There’s no time to waste.
Nov 4, 2013, Vol. 19, No. 08 • By JAY COST
This was an abject failure. By the time the Supreme Court invalidated the NIRA, the justices were doing the president a favor. Businesses were cheating on the codes left and right, to the extent that they participated in them at all. The effect of the AAA was more pernicious. It rested above all upon an economic fallacy, that limiting production would help the country recover from the Depression. Beyond that, it brought unprecedented government intrusion into previously private matters. In Wickard v. Filburn (1942), for instance, the government brought suit against Roscoe Filburn for growing wheat for private consumption, and the Supreme Court ruled with the feds. Worst of all, the AAA degenerated into gross payouts to the Southern plantation class, at that point one of the most important Democratic client groups. They used the cash to buy farm machinery and then fire the black sharecroppers who worked on their land. This, in turn, forced a generation-long migration into the cities, and facilitated the urban crisis of the 1960s.
The experience of this First New Deal helped prove a point that economic conservatives know instinctively: Government does a bad job of managing the economy. The experts are not as knowledgeable as they think they are; it is impossible for them to anticipate all of the various ways their interference will affect society, for good and for ill. For instance, who in the Department of Agriculture could have predicted that the AAA would contribute to an urban crisis in Northern cities some 30 years later? Additionally, the idea that experts can be insulated from politics is illusory. When bureaucrats in the Agriculture Department complained about the inequity of AAA subsidies, they learned the hard way that they were not as removed from Democratic politics as they had liked to think. FDR needed the backing of the Southern Democrats who ran the congressional committees, and the price of admission was support for the wealthy plantation class at the expense of the poor. So he had agriculture secretary Henry Wallace sack the bureaucrats who made a stink.
It was the failure of the First New Deal that brought about the rights-oriented Second New Deal, and with it Social Security, the National Labor Relations Act guaranteeing labor unions the right to organize, and eventually the Fair Labor Standards Act providing for a federal minimum wage. Liberalism shifted from attempting to manage the economy directly toward supplying the downtrodden with tools to fight their own battles. This is why the left remembers the New Deal so fondly. It is not for the quasi-fascist “Blue Eagle” campaign of the NIRA or the AAA’s requirement that millions of baby pigs be slaughtered. Those were failed policies that ultimately led to a change of tactics and the eventual triumph of Social Security, labor rights, and a minimum wage. When LBJ sought to complete FDR’s work, he did not go house to house to make sure nobody was growing wheat in the backyard; instead, he created Medicare, federal aid to education, and public television.
On the surface, Obamacare appears to fit into this tradition. That is certainly how the president frames it, proudly trumpeting all of the people who now have access to health care thanks to federal efforts. But dig a little deeper, and it emerges that Obamacare has much in common with the failed efforts of the original New Dealers to organize vast segments of the economy.
For almost 80 years, the federal government has been in the rights-producing business, especially as regards health care. The elderly, the indigent, low-income children, and veterans have all been brought under the federal umbrella. The people still on the outside looking in are primarily those who refuse to buy insurance or those for whom the economics of insurance cannot account. Insurance is a bet between insured and insurer made amidst uncertainty about when and whether calamity will strike. People with preexisting conditions cannot qualify for insurance for the same reason that a person whose house is burning down cannot get homeowners’ insurance: The calamity is not in doubt.
Rather than provide the uninsurable with separate access to health care—such as veterans enjoy, for instance—Obamacare seeks to fit this square peg into a round hole. People who cannot logically be incorporated into the economics of insurance are nevertheless forced into it. In requiring this, Obamacare behaves in effect much like the AAA or the NIRA. To make these people eligible for insurance, the federal government must manage the intimate details of the health insurance industry, and by extension all of American health care. Dollar for dollar, this has meant a heavier hand than ever envisioned by the New Dealers in the early 1930s.
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