Exam: chapters 9-14 Flashcards
(88 cards)
- Explain why President Hoover was frustrated with Franklin Roosevelt’s campaign strategy in 1932 and his behavior after he won.
Hoover was frustrated with Franklin Roosevelt’s campaign strategy because it involved a lot of harsh criticism of the former president even though FDR recycled a lot of his ideas in his presidency. Hoover referred to him as “chameleon on plaid”. Also, FDR sent out very mixed messages in his campaigning and ended up doing a lot of the opposite when he took office. FDR crushed Hoover in the Electoral College and wouldn’t let him work in the 5 month interim between election and inauguration.
- Why do historians see FDR as more of a “pragmatic tinkerer” than a left-winger?
Historians see FDR as more of a “pragmatic tinkerer” than a left-winger because he was willing to try almost anything to get the country out of the Great Depression, not just what was “allowed” by left wingers. Instead New Dealers (FDR) tinkered as practically (pragmatically) as they could; taking action and experimenting over theorizing.
- Summarize the basic ideas behind the early (or First) New Deal.
Goal of Relief, Recovery, and Reform
The First New Deal got the U.S. on a looser gold standard, shored up the banking system, spurred the stock market, and provided the public with some nutritional and psychological relief.
- Backed workers' rights, compelled, but used voluntarism to get the companies on board - Less long-term impact - fought crime - Provided some relief to farmers through the Agricultural Adjustment Act - Government weeded out the weak; paid farmers to destroy their crops and slaughter livestock to raise commodity prices
- Explain why the New Deal wasn’t progressive on racial, civil rights issues for the most part. Assess why Social Security excluded servants and migrant workers.
The New Deal excluded sharecroppers and tenant farmers from farming relief, perhaps to discriminate against minorities. Also, it denied domestic servants (often minorities) the right to collective bargaining. Social security also was incidentally racist, though migrant workers were harder to track. FDR and congress went out of their way to marginalize Blacks and Mexicans to get Southern Democrats on board with the New Deal and keep Democrats united.
- As in Chapter 5, know the basics of the American political spectrum in relation to economics. Identify what’s meant by being on the Left or Right. Understand that most people view themselves as moderate and others who disagree as extreme.
Left (liberals): More gov. Intervention on behalf of workers and consumers- (Unlike communists) liberals and democratic socialists want most of the economy to stay in private hands, but also want the capitalist engine to distribute wealth throughout society
- redistribution of wealth
- safety net
- worker rights
Right (conservatives): Less gov. Intervention, regulation, and taxation of business (laissez-faire)-support moderate levels of socialism, like Social Security, roads/bridges, and K-12 public schools (unlike economic libertarians)
- free market
- corporate rights
- low taxes
1930s: democrats became more associated with the left (Hoover and FDR used a lot of government intervention) and republicans with the right
- Identify John Maynard Keynes and the ideas behind Keynesian economics (stimulus spending).
The New Deal’s technique for stimulating American capitalism drew on the counter-cyclical theories made by British economist, John Maynard Keynes. He predicted that the world economy would suffer from the Versailles Treaty indebting Germany. Keynesians argue that governments should spend in recessions to stimulate economic growth and create jobs while not raising taxes or cutting programs, and then collect tax receipts at normal rates later to pay off the debt when the economy rebounds. (short-term debt) According to the Keynesian school of thought, stimulus spending is worth it and provides a net gain because once the economy has turned around the government can well afford to pay off the debt.
- describe how a Keynesian would deal with the Financial Crisis and Great Recession of 2007
A Keynesian would deal with the Financial Crisis and Great Recession of 2007 by having the government spend money to stimulate the economy and create jobs. However, they would not raise taxes or cut programs.
-With the counter-cyclical option, the government goes into temporary debt by spending more
Contrast liberal, Keynesian “demand-side economics” with more conservative “supply-side” approaches like that of Friedrich Hayek and Milton Friedman.
Liberal, Keynesian “demand-side economics” increases government spending and employment and thereby increases demand for products and services. Most conservative, Keynesian “supply-side” approaches can involve cutting taxes for the wealthy and corporations in hope that more jobs will trickle down to the have-nots if money is in greater supply among the haves (Began with Ronald Reagan). Government spending v.s. tax cuts- both are forms of temporary government intervention to jump-start a stalled economy. Freidrich Hayek and Milton Friedman are two economists that believe that stimulus spending is counterproductive, though Friedman endorsed the tax-cut version of stimuli and thought that the government at least had a role via the Federal Reserve. Hayek thought governments should balance their budgets and interfere as little as possible with the natural capitalist process of creative destruction.
- Describe the basics of the American Recovery and Reinvestment Act of 2009 (2009-19 Stimulus Package). You don’t need to read the entire Wiki entry, but know the essentials of what it was about and where the money went (see Provisions).
The American Recovery and Reinvestment Act (ARRA) was a $831 billion stimulus package enacted by the 111th US Congress and signed into law by President Barack Obama in February 2009 in response to the Great Recession. The primary objective of this federal action was to save existing jobs and create new ones quickly. 35% of the package was devoted to tax incentives, 18% is for state and local fiscal relief, and the remaining 45% is allocated to federal spending programs (transportation, communication, etc.). It was a combination of the “demand-side economics” and “supply-side” techniques, with 63% stimulus spending (infrastructure, education, unemployment insurance, and renewable energy) and 37% (in the form of withholdings rather than rebate checks) middle-class tax cuts.
- Explain how FDR’s administration tried to jumpstart the economy during the early New Deal. How do their projects still impact us today?
FDR threw in with Keynes. The New Deal provided some direct relief, but mostly focused on creating jobs through a series of government-sponsored programs that put people to work. (road building, clearing trails through nation forests, construction, fighting forest fires, etc). They even hired artists. The WPA (Works Progress Administration) and the PWA (Public Works Administration) projects have boosted the economy to this day, attracting tourist dollars and providing electricity and flood control through the dams built. The WPA in particular has built many lasting buildings. The CWA (Civil Works Administration) put millions to work on construction projects. CCC (Civilian Conservation Corps) workers planted billions of trees and transitioned into the military after Pearl Harbor. FDR also created the TVA (Tennessee Valley Authority) to industrialize the southern economy- built a series of hydro dams on the Tennessee River that employed many, controlled flooding, brought power to the region, and helped to industrialize. Today, the costs of energy in that area are super cheap and attract automotive industries. The LCRA (Lower Colorado River Authority) provides water, flood management, electricity, and parks. The New Deal “workfare” provided work for families in need and created lasting infrastructure.
- Explain the main criticisms that FDR got from the left and right concerning his method of jumpstarting the economy.
Right-wing CCC critics compared it to Soviet-style socialism. They believed the worst workers ended up on the public crews and said that the WPA jobs were silly and pointless, created merely just to put people to work. Left-wing critics thought the work crews’ low wages hurt unions’ bargaining power. Also, some job-creating programs like the TVA (Tennessee Valley Authority) actually had a lot of downsides like damaging the environment and displacing people whose property flooded because of the dams they built.
Many traditionalists thought Roosevelt was destroying America’s proud tradition of free-market self-sufficiency (right). Leftists saw Roosevelt as a Wall Street lackey missing an opportunity for a real socialist revolution.
- Identify Huey Long and how he criticized FDR.
Louisiana Governor Huey “the Kingfish’’ Long was FDR’s most notorious leftist critic and a potential rival for the presidency. His Share Our Wealth program diverted oil company profits to building roads, bridges, charity hospitals, and schools in that mostly impoverished state. He never used the words socialism or communism, but just asked the poor majorities if they thought it was time to redistribute some oil wealth, couching his policies in Christian themes. He mocked FDR for still being on his mother’s allowance and if he hadn’t been assassinated in 1935, he may have challenged Roosevelt in a 1936 presidential race. Instead, FDR raised taxes on the wealthy to steal Long’s thunder.
- Identify Charles Coughlin and how he criticized FDR.
Father Charles Coughlin of Detroit, America’s first radio shock jock, managed to be on the left and right, criticizing the New Deal “socialist” cabinet as “Christ-killing Jews” while imploring FDR to nationalize the banks. He claimed to dislike socialism, but also favored the government taking over banks. Coughlin called on his viewers to form a new Christian Front party to support Nazism before radio stations canceled him.
- Identify Dr. Francis Townsend and how he criticized FDR.
Californian, Francis Townsend was a retired farmer and physician who advocated for a $200/month public pension system for retirees over sixty. FDR disliked the idea, thinking it verged on communism, but it was the basis for the Social Security system he reluctantly went along with. However, under Social Security each worker funds the system directly as they go with paycheck deductions.
- Describe how the New Deal changed after 1934. What were the most important legacies of the Second New Deal of 1934-38?
The New Deal changed with pressure from leftists; Roosevelt abandoned his earlier polite requests to industry for cooperation (volunteerism) and sided clearly with labor. The Second New Deal featured more lasting measures than the First: Social Security, right to collective bargaining for unions, minimum wage (Minimum Wage Act in 1938- 40C/hr), and federal housing assistance.
- Explain the origins of Social Security and why, despite its relative success, it poses challenges for future generations of Americans. Identify Frances Perkins and her role in Social Security legislation.
Social Security formed the basis of a new government “contract”. Roosevelt agreed to the idea if it was funded directly out of payrolls instead of its general fund. At first, it provided a modest retirement pension and short-term unemployment insurance. Used religious (Christian) ideals to back Social Security. It became a law in 1935 with dependents added in 1939, and cost-of-living adjustment for inflation in 1950. Dr. Townsend envisioned such a system in California, but the main architect of Social Security was Frances Perkins. She was the Secretary of Labor and contributed to many aspects of the New Deal and helped win labor’s support of FDR. Perkins was supported by Senator Wagner and Treasury Secretary Henry Morgenthau Jr.
Social Security has worked well so far and remains popular among most citizens, but demographic projections show it will no longer operate by the 2030s. The problem is that with Baby Boomers retiring and living longer than their parents’ generation, the ratio of retirees to workers paying into the system will grow to about 1:2. Americans will eventually need to either reduce benefits, raise taxes, or increase the age at which benefits kick in.
- Describe how the right to collective bargaining increased the power of labor unions.
Collective bargaining meant that management was legally obligated to sit down and negotiate with unions rather than simply firing, harassing, or killing strikers. Blue-collar workers had negotiating leverage to build on improvements in hours, pay, safety, and working conditions.
Describe how the federal government intervened in housing during the New Deal.
Mortgage foreclosures were significant during the Great Depression, with nearly half of mortgage holders in default or late on payments. Also, in the 1930s, the ratio of renters to owners was 2:3. Most mortgages were short-term and required down payments of over 50%. The government thought Americans would feel a greater stake in their country and capitalism as owners than renters, so it intervened in the economy to encourage buying.
- Homeowners Refinancing Act (1933)
- The Federal Housing Administration (1934), FHA (extreme racism and segregation policy)
- Made low-interest loans to qualified borrowers (white)
- Long-term mortgages with small down-payment
- Made homes more affordable-> transformed America’s geography and spurred growth in insurance, construction, retail, and real estate.
The New Deal government also refinanced distressed mortgages to tamp down the huge number losing their homes
- Identify FDR’s Court-Packing Scheme and the Switch in Time That Saved 9.
Because a lot of Judges (Louis Brandeis) were against the New Deal (deemed it unconstitutional), FDR threatened to pack the Court with more judges (one for each existing judge over 70 that refused to retire), all favorable to the New Deal. He claimed that the bigger court would lighten their workload. Though the Court-Packing Scheme was ridiculous, but FDR was cleverly focusing the public’s attention on the Court threatening to undo the New Deal. He reminded the Court that they were out of step with the times, regardless of the New Deal’s legalities. The Supreme Court backed off on its own. With the Court allowing New Deal liberalism to flourish and Social Security, journalists nicknamed its sudden change of heart “the switch in time to save nine”, meaning that it salvaged the traditional nine-judge Court. However, the saying is a little misleading because Judge Robers changed his mind about the New Deal before FDR’s scheme and Van Devanter retired after Congress restored full pensions. The court-packing bill died and even though FDR saved the New Deal, it exhausted his political capital. The Court confirmed the New Deal, but Roosevelt wouldn’t be able to get much more done.
- Identify the Roosevelt Recession of 1937. Explain how liberals and conservatives might interpret it differently and why it is difficult to draw helpful lessons from that recession. What would liberals and conservatives, respectively, cherry-pick and flush down the memory hole?
FDR pulled the plug on his New Deal public work projects to balance the budget, but it was too soon. He did not keep his foot on the Keynesian pedal long enough. It is difficult to draw helpful lessons from that recession because it more or less coincided with a 1935 tax hike in the upper bracket, from 63% to 77%-> showing lack of cash caused downturn (also in 1936-37 the Fed doubled bank reserve requirements-funds banks keep as vault cash, or on deposit at the Fed). It was also the first year that payrolls deducted taxes for Social Security. For conservative supply-siders, the Roosevelt Recession of 1937-38 shows that lack of cash among spenders (supply) caused by these taxes led to the downturn, with the capital needed for further recovery either taxed away or forced into hiding. FDR blamed the recession on the reduction in federal spending and authorized more stimuli. Liberals might blame the recession on the halt of stimulus spending too soon. Each side, conservative and liberal is correct, they selectively share what aligns with their general beliefs and flush the other reasoning down the memory hole.
- Analyze and critique the theory that stimulus spending doesn’t work — that only WWII lifted the U.S. out of the Great Depression.
- FDR heavily taxed rich during 2nd New Deal, discouraged innovation
- offset by steering money into industries through subsides (what US did after WWII)
- By saying that only WWII lifted the US out of the Great Depression to discredit the New Deal and stimulus spending you are ignoring that defense spending was government spending (it is proof that stimulus spending works). The federal budget escalated dramatically even as Congress pulled the plug on the CCC and WPA (You could think of WWII as Keynesian stimulus on steroids)
- The economy was growing before WWII due to government stimulus spending
- Evaluate the economic and diplomatic policies of the Western Allies (U.S., Britain, France) in the 1920s and ’30s. What were their attitudes toward trade and diplomacy?
In the late 1920s, nations reverted to protectionism instead of reaffirming open trade agreements (stalled global trade). The U.S., Britain, and Europe remained yoked together under tight monetary policy tied to the gold standard, inhibiting stimulus spending when the Depression set in. The US was diplomatically isolated and Wilson’s League of Nations never gained effective traction and didn’t grant itself the authority to intervene militarily/economically. Also, the US rejected the Versailles peace treaty and didn’t join the league of nations as America’s League opponents made a solid isolationist case that membership over-committed the US to intervene all over the world in conflicts that didn’t concern us. Also, the Western Allies followed a policy of appeasement which allowed aggressive nations like Japan and Germany to get away with more than they otherwise would have.
*Instead of trying to rebuild Germany after WWI they were punishing them by limiting their military, territory and forcing them to pay the debts of all the other countries involved.
- Evaluate Japan’s foreign policy in Asia in the 1920s and ’30s. Compare and contrast it with America’s Monroe Doctrine and Roosevelt Corollary and Britain’s historical pattern of industrial/naval buildup as described by Alfred T. Mahan.
The Japanese took advantage of Europe’s preoccupation and their alliance with Britain to expand their holdings in the Pacific. Japan was slamming shut the Open Door Policy that had kept China’s spoils evenly divided amongst Japan and the West since the late 19th century. Just as the US claimed all the Western Hemisphere as its sphere of influence starting in the 1820s, Japan now countered the American Monroe Doctrine and Roosevelt Corollary with the Greater East Asia Co-Prosperity Sphere. Translation: Japan was taking over Asia. They were following the same logic Alfred T. Mahan laid out for the US in the 1890s in terms of acquiring overseas territories (markets) and building a strong navy to fuel domestic industry. Mahan based his theories on Britain’s rise to maritime and naval prominence and the British model fit Japan best because it was also a small island country with few natural resources. Japan hoped to dominate the western Pacific economically with a superior navy. However, a big difference between Japan’s foreign policy and America’s Monroe Doctrine and Roosevelt Corollary is that Japan was a lot more aggressive.
- Recognize the fundamental challenges facing the Weimar Republic over the course of the 1920s and ’30s.
The Weimar Republic faced extremely high debts and other consequences from the Versailles treaty: War Guilt Clause (forced to take blame for WWI- along with their allies), military restrictions, forced to give up some of their land (west to France and east to the reconstituted country of Poland along with overseas colonies in the Pacific and Africa). The Allies embargoed (official ban on trade) Germany for another year-and-a-half, ostracizing them just when Western Allies should’ve been propping up the struggling democracy that ruled the country in the 1920s. The Weimar Republic struggled to get out from under the Versailles Treaty restrictions.- experienced hyperinflation in the early 1920s due to the German Mark’s devaluation, recovered briefly, and then sank into a depression that worsened the worldwide 1930s slowdown. The Weimar Republic had political problems as well. Its constitution muddled the relationship between the chancellors, presidents, and Reichstag (Parliament). It allowed leaders to rule without Parliament’s consent in an emergency but didn’t clearly define an emergency.