Channeling FDR: The Moral Case Against Unemployment

Photo: jimcintosh

My last weekend in D.C. provided a final chance to enjoy my favorite haunts. And so I found myself walking amongst the memorialized giants of U.S. history: Washington, Lincoln, and now, Martin Luther King. On I walked, through the FDR Memorial, where I stumbled across the chiseled message below. Sure, I had seen it before. But I had forgotten how beautiful it is. And with the President about to announce his new jobs package, and Congress set to (hopefully!) debate these measures, it seems well worth sharing my serendipitous moment with Franklin Delano Roosevelt.  A reminder, if you like, of why we care.

If my photo isn’t entirely clear, let me reproduce the full quote:

No country, however rich, can afford the waste of its human resources.  Demoralization caused by vast unemployment is our greatest extravagance.  Morally, it is the greatest menace to our social order.

I’m sure FDR would acknowledge the usual economic case against unemployment—billions of dollars of lost output and rising fiscal pressure. And certainly, we hear this a lot in Washington. But I find FDR so persuasive because he advocates an explicitly moral argument, reminding us of the corrosive and demoralizing effects of unemployment.

This speech continues beyond the parts that were memorialized, and it is just as important:

I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return.

Wise words, worth bearing in mind when the policy debate heats up.


Mike B

You should better explain the context of these remarks. I believe that they were directed to contradict a popular theory at the time held laissez-faire economists that a large pool of unemployed was critical for the proper functioning of a capitalist economy. I can't remember the details myself, but it was in addition to the other mantra that high unemployment was necessary to drive down wages which would then stimulate the economy. I guess that's all well and good unless it's your wages which is the one being driven down :-\

WholeMealOfFood

If only FDR had warned against credit bubbles...

B Jim

The wife remarked just the other day, about an 86 year old co-worker, at the front counter of a bakery, how she has to keep working because she needs the money, even though she can't lift a sheet cake. How many of our seniors are forced to stay at work long after age 60 or 62.

If all of those senior jobs were vacated, I am sure it would do wonders for opening up jobs for the unemployed and recently graduated.

So then our society has to take better care of those seniors, who lost small fortunes in the markets, and for whom inflation mocks what money they do have.

Vangel

"If all of those senior jobs were vacated, I am sure it would do wonders for opening up jobs for the unemployed and recently graduated. "

Why is it moral to force seniors to vacate jobs?

"So then our society has to take better care of those seniors, who lost small fortunes in the markets, and for whom inflation mocks what money they do have."

First, who pays for these seniors? Second, do not mistake society with government. They are not the same thing. In previous times Americans used mutual and fraternal societies to provide them with cheap insurance and the social nets that they might need at some time in their lives. These organizations looked after their own members, provided a network of contacts for easier employment, and built hospitals, orphanages, and old age homes. They were pushed out of business when the government stepped in and began to create the welfare state. Things would be a lot better if the government got out of the way and let voluntary organizations and charities meet the needs of individuals and families.

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Francois T

The absolute disgrace in today's US of A is that the so-called "elites" don't do morality anymore. They are so detached and literally separated from the rest of us that they just cannot relate to what ordinary Americans live every day.

You can't develop a sense of empathy, hence a moral sense in these conditions.

How's that for a moral case against rising income/wealth inequality?

Robbie

Should I take this to mean that, as an economist, you agree with FDR's economic policies? Pardon me if I am wrong, but don't the majority of economist feel that FDR's policies prolonged the Depression?

Eric M. Jones

Well, the majority of SOBER economists think FDR saved everyone's bacon.

The 1929 Depression was SO BAD that there was every possibility that capitalism would not survive and we would become a socialist, communist or fascist country--because OBVIOUSLY capitalism hadn't worked, and in those days the S-C-F words weren't so poisonous.

Hey, it could still happen! Wait 'till you see the US Wealth Distribution figures for 2010 (to be published by the Federal Reserve next Spring) and learn that 1% of the population owns 50% of the wealth and 50% of the population owns 1% of the wealth.

I am thoroughly convinced that a violent, sudden and bloody revolution is not beyond possibility. And I have no illusions--I'll be blindfolded and put up against the wall too.

Steve

Eric,

Go back and refresh yourself on the Communist Manifesto and the principles of the Marxist philosophy.

There is only a class war if people who have not earned things suddenly feel entitled to the things other people have earned. It is a straw man to assume that the lack of government contribution to a persons job-state is a crime. Only in a Marxist society is...

1. the means of production owned by the State.
2. the distribution of wealth is the purview of the State.
3. the State should sustainably employ the "proletariat".

All of that to say, it was Karl Marx who promoted the idea of a proletariat uprising to overthrow the leadership so that a single party could set right the economic means and balance the scales of fiscal injustice. Classic rediculum!

The Government can get out of the way and focus on certain factors that protect the people (consumer protections and protecting the interests of Americans). But as for "creating jobs" or "class warfare" or other myths... the government can only take and consume. It only makes way at best.

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Vangel

"But I find FDR so persuasive because he advocates an explicitly moral argument, reminding us of the corrosive and demoralizing effects of unemployment."

I find the quote hypocritical. FDR caused a great deal of unemployment by meddling with the economy and never allowing the malinvestments to be liquidated. Government cannot create employment. All it can do is stay out of the way and let the market create employment as it always does.

Dan

"Government cannot create employment."

tell me, who do the nearly 1.5 million active military personell work for?...

Jack

I agree that unemployment is moral menace. And thus, it is immoral for the government to artificially raise the cost of employing someone (for example, by minimum wage and mandated health insurance).

dave gant

Which party creates more jobs when holding the White House? No question about it, and it's a matter of competence!
Job creation by term

Numbers listed here are measured from January of the year at the beginning of the term to the January four years later, when the term ends.
U.S. president? Party? Term years? Start jobs*? End jobs*? created (in millions)? Average annual increase?

Ronald Reagan R 1981–1985 91,031 96,353 +5.3 +1.5%
Ronald Reagan R 1985–1989 96,353 107,133 +10.8 +2.7%
George H. W. Bush R 1989–1993 107,133 109,725 +2.6 +0.6%

Bill Clinton D 1993–1997 109,725 121,231 +11.5 +2.6%
Bill Clinton D 1997–2001 121,231 132,469 +11.2 +2.3%

George W. Bush R 2001–2005 132,469 132,453 +0.0 -0.0%
George W. Bush R 2005–2009 132,453 133,563 +1.1 +0.1%

Barack Obama D 2009–2013 133,563 135,373 (May 2011) +1.81 (May 2011) +0.54% (May. 2011/Roughly 2.5 Years)

Clearly bush 2 our worst job creator, and, of course, not only was it a matter of competence, but
also ideology. Check previous pubs.

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JBP

These numbers are meaningless. Your sample size is 8. Your margin of error is going to be a multiple of your difference.

Will Williams

The words do not distinguish between short term and long term unemployment. Not do they acknowledge that high unemployment in particular regions might be best addressed by relocating to where there is more work.

Joe D

How many people would love to relocate, but can't sell their home? My wife has colleagues who *have* relocated and are paying two mortgages (and two insurance premiums, and two sets of property taxes, only one of which is eligible for a homestead exemption!), one in FL and one in IA. As professionals, they can afford it (barely); what about the licensed plumber or electrician, who used to have lots of work, bought a home, and now can't get out of it to find a new job?

Enter your name

This problem is easily solved: we should discourage more people from buying homes. Renters have no such trouble relocating.

My proposed first step in reducing the number people buying homes is to require a larger downpayment (people in their 20s and even 30s will need to rent while saving up) and to significantly limit the mortgage-interest deduction, so that people will eventually remember that mortgages are for paying off, not for refinancing endlessly to support their lifestyles. The "security" goal of owning a home is not met if you don't have it paid off when you retire.

Joe Eagar

I have to admit, Adam Smith's chapter on the dangers of property ownership concentration makes me wary to embrace a renter's culture (this is one case where the Wealth of Nations can be used to support a government program, heh).

A. Wilson

I agree with AaronS. The hiding of comments is highly annoying. If the comment is offensive just remove it. Otherwise, let the discourse flourish!

FREAKONOMICS–STOP HIDING COMMENTS BECAUSE OF A LOW RATING. I READ SEVERAL TODAY THAT WERE QUITE THOUGHTFUL, BUT HAD BEEN HIDDEN. INSTEAD, JUST SHOW THEIR “SCORE.” PLEASE…AND THANK YOU.

Joe Eagar

This is all well and good, but what about the poor Chinese worker whose savings is ultimately tied in dollar assets? Reducing unemployment by increasing consumption (and the trade deficit) would transfer wealth from dirt-poor poor Asian workers to coddled, wealthy Americans. That isn't right.

What we need is less consumption coupled with structural reform. I know, I know, democracies don't do structural reform. But is it really right for us to steal the bread of hard-working Asian workers abroad to avoid politically-difficult hard choices at home?

This is what annoys me about the debate here in America (and in most developed nations, now that I think about it). Yes, cranking up consumption can solve all ills--but someone has to pay for it, and it just isn't sustainable.

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