In the annals of disastrous liberal economic policies, Franklin Roosevelt’s Agricultural Adjustment Act, which paid landowners not to grow crops, ranks very high. It violated what David Henderson calls “Pillar of Economic Wisdom #9: The only way to increase a nation’s real income is to increase its real output.” Deliberately reducing output, as Roosevelt did on this and other occasions, is profoundly stupid. Henderson explains:
The government’s goal was to reduce output and thus raise prices of crops. This would, no doubt, help farmers [although qua landowners, not qua farmers: more on that anon]. But it hurt people generally. In an era of low production and consumption, you don’t make people in general better off by reducing production and consumption.
But the general harm fell on one group of Americans with special viciousness:
[T]here was one unintended, but totally predictable, consequence of the so-called “allotment payments” to farmers not to grow: they would have no more use for sharecroppers. So sharecroppers, who were mainly in the South and who were already in bad shape, suddenly found themselves out of work.
The Roosevelt administration tried sending a portion of the allotment checks, where appropriate, to sharecroppers, a policy which led to open rebellion among Democrats in Congress. The sharecroppers were nearly all black, and white Democrats saw no reason why they should share in the booty. So Roosevelt quickly ordered his bureaucrats to back down:
Roosevelt, with his entire legislative agenda suddenly at risk through defections by Southern Democrats who controlled the Agriculture, Appropriations, and Rules committees, ordered Secretary [of Agriculture] Wallace and the AAA to surrender. …
Section 7 was “reinterpreted” so that no more allotment checks would go to sharecroppers directly, and the planters were left with what was deemed a “moral obligation” not to evict their tenants. Over the next year, the growers acted on that moral obligation by evicting more than 700,000 Southern tenant farmers and their families, with many ending up homeless and on general relief.
The above quote is from Richard Parker’s biography of John Kenneth Galbraith, who worked in the Department of Agriculture as a young man. In his memoirs, Galbraith recalled the devastation that Roosevelt’s policies wreaked on Southern sharecroppers:
[Roosevelt] did nothing that would disturb the great southern baronage in the Senate . . . for these men gave the President his prime congressional base. . . The New Deal remembered the forgotten man but not the truly forgotten. Looking back, I am astonished how little we were concerned.
I’m not. Liberalism has always been about power, not virtue or justice, and no one exemplifies this fact better than Franklin Roosevelt.
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