The New Deal marked the change of the Federal Government into a paternalistic, caretaking body of control. The "hub" of the U.S. government became a larger part of the "wheel", while the "spokes" of the "wheel" (State government) became shorter. This fundamental change to the balance of governmental power has been the greatest effect on American life resulting from the Depression. The U.S. was not the only country suffering from economic depression during that time, and comparing the political changes from one country to the next provides a fascinating lesson in political science.
It is common for a country to take an extreme political slant either to the left or the right after an economic collapse. Germany and Italy leaned to the political right with their adoption of ultra-right-wing political systems, which essentially merge government and business into a single sector. The U.S. leaned to the left economically, with a strong socialist bent. The government became a consumer, and took greater control over business. The massive public works projects and programs were funded by large deficits, and government payments were accepted on faith, as there was not enough actual money in the Treasury to cover the costs.
New Deal leaders flirted with the idea of building closer ties between business and government, but some of these efforts did not survive past World War II... While America never took the turn to fascism that similar business-labor-government arrangements did in Germany and Italy, the New Deal initiatives did point to a new sharing of power among these three key economic players. This confluence of power grew even more during the war, as the U.S. government intervened extensively in the economy.(Outline of the U.S. Economy).
Government in America has continued to grow in scope far beyond what the Founding Fathers had envisioned. This has had some apparent benefits for average Americans, and improved opportunities for women and minorities. But, the dependence of the Federal Government on debt and corporate backing has left it vulnerable to influences which use the government as a tool for their own ends. The recent court ruling on eminent domain is a prime example, as it basically allows government to seize private property to give to wealthy developers. Sounds like business controlling government...where have we seen this before?
All American Presidents since have been, at best, faint echoes of F.D. Roosevelt. For the people whom Roosevelt's plans and programs helped, he was regarded as "a god," particularly among women and minorities (Berkin, et al 777). Elected to four terms, his stoicism was America's candle in the darkness.
Americans' experiences during the Great Depression and FDR's leadership gave rise to a belief that the Federal Government has the responsibility of stabilizing the economy and the financial system, and helping citizens during times of economic trouble. "Uncle Sam" became an almost tangible presence for many Americans. Many important government agencies and programs were created in the 30s. Social Security, the Securities and Exchange Commission, the FDIC to insure bank deposits. In addition, The Emergency Banking Act of 1933 abolished the gold standard, meaning the Dollar would no longer be backed by gold or silver, just the credit of the U.S. government. This gave the government an everlasting blank check to fund the massive government spending during the depression and afterward. The cost has been a gradual shift of American politics back to the far right, and a reappearance of some of the same economic conditions that preceded the Great Depression. What could be so bad about that? It helps to recall how the Great Depression and World War II began after right-wing governments took control of the US in the 1920s, and Germany in the 1930s.
Works Cited
Berkin, Carol, et al Making America: A History of the United States, Vol II. Third Ed. Houghton Mifflin 2003.
"Outline of the U.S. Economy." U.S. Department of State. 02 Jul. 2005 http://usinfo.state.gov/products/pubs/oecon/chap3.htm.
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