Firstly, the title is not a typo. The New Deal, which was implemented under Franklin Delano Roosevelt during the time period of 1933 to 1939. During this time national unemployment was 25% and even higher in certain industrial and mining towns. The result of the New Deals (there were two) were mediocre at best, but did include the repeal of prohibition (a time when making or drinking alcohol recreationally was illegal). A number of economists believed that the New Deal (also used to represent both New Deal 1 and 2) actually prolonged the Depression. This Depression did not end until WWII thanks to British buying of war materials from the US and increased production of war gear.
The second New Deal, popularly known as the “Stimulus Package”, is making it’s way through. It is in fact a spending package by the Government to spur new jobs and more demand in various sectors of our economy. Although it is currently around 850 billion dollars, it is bound to increase as time goes on if the economy does not recover quickly enough. Much of this goes into infrastructure development, and about half of it is going towards tax breaks. A few restrictions on the plan are that any buildings built from it must be built from American materials, putting caps on executive pay. A few of the companies receiving aid (not just from the stimulus, but also from the bank bailout) are Citigroup, Bank of America, and American International Group (AIG), were notorious for their exectutives pay being far over the $500,000 level. For example the CEO of Citigroup in 2007 made a $3.1 million dollar salary.
My concern over this new new deal is that it will be similar in effect to the 1933 New Deal. Putting caps on salary can be considered noble but also is anti-capitalistic. It reminds me of an old story heard years ago called “The Little Red Hen” as revised by Ronald Reagan:
A modern day little red hen may not sound like or appear to be a quotable authority on economics but then some authorities aren’t worth quoting. I’ll be right back.
About a year ago I imposed a little poetry on you. It was called “The Incredible Bread Machine” and made a lot of sense with reference to matters economic. You didn’t object too much so having gotten away with it once I’m going to try again. This is a little treatise on basic economics called “The Modern little Red Hen.”
Once upon a time there was a little red hen who scratched about the barnyard until she uncovered some grains of wheat. She called her neighbors and said ‘If we plant this wheat, we shall have bread to eat. Who will help me plant it?’
“Not I, ” said the cow.
“Not I,” said the duck.
“Not I,” said the pig.
“Not I,” said the goose.
“Then I will,” said the little red hen. And she did. The wheat grew tall and ripened into golden grain. “Who will help me reap my wheat?” asked the little red hen.
“Not I,” said the duck.
“Out of my classification,” said the pig.
“I’d lose my seniority,” said the cow.
“I’d lose my unemployment compensation,” said the goose.
“Then I will,” said the little red hen, and she did.
At last the time came to bake the bread. “Who will help me bake bread?” asked the little red hen.
“That would be overtime for me,” said the cow.
“I’d lose my welfare benefits,” said the duck.
“I’m a dropout and never learned how,” said the pig.
“If I’m to be the only helper, that’s discrimination,” said the goose.
“Then I will,” said the little red hen.
She baked five loaves and held them up for the neighbors to see.
They all wanted some and, in fact, demanded a share. But the little red hen said, “No, I can eat the five loaves myself.”
“Excess profits,” cried the cow.
“Capitalist leech,” screamed the duck.
“I demand equal rights,” yelled the goose.
And the pig just grunted.
And they painted “unfair” picket signs and marched round and around the little red hen shouting obscenities.
When the government agent came, he said to the little red hen, “You must not be greedy.”
“But I earned the bread,” said the little red hen.
“Exactly,” said the agent. “That’s the wonderful free enterprise system. Anyone in the barnyard can earn as much as he wants. But under our modern government regulations productive workers must divide their products with the idle.”
And they lived happily ever after, including the little red hen, who smiled and clucked, “I am grateful, I am grateful.” But her neighbors wondered why she never again baked any more bread.
Let us hope that it doesn’t come to that point.