Some Amazon reviews critical of FDR's Folly

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Often, the one-star reviews at Amazon identify the ideological bullshit: either the book author's bullshit or the reviewer's. This case is clear: the book author is full of it.

Because reviews can come and go at Amazon, I have copied these selected reviews from here.

Powell Deserves an F in Economics

November 29, 2007

By watzizname "watzizname" (Murfreesboro, Tennessee)

If Mr. Powell had submitted this as a paper in one of the college economics classes I taught, he would have received an F, for incompetent economic analysis and intellectual dishonesty. Mr. Powell picks his facts carefully, citing only those for which he can argue (almost always fallaciously) that FDR was wrong. Listing all his economic whoppers would become tiresome, but here are a few:

On page 41: "The fundamental fallacy in the high-wages doctrine was that it didn't increase the total purchasing power." BAD ECONOMIC ANALYSIS (BEA) Powell cleverly confuses instantaneous total purchasing power with total purchasing power over time. The same dollar (or $10, or $100) can make many times that many purchases over the period of a month or a year, with no change in the total instantaneous purchasing power. If Alice pays Brian $10 for something, Brian can spend that $10, as can those he pays it to, and so on. Economists call this the MULTIPLIER EFFECT, a term Powell never mentions.

On page 83, after admitting that only about 5% of Americans paid income tax during the Depression (carefully omitting that it was because wages weren't taxed) Powell says "these taxes surely discouraged employers from making investments." (BEA) Excess plant capacity and lack of demand, not taxes, were the major reasons for lack of investment. Even with zero taxes, who will invest in more plant capacity when their existing plant is operating at 20 or 25% of capacity and producing all the product they can sell?

On page 89: "Each dollar taxed meant a working person had a dollar less to spend on his or her own." INTELLECTUAL DISHONESTY (ID) Powell knew (he mentioned it on page 83) that wages weren't taxed.

On page 96: "(again, not counting jobs destroyed by taxes that reduced private sector spending)" (BEA) Powell makes much of the theoretical possibility, but never cites even one job destroyed by taxes. It is, of course, difficult to obtain an accurate count of those job losses that didn't happen, and Powell prefers to ignore the jobs created by the government spending of that tax money.

On page 41: "In any case, public works projects tended to require people with construction skills, so they weren't an effective way to help poor people" (BEA) Skilled workers were needed IN ADDITION TO, NOT INSTEAD OF common laborers, which generally outnumbered any of the skilled trades.

On page 161: "business investment remained at historic lows throughout the Great Depression." (ID) Production was increasing almost thruout FDR's presidency, but very little new investment was needed until the production facilities approached capacity.

On page 179: [Social Security] "supposedly would involve contributions by employers. In truth, the entire payroll tax would come out of the pockets of working people, because the tax would be part of the cost of providing a job; and if the money weren't going to the government, it would be available for employee compensation." (BEA & ID) Powell understandably does not specify which employers would actually have paid that money to employees, were it not for FICA {Social Security) tax. One suspects the list would be embarrassingly short.

On page 183: "The advocates of Social Security must have realized that private retirement plans would offer a better deal," (ID) No doubt they would have OFFERED a better deal, but experience (in Chile and England, for example) indicates that it is unlikely that they would have DELIVERED a better deal. And every laundry detergent cleans better than any of the others.

on page 254: [Social Security] is a pay-as-you-go system without an investment fund yielding returns to help cover future obligations." (ID) An out-and-out lie. SS is not fully advance funded, like the New York State Employees' Retirement System, but unlike pay-as-you-go, it does include an investment fund sufficient to meet ALL obligations for nearly four years and growing. (Source: OASDI Trustees Report, 2007)

On page 187: "Labor unions were generally based on force and violence . . . ." (ID) A blatantly unfair, untrue, and prejudicial statement. While it is true that a minority of unions descended to unjustified force or violence, most of the violence was started by company goons or strikebreakers. And calling elected union officers 'bosses' is similarly prejudicial and generally, false.

On page 200: "General Motors car production plunged from 50,000 in December, 1935 fo 125 during the first week of February, 1936." (ID) Comparing dissimilar items, a month's production to a week's. This technique could have come straight from Darrell Huff's How to Lie With Statistics It would have been quite proper to say 'from an average of 12,500 a week in December,' but impressive as that 99% reduction is, Powell chose to make it seem four times as big. Not only dishonest, but downright silly.

On page 203: "UAW picketers fought with nonunion workers, and some people were stabbed." (ID) The 'some people' that were stabbed must have been union members, because had they been the strikebreakers, you can be sure Powell would have said so very clearly.

On page 245: "Personal income tax rates hit 91 percent . . . ." (ID) Deceptively, Powell fails to mention that this was the highest tax bracket, not the average tax rate, which was nowhere near 91%.

On page 273: "Maintaining wages above market levels is guaranteed to maintain unemployment at high levels." (BEA & ID) A 'guarantee' not worth the paper it is written on. Since the enactment of minimum wage laws, there have been many periods of full employment. The 'market levels' Powell envisions are the result of a monopsony market in which the sellers (workers) would be price-takers, forced to take whatever wages are offered or be unemployed and face starvation.

On a lighter note, on page 226: "October 19, 1937--which came to be called 'Black Tuesday'" I googled "Black Tuesday" to be sure there weren't two, but all the entries referred to October 29, 1929.

The above is but a small sampling of the lies, distortions, and bad economic analysis in Mr. Powell's book. FDR did indeed do some bad things, such as the blatantly racist internment of American citizens of Japanese ancestry during WWII, and permitting the refusal to allow Jewish refugees from Germany to enter the United States, but he also did a great many more good things; the credit for bringing the nation out of the Great Depression is deservedly his, and Mr. Powell's mean-spirited hatchet job doesn't deserve even one star.

watziznaym@gmail.com

extremist politics masquerading as history

February 5, 2004

By "geaurilla" (chicago)

This is not history but political advocacy-it is an exercise in the selective use of historical information to support a set of radical (in this case, libertarian) economic policy prescriptions for today. These include deep tax cuts and the elimination of labor unions, minimum wage laws, and the Federal Reserve. In order to make his case, the author freely indulges in distortions, omissions, and perversions of the historical data of the 1930s. The constraints of this forum allow for the mention of only a few examples.

First-a distortion. The author has framed the economic situation in a very misleading way. Between 1929 and 1933, real GNP declined 35 percent and industrial production fell by more than half. It is a simple mathematical fact that if a parameter falls by 35 percent, it must increase by 54 percent to reach the previous level. The author does not recognize-or does not want the reader to recognize-that this kind of growth takes time. Instead, in a facile comparison, he claims that, but for the New Deal, the Great Depression could have been ended much more quickly, citing the fact that the United States recovered from the brief 1920 depression in about a year. (I suggest the fans of this book do a little math and see how long it takes the economy, given some realistic growth rate, to grow by 54%.)

Second-some omissions. One would never know from this book such basic facts about the period as: (1) the actual recovery from the Great Depression began as soon as Roosevelt took office, (2) the economy grew at a rapid rate from 1933-1937 and from 1938 to 1941, and (3) FDR's actions were crucial for the turnaround.

From 1933 to 1937 real GNP grew at an average rate of 8% per year and between 1938 and 1941 it grew over 10% per year-impressive growth rates by any standard. The crucial event in the initial recovery was Roosevelt's decision to take the country off the gold standard and the subsequent depreciation of the dollar. This move, which had been fiercely resisted by the Hoover administration, provided a basis for an increase in the money supply as gold flowed into the United States. This recovery was interrupted when the Federal Reserve abruptly contracted the money supply in 1937. The author describes this contraction and notes its adverse effects but immediately confuses the issue by including other "possible" contributors-of course these are New Deal programs. The author then summarizes the issues in his title: "How Did New Deal Policies Cause the Depression of 1938?" In fact, the 1938 depression was caused by the sharp contraction of the money supply, not FDR and the New Deal, and the recovery from this depression occurred once the money supply resumed its rapid growth.

Third-two perversions. The author rejects the consensus among serious historians (and not just among "liberal" historians) that Roosevelt's decisive actions ended the banking panic-instead, he suggests that not all the reopened banks were fully solvent (an irrelevant point) and that therefore, Roosevelt's actions amounted to a fraud perpetrated on the public. The author's discussion of federal deposit insurance is equally perverse. Once again, there is little disagreement that the introduction of deposit insurance (which FDR opposed) helped restore confidence in the banking system, as even the author admits in passing. And, in fact, the author cannot show how this feature in any way "prolonged" the depression. So instead, he cites the contribution of deposit insurance to the savings and loan crisis fifty years later.

Finally, as if the book were not bad enough, the publisher, not content with the author's assertion that FDR and the New Deal prolonged the depression, has completely inverted the truth by claiming, on the book jacket, that the New Deal "deepened the Great Depression" and then, in what is, perhaps, the crowning touch, placing on the cover of a book devoted to the flaying of FDR and his economic policies a photo of a relief line that was taken during the first half of the Hoover presidency.

Although this book contains a great deal of information on the New Deal-and there is much to criticize about the New Deal-it has presented it in such a distorted way that it does little to advance our understanding of the depression, of FDR, of the New Deal, of the problems faced by policy makers, or of the era in general. Judging from the reviews on this site, the book's many shortcomings will be of little or no concern to its intended audience since most readers-even the self-proclaimed history-buffs-appear to think that the value of a history book is determined by how well it supports one's political position. As such, this book provides a sharp reminder that, at least when it comes to the writing of American history, extremism in defense of liberty is a vice that is still very much with us.

If the New Deal is liberal and socialist,...

April 13, 2005

By samsausage (SC)

then how does Powell explain the Economy Act of 1933, which reduced federal employees'(including Congress) salaries by $100 million and veterans' pensions by $400 million? The Roosevelt Administration actually CUT federal spending and reduced the bureaucracy!

What about repealing Prohibition to bring in additional revenue?

What about Roosevelt resisting efforts by Southern and Western agrarian Senators to devalue the money supply and enact the free coinage of silver?

What about the Revenue Bill of 1938, which repealed an onerous undistributed-profits tax?

Much of the New Deal aided business. The Emergency Banking Act restricted unsound banking practices, just as the Securities Exchange Act did for the securities market. The Home Owners Loan Act bailed out the lender as well as the loan recipient.

It's funny how modern conservatives forget that FDR faced opposition from the left as well as the right. Evidently Mr. Powell is not familiar with Huey Long (he of the "Share Our Wealth" clubs).

When pseudo-academics like Powell apply terms like "liberal" and "conservative" to past events and people without providing some sort of historical context, the result is a distortion like FDR's Folly.

And why lay all the blame at FDR's feet? Congress authored and enacted much of the so-called New Deal legislation attributed to Roosevelt.

This is bad history. I never trust an author who reveals his agenda so transparently, whether it is excessively harsh or excessively fawning.