Thursday, June 17, 2010

The Gateway Drug

So, here we were, plugging right along. We had helped win the greatest war in the history of the world and were now a world power. Herbert Hoover was in office and despite the income taxation laws and other alarming changes to the Constitution, we were still a greatly productive, creative populace of self-sufficient, independent, proud Americans. There was nothing from which we couldn't recover, no obstacle we couldn't overcome. We valued our individuality, our independence as such, and our reliance on no one but ourselves for our livlihoods.

There are too many theories for what happened on Black Tuesday, or why, to get into them here. The point is that it happened. The market turned upside down, and our nation plunged into the greatest catastrophic economic depression it had ever seen. Jobs were lost at unmentionable rates, wealth disappeared into black holes, and poverty was suddenly a mainstream problem for America. There is no doubt something went awry.

Since every ill of the country is ALWAYS the fault of the President, it's no surprise that Hoover was promptly replaced in the following election by Franklin D. Roosevelt, who then was elected to five (!) consecutive terms (more on that later.) In his very first term, FDR, an aggressive liberal President, proposed and passed with the blessing of (a completely popularly elected and Democrat-controlled) Congress, a series of new government "solutions" to the Great Depression. These were collectively called The New Pyramid Scheme.

Did I say that? Oops, I must have been stream-of-consciousness writing. I meant to say The New Deal. Yep. What a deal. Here are some highlights:
  • The Social Security Act - we ALL know this one
  • Fair Labor Standards Act of 1938 - set maximum hours, minimum wage
  • Wagner Act - to promote labor unions
  • Works Progress Administration relief act - everyone gets a job, doing nothing. The first bailout!
  • FDIC - To make sure the government protects our money.
  • SEC - government regulates companies to prevent another crash
  • FHA - Federal housing regulation
Let's not forget the change from the Gold Standard to floating currency, in which the value of our money depends on expectations rather than hard metal.

OK, let's have a Reality Check. People were desperate, I'm sure. But let's look back again to how our nation was formed. This is REALLY important. We were a nation where you had freedom. Freedom to win, and freedom to LOSE! Being created equal has never meant that all will end up equal. It just means you have an equal shot.

The Founders never gave the Federal Governmment the right to regulate the economy this way. Many of the social programs could easily (and should) have been the right of each State to implement if necessary. In fact, many of the programs in the New Deal were struck down as unconstitutional by the Supreme Court. The big ones that have stuck to this day, such as Social Security, started off as optional. Now they are mandatory, an entitlement, and many people use them as their primary income source!

This is what FDR said when he accepted his nomination for President: “Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth… I pledge myself to a new deal for the American people. This is more than a political campaign. It is a call to arms."

Sounds familiar, doesn't it? It was the beginning of the "entitlement mentality" that plagues us to this day. "Distribution of national wealth?" Where does that wealth come from? It comes from the taxpayers. The taxpayers that until the 16th Amendment, didn't have to give up money from their own incomes. The problem, readers, is that not everyone voting was actually paying into the "national wealth," as is the same situation today. No wonder FDR got elected five times! So many people were getting "free" services that others paid for, hey, this really WAS a great deal! (Incidentally, that's why we have the 22nd Amendment, which sets term limits.)

The worst part is that no one is more inept at handling money than the government! Social Security? It's worse than a Madoff scheme! They take our money, put it in the fund, then borrow from it to spend on other things. We owe money to ourselves! Seriously? The money is safer in a 401K, even in a recession. If you're a GenXer or younger, don't think you'll see a penny of your Social Security when you hit retirement.

Government dependence as an entitlement changed the American way of life in ways no one could have foreseen. Our sense of independence and perseverance changed into a view of the government as a "fix-it-all" entity. Rather than get ourselves out of our own issues, we look for a handout. This has opened the doors for government controlled healthcare (Medicare, Medicaid, insurance regulation), various federal welfare programs, government bailouts of industry, and everything we are witnessing today.

The New Deal was the Gateway Drug...


  1. I've long wondered why there wasn't more anger amongst the 40 and under population over Social Security. It's long been obvious that it's a pack of cards, and that age group is going to be the first that's paid into it all their lives without seeing a dime of it in return upon retirement. THE GOVERNMENT IS STEALING THEIR RETIREMENT. Why hasn't there been more anger? Why is the younger generation the most supportive of the progressive wealth redistribution movement?

  2. From the Founding Fathers to the present, America with originally 13 States and now 55 + territories has gone through profound transformation and evolution and revolutions. Immigration, Industrial, Civil Rights etc. You mentioned all of them. I think that the proposal of the New Deal were intended for some good and to be some kind of medicine for what, in those days, were illness attacking our society and like some medicine the problem is that without proper use it turns into addiction. So the real problem is the ABUSE and lack of control that brings us to the present.

  3. An excellent point! Please keep the comments coming, as this is the kind of dialogue I am looking for. Seeing the problems in the nation, it was natural to think that some immediate relief was needed given the conditions at the time. This begs the question: could the Federal Government be trusted to terminate those solutions, once they were no longer needed? 80 years later we know the answer is a resounding NO. The Founders knew this inherently, which is why that Bill of Rights, especially the 10th Amendment, was such an important part of the Constitution. Much later, Ronald Reagan said, "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" The abuse was guaranteed the second we allowed their implementation at the Federal level.