From The Weekly Standard, Killing Obamacare by Jay Cost:

It was the success of the progressives in World War I that inspired Franklin Roosevelt—Wilson’s assistant secretary of the Navy—to treat the Great Depression as a national emergency akin to the Great War. Accordingly, his administration took a heavy hand in managing both agriculture and industry. The Agricultural Adjustment Act (AAA) restricted agricultural output in the hope of stabilizing farm prices, with remuneration to farmers who followed the rules. The National Industrial Recovery Act (NIRA) offered big business a bargain: The government would suspend the Sherman Antitrust Act, allowing businesses to coordinate through trade associations, so long as they worked with the government to create and abide by socially responsible production goals. This was the pinnacle of Bull Moose progressivism. The government would convene and manage a coalition of economic stakeholders for the public good. If that meant the diminution of traditional rights, so be it.

This was an abject failure. By the time the Supreme Court invalidated the NIRA, the justices were doing  the president a favor. Businesses were cheating on the codes left and right, to the extent that they participated in them at all. The effect of the AAA was more pernicious. It rested above all upon an economic fallacy, that limiting production would help the country recover from the Depression. Beyond that, it brought unprecedented government intrusion into previously private matters. In Wickard v.Filburn (1942), for instance, the government brought suit against Roscoe Filburn for growing wheat for private consumption, and the Supreme Court ruled with the feds. Worst of all, the AAA degenerated into gross payouts to the Southern plantation class, at that point one of the most important Democratic client groups. They used the cash to buy farm machinery and then fire the black sharecroppers who worked on their land. This, in turn, forced a generation-long migration into the cities, and facilitated the urban crisis of the 1960s.

The experience of this First New Deal helped prove a point that economic conservatives know instinctively: Government does a bad job of managing the economy. The experts are not as knowledgeable as they think they are; it is impossible for them to anticipate all of the various ways their interference will affect society, for good and for ill. For instance, who in the Department of Agriculture could have predicted that the AAA would contribute to an urban crisis in Northern cities some 30 years later? Additionally, the idea that experts can be insulated from politics is illusory. When bureaucrats in the Agriculture Department complained about the inequity of AAA subsidies, they learned the hard way that they were not as removed from Democratic politics as they had liked to think. FDR needed the backing of the Southern Democrats who ran the congressional committees, and the price of admission was support for the wealthy plantation class at the expense of the poor. So he had agriculture secretary Henry Wallace sack the bureaucrats who made a stink.


Elitist bureaucrats have reams of academic qualifications, but lack the critical wisdom to understand their limitations.  The best theoretical ideas are quickly frustrated by the political realities that create counterproductive favoritism,  cronyism, and quickly confront the sacrifice of individual liberty to a utopian theory that not only does not work but inevitably creates considerable harm.  The ignorance of those who do not understand the basic concepts of free markets and capitalism creates an acceptance of a political self interest that is far more destructive to our social structure than the economic self interest of capitalism.