There are several elements of the New Deal that are not well understood by the stenographers that pass for journalists these days. Here’s just three of them:
1. The New Deal introduced unionization. Because an economy cannot thrive (internally, at least) if its workers do not earn enough to buy the goods that they make. It is said that when Henry Ford was asked why he didn’t use more robots, he replied: “Robots don’t buy cars.” Unionization and collective bargaining were, and are, fundamental elements in the structure of a more stable capitalism.
2. The New Deal introduced a fledgling welfare state (which has, alarmingly, now all but gasped its last breath in the US). This set a safety net below which employers simply could not force workers to go. There was a limit to the downward pressure on wages from the high unemployment that capitalism requires.
Ever wonder why the CBI speak out against caps on immigration, but never against making it difficult for immigrants to work legally? Or why India is taking its census seriously now that they need a larger middle-class? Because they need a functioning welfare state for that to happen. The welfare state keeps people educated, housed, fed, healthy, and able to work (the US never quite got around to the healthy bit though) . This boosts the economy, no matter what those self-serving, venal, ignorant, lying politicians say on behalf of the only voters that matter to them their careers: the top 0.1%.
Most of this government are in the top 0.1% of course. So it’s all pretty tightly stitched up now.
3. The New Deal split the banks into retail or investment, but not both. This was to guarantee that the people would never again pay the losses of professionally incompetent and greedy individuals, pocketing their gains but nationalizing their losses. Retail banking (your and my savings and debts) would be underwritten by the government in the event of a bank failure, but investor beware. That was the substance of the Glass-Steagall Act , 1936. It took them a while to wrestle the bankers to the ground and sit on them long enough to do it, mind.
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An educated workforce: high literacy and numeracy rates, skilled workers and graduates on tap. There is no profession more productive than a teacher. It’s not possible to do better when your skills cascade out through so many children each year and on into the future of our economy for decades to come.
A ‘flexible’ workforce: that’s ‘unemployed and insecure’, to you and me. Guess what it does to wages
A welfare state: to maintain a pool of workers near places of business, without the need for employers to pay wages high enough to cover local rents. Or pass these labour costs onto customers, lest they are enticed out to poorer areas to shop, and live. And to ensure that there is some level of consumer demand even when times are hard and employment is low.
Universal healthcare: this means free at the point of delivery, paid through general , progressive taxation, with equal access to all. Big pharma and the multinationals, who between them have the US governing parties all sewn up, might hate socialized medicine because they profit massively from the sick, but health insurance cripples the competitiveness of small to medium-sized businesses who cannot compete with the big boys, in purchasing power or staff retention, when they have such massive costs to bear. What do smaller businesses think about the costs forced on them, compared to the gifts lavished on their gigantic competition?
Is that what passes for a free market these days?
The NHS is not only the single most spectacular creation of mankind – what else can you call the third largest employer in the world, performing such a vital and complex function (no disrespect to the Indian railway workers or the Chinese Army)? And with such remarkable dedication, in the face of political attacks from all sides, nearly always eating into cash and energy and skills that could and should have gone into patient care. It’s one of the most productive things you could possibly do for a national economy. An enormous taxpayer-mediated transfer of money from vast multinationals to smaller, local employers, who will spend it locally instead of taking it out of the country. A boon, too, for entrepreneurs, who can afford to take more risks when a broken leg can’t bankrupt them.
