Amity Shlaes - "Don't repeat errors of New Deal"

"The historical model that the Democrats are choosing to hold up as they ponder our financial crisis isn't Harry Truman's Fair Deal or Lyndon Johnson's Great Society. It is Franklin D. Roosevelt's New Deal. At least three economic reforms under discussion now were also central in the New Deal package. Trouble is, these reforms didn't necessarily work well when they were first tried - and some failed outright.

Consider, for starters, a stimulus package. President-elect Obama has said that 'the one thing I can say with certainty is that we are going to need a stimulus package passed either before or after my inauguration...'

Last summer saw the failure of just such a stimulus - President Bush's. University of Michigan economists found that, instead of spending as proposed, consumers saved their money. But the original stimuli of the New Deal also failed...

Even more than specific New Deal projects, Obama and his fellow Democrats are evoking Roosevelt's leadership style. In school, we learned that it was FDR's personality that pulled the country through the Depression. If only, the suggestion is, we can have a strong enough leader, Americans will also find recovery again. We need some 'bold persistent experimentation' of the Roosevelt variety.

There is evidence, however, that FDR's very strength was a negative, because he used it to give himself a license to do true experimenting. In his second inaugural address, FDR said that he sought 'an instrument of unimagined power for the establishment of a morally better world.'

No one knew what it meant, and markets were terrified. Everyone feared FDR would regulate or prosecute them next. Businesses refused to invest. The 1930s' second half proved frustrating for the country: The economy was always recovering but never quite recovered. The Dow didn't get back to its 1929 level until the mid-'50s.

These facts are important to bear in mind. The New Deal inspired. But it is the wrong deal for the country, even now."