Since I recently finished the book, what I have consists primarily of thoughts I had while reading the last 100 pages or so of THE FORGOTTEN MAN. Since this is a non-fiction book, I prefer to have ‘discussions’ rather than have a review of the contents. Generally speaking, providing a rating of a non-fiction book seems impractical when critiques are more suitable.
But anyway…
After an economy falls apart – who is more suitable in rebuilding it; the government or the private sector? This is the question that Amity Shlaes explores in her book, THE FORGOTTEN MAN A NEW HISTORY OF THE GREAT DEPRESSION. The argument that Shlaes is proposing is that the governments interference in the economy actually prolonged the depression rather than rectify it.
After the economy fell apart and millions of people were without jobs, the US Government under the direction of President Roosevelt believed that the best remedy to this was to put people back to work. In order to do this, the government set up numerous agencies to help re-energize the work force. The Government also believed that another way to help with the economy was to regulate how businesses operated.
The US Government was learning how to deal with the economy through a series of experiments and by observing how other governments were dealing with similar problems. What the author inadvertently made clear was that there was no set procedure in how to pull the USA out of the Great Depression. Whether the private sector could have done it itself or whether the Government prolonged the Great Depression can only be argued in hindsight.
Shlaes presented several anecdotes where the government had overstepped it’s bounds in an effort to show how the government often acted as a hindrance. Although presented as an example as how the Governments programs worked against the economies natural growth – what it really showed was the governments inability to recognize it’s own limits.
I wouldn’t consider the New Deal necessarily wrong – the intention was certainly to correct a problem that hadn’t been encountered to such a degree in America. The largest issue with the New Deal was that the government – primarily Roosevelt – put way too much faith in it. Instead of adjusting to eliminating programs that weren’t going to work – the Government preferred instead to stand behind them, despite the economic destruction they were causing.
The Great Depression and the New Deal were both the results of inexperience – both in Government and in the economy. Before they happened, there was no “lesson” from a previous experience to learn from. Shlaes even notes how the US Government looked to both the Soviet Union and Fascist Italy for answers – the implication being that there was to prior event to look to.
Fear and hope were the primary motivations behind what the Government did – with no procedure to deal with such a problem, of course they’d run into problems – or become the very problem they were so diligently trying to avoid.
Either way, the book, albeit dry at times, was quite insightful.
Interestingly, the New Deal was largely a massive social experiment with varying degree’s of success and failure. The problem is that it essentially became the Government’s go-to blueprint in how to deal with a troubled economy. How numerous parts of it didn’t work is what needs to be examined – but rarely are and instead are just repeated, resulting in similar errors of the past.
Conflicting opinions in regards to how to handle the stock market crash and the subsequent recession – and what part the government should play in helping to alleviate the economic hardships is where I begin PART 2 of THE FORGOTTEN MAN book discussion.