“The Utopia of Damned Fools”

This is from an article on “The New Deal” written by H.L. Mencken in May, 1935 and published in A Mencken Chrestomathy [Vintage Books New York 1982: pages 424-25]. It discusses how the first application of Keynesian economics by the Roosevelt Administration came about even before The General Theory had been written. The article begins with excerpts from two articles in The New Republic and The Nation describing how FDR’s closest advisor, Harry Hopkins, in collaboration with three others, came up with the idea of massive increases in public spending to bring the Depression to an end. Although tentative in approaching Roosevelt about such a massive spending program without even having done the slightest bit of analysis, he expected Roosevelt to be reluctant about spending such immense amounts of money, all the more so since Roosevelt had committed himself to balancing the budget. That was not, however, how it went.

[Hopkins] expected to be told to develop the idea and come back with a fuller outline. He still expected that when he left the White House that evening. But it so happened that he had caught the New Deal Messiah in one of his periods of infatuation with the spending art, and Hopkins literally woke up the next morning to discover that Roosevelt without further ado had proclaimed the CWA* in effect.

It is now more than two years later. Mencken is here looking back on the fantastic amounts of spending and the effect such spending has had.

The money began to pour out on November 16, 1933, to the tune of a deafening hullabaloo. By December 1 more than 1,000,000 were on the CWA pay roll; by January, 1934, the number reached 4,100,000. Press agents in eight-hour shifts worked day and night to tell a panting country what it was all about. The Depression, it was explained, was being given a series of adroit and fatal blows, above, below and athwart the belt. In six months there would be no more unemployment, the wheels of industry would be spinning, and the More Abundant Life would be on us. Brains had at last conquered the fear of fear.

What actually happened belongs to history. By the opening of Spring Hopkins had got rid of his billion, and the whole thing had blown up with a bang. More people were out of work than ever before. The wheels of industry resolutely refused to spin. The More Abundant Life continued to linger over the sky line. There ensued a pause for taking breath, and then another stupendous assault was launched upon the taxpayer. This time the amount demanded was $4,880,000,000. It is now in hand, and plans are under way to lay it out where it will do the most good in next year’s campaign.

Go back to the clippings and read them again. Consider well what they say. Four preposterous nonentities, all of them professional uplifters, returning from a junket at the taxpayer’s expense, sit in a smoking car munching peanuts and talking shop. Their sole business in life is spending other people’s money. In the past they have always had to put in four-fifths of their time cadging it, but now the New Deal has admitted them to the vaults of the public treasury, and just beyond the public treasury, shackled in a gigantic lemon-squeezer worked by steam, groans the taxpayer. They feel their oats, and are busting with ideals. For them, at least, the More Abundant Life has surely come.

Suddenly one of them, biting down hard on a peanut, has an inspiration. He leapt to his feet exultant, palpitating like a crusader shinning up the walls of Antioch. How, now, comrade, have you bitten into a worm? Nay, gents, I have thought of a good one, a swell one, the damndest you will ever heard tell of. Why not put everyone to work? Why not shovel it out in a really Large Way. Why higgle and temporize? We won’t be here forever, and when we are gone we’ll be gone a long while.

But the Leader? Wasn’t he babbling again, only the other day, of balancing the budget? Isn’t it a fact that he shows some sign of wobbling of late – that the flop of the NRA has given him to think? Well, we can only try. We have fetched him before, and maybe we can fetch him again. So the train reaches Washington, the porter gets his tip from the taxpayer’s pocket, and the next day the four brethren meet to figure out the details. But they never get further than a few scratches, for The Leader is in one of his intuitive moods, and his Christian Science smile is in high gear. Say no more, Harry, it is done! The next morning the money begins to gush and billow out of the Treasury. Six months later a billion is gone, and plans are under way to collar five times as much more.

Such is government by the Brain Trust. Such is the fate of the taxpayer under a Planned Economy. Such is the Utopia of Damned Fools.

We never seem to learn a thing. Not from the experience of the 1930s, the 1970’s, Japan in the 1990’s and everywhere across the world since the GFC. Keynesian economics is junk science; no public sector stimulus has ever brought an economy in recession into recovery. It would only be about one economist in a hundred who even knew an economy is not driven forward by aggregate demand, never mind could explain why the stimulus, either now or then, didn’t work. Indeed, there are probably still many who would argue the stimulus had been a great success.
* The CWA was the Civil Works Administration, the stimulus program put in place by FDR in 1933 that worked as well as Obama’s stimulus program after it was put in place three-quarters of a century later.

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