Mayoral Nostalgia for the New Deal

In an article published in the Wall Street Journal on March 8, 2010, Louise Radnofsky reports that the U.S. Conference of Mayors claims it “can put thousands to work on infrastructure projects, as was done in the 1930s.”

The mayors expressed a collective willingness to hire people on jobs that benefit their communities—provided, of course, that the costs of such projects are financed principally by taxpayers residing (and voting) in jurisdictions beyond city limits.

Mayor Robert Duffy of Rochester, NY, for example, opines that he will ba able to hire large numbers of his constituents to, in Ms. Radnofsky’s words, “repair roads, clean up graffiti and enhance sewers” – “much like”, according to Mr. Duffy, “the CCC [Civilian Conservation Corps] programs”. Other mayors justified their requests for more federal “stimulus” monies by drawing analogies to the New Deal’s Works Program Administration (WPA), which indeed employed hundreds of thousands of people forced out of work by the Great Depression.

Attentive students of the 1930s know better than to expect taxpayer-financed jobs to be anything more than a palliative for today’s “Great Recession”, which currently has stranded about 14 million Americans on the unemployment rolls.

First, contra Mayor Duffy, the CCC was a program that moved unemployed young men (but not women) from inner cities into camps located in the fresh-air environments of the Southeast and the Far West to blaze trails and plant trees on federally owned land. Among other things, the CCC’s built the Appalachian Trail, but it did not clean up graffiti or repair sewers.

Second, and what is more important, the WPA was known at the time both for its inefficiency (the word “boondoggle” was coined to describe it) and for the heavy-handed political influence brought to bear on its beneficiaries. To keep their jobs, many recipients of WPA largesse were required to contribute some of their wages to the Democratic Party or to campaign for local Democratic Party candidates.

Modern scholarship on the New Deal points to the conclusion that the policy initiatives of FDR’s administration prolonged the Great Depression and deepened its economic consequences far more so than if free-market forces had been allowed to run their course. America’s mayors and its president should pay heed to those lessons.

Government cannot “create” jobs except by taxing or borrowing from the private sector and, hence, destroying wealth and reducing employment opportunities there. If federal, state and local policy-makers do not soon wake up to that simple fact of economic life, the American experiment with liberty is at an end.

William F. Shughart II is a Distinguished Research Advisor and Senior Fellow at the Independent Institute, the J. Fish Smith Professor in Public Choice at Utah State University, past President of the Public Choice Society as well as the Southern Economic Association, and editor of the Independent book, Taxing Choice.
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