Megan McArdle calls someone an “economic idiot.”

June 29, 2012, 8:43 pm

Megan McArdle is advising “liberals” that they “shouldn’t defend FDR’s attacks on the Court.” Any “liberals” who would take advice from Megan McArdle are probably not very bright, but there is so much misinformation in McArdle’s post it seems worth a little time to clear it up.

McArdle executes a pivot classic to the anti-New Dealer playbook: facing Andrew Sullivan writing that “the Court tried to sabotage the New Deal under Roosevelt,” McArdle responds, “it’s bad economics. The NRA wasn’t going to save America, and we should be glad that the Court put it to rest.”

Did you notice that? Sullivan was talking about “the New Deal,” and McArdle immediately starts talking about “the NRA.” You see this a lot, anti-New Dealers reducing the New Deal to the NRA. That’s because if you’re an anti-New Dealer, you have a big problem: the New Deal was, and remains, popular. Its most important elements have endured. The New Deal included the SEC, FDIC, TVA, Social Security, innumerable public works projects and the minimum wage, as well as the right to unionize.

By contrast, NRA did not endure and, after an initial flush of enthusiasm (including parades and, McArdle notes, “lisping” schoolchildren; why they’re lisping or how she knows they’re lisping, I couldn’t tell you) the NRA was unpopular even during the New Deal.

So of course McArdle and other anti-New Dealers don’t want to talk about the New Deal, they just want to talk about NRA.

NRA lasted a very short time, because the cartels it authorized permitted either a single major business to dominate the industry or a group of middle-sized players to gang up; either way, it left some businessmen feeling left out and a fair number of consumers aggrieved. By the time the Supreme Court “put it to rest” (in McArdle’s phrase) NRA was the walking dead anyway, having descended into investigations of itself and receiving only a limited (ten month) extension of its powers in a vote from the Senate.

This is not necessarily to agree with McArdle that NRA was “bad economics.” Gauti Eggertsson argues that NRA’s price-fixing policies performed the invaluable service of changing deflationary expectations at a time when the downward price spiral desperately needed stopping. But NRA did turn out to be poor politics.

But that’s all standard, skewed stuff. McArdle goes even more importantly wrong in saying, “The centerpiece of the conflict between FDR and the Court was a program called the National Industrial Recovery Act, which was challenged in a case called Shechter [sic] Poultry v. United States.” Not so. The Schechter case did strike down the NRA, but it wasn’t the centerpiece of the conflict between FDR and the Court. As William Leuchtenburg notes, FDR was not stupid, and knew he couldn’t go to war against the Court on behalf of NRA, because “its detractors were more numerous” than its supporters.

Instead, after an initial outburst about Schechter, Roosevelt kept his peace and let the Court go too far. When it invalidated the railway pensions act, it aroused the ire of a million pensioners. When it invalidated AAA, it aroused the ire of even more farmers. And when, in the Tipaldo case, the Court struck down a state minimum wage law, even some Republicans got concerned. As Hamilton Fish said, “I say to my Republican friends if you lend or express any sympathy for this decision … it will mean a million votes for the Democratic Party.” In fact, in response, the Republican Party’s 1936 platform disputed Tipaldo, saying that the state power to set a minimum wage was “within the Constitution as it now stands.”

The course of the Court’s action in 1935-1936, culminating in the radicalism of Tipaldo, suggests we should not, or not only, think of the struggle between the Roosevelt administration and the Supreme Court as a case of a befuddled, conservative Court trying to grapple with a very New Deal and a suddenly expansionary federal government. It was also a case of an activist Court determined to roll back even state powers to intervene on behalf of labor. As Herbert Hoover wrote of Tipaldo, “something should be done to give back to the states the powers they thought they already had.”

But McArdle isn’t interested in this sort of thing. She’s happier calling FDR “an economic idiot.” (This is the point at which one must grit one’s teeth to avoid snarking back at McArdle in what would only be fair return for her smart-alecky style which includes pellucid writing like “the, y’know, massive cartels.”) McArdle decries the record of the New Deal in promoting economic improvement. To which I can only ask those of you who are serious readers to look at the below graph, and a whole lot of related posts on this blog.

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