will bail from the left in light of the evidence that Obama is serving the cause of regimentation and the power elite, and some of those will come around to the political view that is the only genuine alternative to the total state: libertarianism. But for the most part, I think we can safely predict that the Obama experience will do one other thing that the FDR experience did: totally corrupt its partisans.

Books by Lew Rockwell

Llewellyn H. Rockwell, Jr. [send him mail] is founder and president of the Ludwig von Mises Institute in Auburn, Alabama, editor of LewRockwell.com, and author, most recently, of The Left, The Right, and The State.

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