The New Deal Was a Good Idea, We Should Try It This Time

On the blogs, in the newspapers, in restaurants, there has been so much discussion of the New Deal lately that the chatter could seem like that at a historians’ convention. Conservatives express panic about socialism and argue that the New Deal experience proved government intervention into the economy does not work. Liberals talk of the New Deal as if it had been a panacea. By contrast, in the 1930s the opposition to Franklin Roosevelt’s New Deal came from the Left as well as the Right. A Popular Front of politicized citizens ranging from liberals to communists complained that programs were inadequate both in reach and funding.

Today, by contrast, criticism of the New Deal comes almost exclusively from the Right. Its most trenchant charge is that the New Deal didn’t end the Great Depression. Only the Second World War did so, by providing a military rationale for massive state spending.

This conclusion is quite correct, and not at all original, but the conservatives are wrong about the reasons, and it is time for those on the Left—or those who think of themselves as part of the coalition crafted by Barack Obama’s campaign—to rethink the New Deal’s limitations. The need seems particularly urgent because there is a strong possibility that those inadequacies will be repeated. And these shortcomings would by no means simply create flaws in solid programs, the inevitable half-loaf we must often accept. They can be deadly because they could undermine the very long-term goals we seek.

Two kinds of shortcomings characterized much New Deal legislation: The first was inadequate funding. Many modern state programs, whether created by executive order or by legislation, are never funded to the extent necessary, and, as a result, we never know if they would have worked or not. This problem is not confined to public aid programs but appears equally in regulatory policies that lack adequate inspection or enforcement personnel and the necessary independence of regulators. Hundreds of initiatives fall into this category, from drug treatment to pollution control to foreign aid to public education to record maintenance to transportation to the War on Poverty.

Second, particularly common to welfare-state programs—in the larger sense of welfare that includes health care, education, and attempts to alleviate poverty—is a two-tier structure that provides the least for those who need the most. These tiers are often counter-intentional, counter-intuitive, and irrational, because they produce one level of generous and honorable benefits for those least in need and another that is stingy and disreputable for those whose need is greatest. This inequality is constructed in several ways:

• the neediest are often excluded altogether from the better programs;

• programs provide more benefits to the prosperous than to the poor;

• payments to the relatively prosperous are disguised, sometimes intentionally...