Everyone is familiar with President Franklin Roosevelt’s embrace of socialism with his adoption of Social Security, a program that originated among socialists in Germany. With Social Security, the government, operating through the IRS, seizes a portion of income from young people and gives it to seniors. Like with all socialist programs, statists claim that Social Security reflects the voluntary compassion of young people.
I wonder, however, how many Americans realize that Roosevelt also embraced economic fascism as part of his New Deal program. Among the best manifestations of FDR’s fascism was the National Industrial Recovery Act (NIRA), which was administered by the National Recovery Administration (NRA).
The NIRA was straight out of the playbook of Benito Mussolini, the fascist dictator of Italy. FDR’s program set into motion a federally planned and regulated economy. Claiming that the Great Depression had been caused by “market instability” (rather than by the Federal Reserve’s erratic monetary policies), Roosevelt said his NIRA would stabilize the economy.
Businesses were told that they were to organize into economic cartels, where they were to set codes, prices, and wages that would apply to all the businesses in the cartel. In other words, no more free-market economic system. Instead, economic activity was henceforth to be planned and directed out of Washington and through these economic cartels.
To run his program, FDR choose Gen. Hugh Johnson. The operative word in that name is “Gen.” Johnson was a military man. Upon being promoted to brigadier general at the age of 35, Johnson had worked closely with the War Industry Board to centrally manage America’s economy in World War I. It also didn’t hurt that he had played an important role in the planning and enforcement of the government’s draft laws that forced American men to fight in the war. Who better to manage and direct a federal command-and-control program like the NIRA?
Central to the NIRA was its emblem — the “Blue Eagle — which, like the program itself, was straight out of the Mussolini playbook. The words “We do our part” were often included underneath the emblem.
Businesses all across America were expected to display the Blue Eagle in their stores, preferably in their storefront windows. If a business refused to do so, it was subjected to public shame and an economic boycott. Once an owner of the recalcitrant business got his head straight and became a loyal member of the NRA, the shame and boycott would be terminated.
There were also criminal prosecutions associated with FDR’s fascist program. Among the victims was a company named Schechter Poultry, which was run by four brothers in Brooklyn, New York. It was a bad mistake on the part of FDR’s prosecutors because the Schechter brothers fought their criminal conviction all the way to the U.S. Supreme Court, which unanimously declared FDR’s fascist scheme in violation of the U.S. Constitution.
One of the interesting aspects of the NIRA is one that relates to Social Security. The NIRA was enacted in 1933. Within a couple of years, many people had come to realize that the program was an absolute disaster and needed to be ended. However, the argument was made that it would be a grave mistake to suddenly and immediately end the program, given that so many businesses had become dependent on it. Instead, the argument went, the program should be gradually phased out.
Yet, when the Supreme Court declared the program unconstitutional in 1935, it essentially “pushed the button” that suddenly and immediately terminated the program. In other words, no gradualism whatsoever. Not only was it not disastrous, the sudden and immediate ending of the program helped to revitalize the economy.
Unfortunately, when FDR’s socialist program of Social Security reached the Supreme Court, the Court reached a different result. The Court upheld its constitutionality, notwithstanding the fact that the Constitution provides no grant of power to the federal government to establish a socialist welfare program for seniors or anyone else.
Today, millions of American seniors are hopelessly dependent on Social Security. This insidious socialist program, which is based on the coercive apparatus of the IRS, has caused people to believe that if it were suddenly and immediately ended, the consequences would be disastrous, with many seniors supposedly dying in the streets.
That, of course, is pure nonsense, just as it was nonsense when it was applied to the NIRA. Not only would the sudden and immediate repeal of Social Security not be a disaster, it would actually help revitalize economic conditions in America, just as the sudden and immediate end of the NIRA did. Perhaps more important, the immediate repeal of Social Security would reinvigorate the spirt of honoring parents, grandparents, and seniors in general on a voluntary basis rather than relying on the coercive and terrifying apparatus of the IRS.
The Supreme Court’s declaration that the NIRA was unconstitutional played a major role in FDR’s decision to propose his infamous court-packing scheme, which was designed to pack the Supreme Court with his legal cronies, so that the Court would no longer declare his socialist and fascist programs unconstitutional. While FDR’s power-lusting scheme went down to defeat, he ultimately prevailed in bending the Court to his will. In the 1937 case of West Coast Hotel v. Parrish, the Supreme Court essentially held that it would never again declare any of Roosevelt’s New Deal schemes unconstitutional. It never did so again.
Reprinted with permission from The Future of Freedom Foundation.
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