Opinion | The New Deal’s Capitalist Lessons for Joe Biden
While certain mature industries like aerospace do not need public investment, today’s parallels to the 1930s can be blindingly obvious. The lack of rural broadband access looks a lot like the state of rural electricity in the early 20th century. And the wages of service workers today are as depressed as those of the manual laborers of the 1930s. During the Depression, about one-third of families on government relief had a breadwinner who had worked in construction. By 1934, the construction industry was one-tenth of its size in the late 1920s.
What should the Biden administration prioritize?
- Paul Krugman, Opinion columnist, writes that Democrats are ready to go big: “Debt isn’t and never was an existential threat to our nation’s future.”
- Priti Krishtel writes that Mr. Biden should choose the director of the U.S. Patent and Trademark Office carefully because “there is a direct line between what the agency does and the systemic disenfranchisement of Black people.”
- Michelle Alexander writes that “the subminimum wage for tipped workers isn’t simply born of racial injustice; it continues to perpetuate both race and gender inequity today.”
- Matt Bruenig writes about the problems with using tax credits to fight poverty, asking, “What kind of anti-poverty program helps the poorest less, not more?”
But as a result of the F.H.A.’s ingenuity, the industry came back: Local banks, contractors and developers in Texas could, for the first time, receive loans from New York, as long as they followed broad rules — a facet of the global financial system that we now take for granted.
Rural Electrification Administration-backed electrical cooperatives connected the countryside to the city, both economically and culturally. Rural Americans, who then accounted for about half the population, could now buy radios made in city factories, but also listen to the same programs, helping to stitch the country together.
Before the Defense Plant Corporation, more people worked in candy manufacturing than in aerospace. Over five years, the agency facilitated loans and tax relief to aerospace industries equivalent in size to half of the entire existing invested capital in manufacturing.
Alongside aerospace came investments in downstream industries — aluminum, electronics, synthetic rubber. In Los Angeles, for example, aerospace employment rose from near zero to 40 percent of the work force in a few years. And though the U.S. military was the largest buyer of planes, the Defense Plant Corporation’s investments set the stage for the American-led jet age to come.
The New Deal’s financially centered programs also had their failures: chiefly, the unapologetically racist nature of its lending system. Still, these failures should be warning flags, not cause to ignore the underlying possibilities of such policies.
The largest failure of this Other New Deal, perhaps, was that these programs were so successful that they appeared, in time, inevitable: Prosperous suburbs, a modern energy grid and American dominance in aerospace are not seen as government creations in the same way as our loveliest public parks and stadiums.
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