The Magazine

A Rendezvous with Disaster

Obamacare is a nightmare because today’s progressives have forgotten what FDR learned

Jan 27, 2014, Vol. 19, No. 19 • By ARTHUR HERMAN and JOHN YOO
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The best wartime example was rubber. Roosevelt had decided that supplying enough rubber for the army’s vehicles required rationing the existing supply, including scrap rubber—at one point he even contemplated confiscating all the tires from civilian vehicles. Instead of hitting the minimum target of one million tons, the government’s rubber drive barely reached a third of that number. At one point the program’s director, Harold Ickes, was reduced to stealing rubber mats from the White House corridors. 

The real way to secure strategic materials, Knudsen and his colleagues saw, wasn’t redistributing what was already available, but giving the private sector the incentive to produce more. As a result, companies banded together to create an entirely new synthetic rubber industry; companies working with new technologies like electric arc melting furnaces almost tripled prewar production of steel; and aluminum supplies, which in 1942 had been the despair of government planners, grew so fast thanks to new plants and new companies like Reynolds that just two years later an official confessed, “We have so much aluminum it’s beginning to run out of our ears.” 

In fact, once Knudsen and Roosevelt’s other “dollar a year men” convinced the president and the Army to take a hands-off approach and let production build itself through the profit motive, they unleashed the most concentrated expansion of industrial production in U.S. history. War production saw a 300 percent increase from 1940 to 1944 and jumped from 2 percent of total economic output in 1940 to 40 percent in 1943—the climax of the wartime buildup—while raw materials like steel and copper saw an average 60 percent increase over the same period. 

This despite the fact that war recruitment and the draft took almost 11 million able-bodied men out of the country’s labor force. But those numbers were more than made up by millions of people voluntarily leaving farms and rural areas and (in the case of women) their homes to find more lucrative work in the factories and shipyards of wartime America—all without a single government official telling them where to go. 

By 1944, half of all war materiel produced in the world was coming out of American factories, plants, and shipyards. By this time, it was clear the Allies were going to win, and the problem was no longer speeding up war production, but slowing it down and then shutting it off at war’s end. What had come into being was precisely the kind of “spontaneous order” that free-market advocates celebrate but big government fans scoff at. As Colonel Orval Cook, production division head at Wright Field, summed it up: “Best results are secured .  .  . where there is a minimum of domination by the Army—and a maximum of flexibility for the private companies involved.” 

Building the arsenal of democracy should have been a relatively easy task for government. Yet it wasn’t. A return to free-market principles was essential to get the job done with the necessary speed. Overhauling the health care system is harder, for several reasons.  

 

For one thing, the government’s involvement in wartime mobilization is obviously constitutional. All agree that Washington has the power to manage the economy in order to successfully wage war. Obamacare’s constitutionality, by contrast, is contentious on multiple counts. Even a Supreme Court that upheld the Affordable Care Act in NFIB v. Sebelius recognized that Washington’s authority to “regulate commerce among the several states” did not allow it to impose mandatory, universal health insurance. The Court also agreed that Congress could not use its power to “promote the general welfare” to force states to expand their Medicaid programs against their wishes. It was only Chief Justice John Roberts’s implausible reading of the taxing power to permit penalizing individuals who don’t buy health insurance that saved Obama’s signature program. 

And more constitutional defects are apparent. The Supreme Court has already accepted a challenge by corporations whose owners refuse to provide their employees health insurance that covers products and services to which they have religious objections. As the Obama administration continues improvising to stop the ACA from going under, it will make ever more extravagant demands upon the Constitution.

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