The Clash Of Two Worldviews: Statism And Liberty

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Posted: Mar 18, 2020 10:12 AM
The Clash Of Two Worldviews: Statism And Liberty

Source: AP Photo/Sakchai Lalit

Despite the Roosevelt Administration’s effort, coercion, and propaganda, by 1934 the National Recovery Administration (NRA) was losing ground. Many smaller businesses around the country, finding the NRA intolerable, began defying its regulations, ignoring fines levied against them, and filing complaints. Ultimately, in May 1935, the Supreme Court unanimously found the NRA unconstitutional.[1] The Lucifer’s tongue and pitchfork of the NRA, and that part of the Roosevelt Administration, was excommunicated. “Facts and circumstances have a logic that planners never seem to anticipate.”[2]

Even today we remain terribly belabored by some devastating legacies of the NRA and NIRA (National Industrial Recovery Act of 1933). Researchers and authors C. J. McNair and Richard Vangermeersch explain:

The NIRA, with its legacy embodied in the Blue Eagle, appears to be the most significant singular event shaping cost practices in the United States. It was the only time in documented history when government intervention in business practices went beyond regulating market transactions to interfering with the internal operations of the firm.[3] The impact of the NIRA on accounting remains today, embodied in the full cost model and the reporting practices it comprises. A legacy of Roosevelt’s New Deal, the full cost model and the cost-plus mentality it fostered continue to serve as an insidious but effective roadblock to change in management accounting.[4]

While many attempts of the Roosevelt Administration to grab power and destroy the rights of Americans were declared unconstitutional by the Supreme Court of the United States, much legislation, as well as many regulations and federal agencies, emerged driven by the New Deal. “In practice, many of [the New Deal’s] policies were redistributive, intended to help workers, farmers, and other sizeable groups. These policies raised real wages above productivity. The result was unemployment.”[5]

When wages are kept artificially high, unemployment lingers on until labor wages are adjusted appropriately.  The great Austrian economist Murray Rothbard explains that unemployment:

[N]eed only be temporary. The speedier the adjustment, the more fleeting will the unemployment be. Unemployment will progress beyond the “frictional” stage and become really severe and lasting only if wage rates are kept artificially high and are prevented from falling. If wage rates are kept above the free-market level that clears the demand for and supply of labor, laborers will remain permanently unemployed. The greater the degree of discrepancy, the more severe will the unemployment be.[6]

Unfortunately, the statism of the 1930s still lingers with us today.

[1] Marvin N. Olasky, 1987, Corporate Public Relations: A New Historical Perspective, (Hillsdale, NJ: LEA Publishers), pp. 75-77.

[2] Bill Murchison, May 10, 2011, “No National Curriculum, Thanks,” Townhall.com, [http://townhall.com/columnists/billmurchison/2011/05/10/no_national_curriculum,_thanks/page/full/].

[3] McNair and Vangermeersch published this writing in 1998 so it was prior to the Obama administration’s direct intervention into General Motors and GM’s shareholders.

[4] C.J. McNair and Richard Vangermeersch, 1998, Total Capacity Management: Optimizing at the Operational, Tactical, and Strategic Levels, (Boca Raton, FL: St Lucie Press, The IMA Foundation for Applied Research, Inc.), p. 8.

[5] Allan H. Meltzer, March 17, 2000, “Lessons from the Early History of the Federal Reserve,” (Presidential Address to International Atlantic Economic Society, Carnegie Mellon University and American Enterprise Institute: Munich, Germany), p. 9.

[6] Murray N. Rothbard, 2008 (originally published in 1963), America’s Great Depression, (Auburn, AL: Ludwig von Mises Institute), p. 14.