From the Roaring Twenties to the bleating nineteen thirties the American economy entered like a lion and left like a lamb–the Great Depression was at hand. In addition to the infamous market crashes, unemployment rose to almost a quarter of the total population, international trade slowed, deflation abounded, banks failed at an alarming rate, and bleak shantytowns huddled on the outskirts of the gray American cityscape. One song that made up the incidental music of the lean days of the Great Depression was the ditty "Brother Can You Spare a Dime."
Once I built a railroad, I made it run, made it race against time.
Once I built a railroad; now it's done. Brother, can you spare a dime?
Once I built a tower, up to the sun, brick, and rivet, and lime;
Once I built a tower, now it's done. Brother, can you spare a dime?
Much to the chagrin of the wait-and-see economists, President Franklin Delano Roosevelt did spare a dime in the form of New Deal policies, which would–for good or ill–transform the American economic landscape for years to come. Some experts argue FDR was right on the money while others argue his policies exacerbated an already dire situation. In The Forgotten Man Amity Shales presents an argument against the policies and philosophies of the New Deal that she claims negatively affected the "forgotten man" in America during the Great Depression.
Who is the "forgotten man" one might ask? It depends who you ask. Yale Professor William Graham Sumner coined the "forgotten man" as "C" who is excluded from the equation where person "A" and "B" attempt to politically fix the suffering of "X." Franklin Delano Roosevelt arranged things differently when he looked at the problem of the "forgotten man." FDR and the New Deal philosophy assigned the "forgotten man" the variable "X." So the "forgotten man" is either "C" who gets left out of socio-economic reforms or the suffering citizen "X." Shales tends to side with Professor Sumner who argued that "C" is the true "forgotten man" and addends that "A," "B," "C," and "X" could equally benefit exponentially by simply bolstering free markets.
The question of who the "forgotten man" was in America’s greatest hour of need was critical for the administrations that formed policy to counteract the effects of the Great Depression. History played out that "X" was the individual that the government should intervene for and intervene it did. Shales writes this intervention although morally heroic came with costs that ultimately outlasted its benefit.
The big question about the American depression is not whether war with Germany or Japan ended it. It is why the Depression lasted until that war. From 1929 to 1940, from Hoover to Roosevelt, government intervention helped to make the Depression Great.
Amity Shales is not alone in her approach to New Deal-style governance. UCLA economists Harold L. Cole and Lee E. Ohanian who researched the effects of the New Deal concluded that not only did the policies impede economic recovery but stalled the recovery for seven years. In a UCLA press release in 2004 Cole commented on the economic interventionism of the 1930s.
The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes. Ironically, our work shows that the recovery would have been very rapid had the government not intervened.
The Forgotten Man is an important political and historical work. It is a timely rumination for voters in the current economic climate and should be on the read list for every informed American citizen before they take to the voting booths in November.
Her book is extremely Socratic as well. By examining government intervention policies it inspires the reader to question the role of the ethereal force of free markets and its parameters. Does free markets mean doing away with government assistance involvement in the form bailouts, subsidies, and corporate pork as well as other involvement in the form of regulation, basically arbitrary wage standardization, and price controls that can unwittingly desynchronize prices with market activity? In other words how "free" should free markets be? Not only are these some of the great questions that arise from The Forgotten Man they will be excellent feud for thought for economists and politicians in the coming years.
Amity Shales is a fellow at the Council on Foreign Relations and a columnist at the financial news outlet Bloomberg. She also has contributed to the Wall Street Journal, the Financial Times, and The New Yorker. Her other works include The Greedy Hand: How Taxes Drive and What to Do About It and Germany: The Empire Within.Powered by Sidelines