An episode from State-education, New Deal

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    I am currently enrolled in an online undergraduate degree program in economics at Oregon State University. I am taking a 20th century U.S History class in which i recently engaged in an online debate regarding the New Deal. My initial post was very long so I will not re-post it in full. I will however post my teacher’s response which may be of interest to those of you in a similar situation. It is my intention for this thread that it not be about the New Deal, but more importantly about making effective historical analysis (with sound theory) in a class in which economic fallacies are endemic.

    My (original) post consisted of very basic points, discussing the issues raised in Professor Woods’ (what is with the Woods’s?) lecture. I focused a lot on compulsory association/ “exclusive representation” and the illegitimacy of the progressive notion of “freedom,” (I called it economic fascism). I also recommended Henry Hazlitt, as you’ll see.

    Oh, and the textbook is written by Eric Foner, who its my understanding is a marxist.

    Here is here response: Henry Hazlitt is a conservative economist. Your contention that “Min wage laws and price controls impoverish society, as do high taxes and labor laws” is not unchallenged. I am not versed enough in the field of economics to be able to speak to this with expertise, but I do know that economists legitimately debate these issues, and that they are much more complicated than such a blunt statement suggests (e.g., what is a “high tax” and how do different kinds of taxes and tax rates affect economic conditions in relationship to other factors . . .)

    I am quite open to challenges to Foner’s interpretation; historical analysis is never fully objective. However, you are presenting your position as if it were the unvarnished and undisputed truth, which is simply not the case and which ignores robust disagreements among knowledgeable people. The closed shop is certainly a legitimate site for debate, for example. You point out that mandating union membership is a violation of free association and that limits on employers’ rights to influence workers on unionism are a violation of free speech. Okay. Valid points. Supporters of pro-union policies would counter by pointing to the vastly unequal position of the individual employee and the corporate employer and argue that these provisions are necessary to enable workers to have any voice in the conditions under which they labor. There are inevitably trade-offs, and a fundamentalist position on what “freedom” is often obscures the complexities of real life.

    If anyone is interested in her response to my social security post I will provide that as well.


    Here is here response (above)
    Correction read Here is her*


    Actually I am just going to go ahead and post her response to my social security post:

    This is a fascinating discussion. I have a couple of things to add. Nick’s point that social security is not “insurance” is an important one; many people misunderstand how the system works, in part because the Social Security Administration purposefully sold the program in a particular way. Our payroll taxes are helping to fund current beneficiaries, and the vast majority of beneficiaries use way more money than they ever put in. In terms of the capacity of the private market to ensure economic security for the “retired”/aged, this is debatable (and I don’t know enough of what economists have to say to offer any definitive answer). I would add that old-age poverty was in fact very high before OAI/OASDI (“Social Security”) and frankly remained high until expansions in the program in the 1960s/1970s (I’m not sure the date of the NY study that Nick mentions), and it was a tremendous burden on many working-class families to care for family members who could no longer work (keeping in mind that industrial and agricultural labor were both very hard on the bodies and that access to medical care was difficult and expensive) – one of the motives for the program was to reduce that burden on the children of the aged. Roosevelt opposed an opt-out for the same reason Obama’s health care mandate is a mandate for all, because if everyone does not participate, the program will not work; the goal was to make this program a universal one (which exclusions prevented but which has come closer to being the case over time) with legitimacy and with political support (the reason for insisting on payroll contributions and the language of “insurance” was precisely to create buy-in and remove the program from any stigma of “government welfare”).

    As for relying on the private market for retirement (individual savings), this is frankly problematic. The only way to ensure that one’s money does not erode with inflation is to “invest” it (all of our private retirement funds are thus investments via mutual funds, etc.), but the stock market is not guaranteed — as our most recent financial crisis revealed, individuals who worked very hard to save over the years can easily lose everything. It is thus a gamble. One might get a much better deal, or one might get a much worse one.

    I recognize the frustration of younger generations who resent payroll taxes that they fear will not “pay off” in their future. At the same time, I don’t see Social Security as a “fraud,” and I fear that some charges against its viability are overblown (from what I understand, most economists believe that a few adjustments can secure the system) and frankly political (a way to discredit the program, urge privatization, and more broadly discredit government social provision). But these are certainly issues that people of different ideologies can legitimately debate.

    I am Nick and the study she mentions is the one quoted by Professor Woods in his lecture.

    Thoughts, comments?

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