The lessons of 1932 for 2020
1932 has lessons for 2020.
An incumbent GOP president is up for re-election in a crisis, shortly after midterms that delivered the House to Democrats and (narrowly) the Senate to the GOP. Yet they still together created something called the RFC. My latest: (politico.com/news/magazine/…)
Supply chains are being torn apart, from medical supplies to food. We’re killing chickens while the rate of starvation in Africa is expected to double. (washingtonpost.com/local/two-mill…) This has led a growing chorus of scholars to call for a rebooting of the RFC, or Reconstruction Finance Corporation, the government agency that (during FDR’s New Deal) became the single biggest investor in the US and global economy. See @rch371 here: (ft.com/content/86a333…)
The RFC is rarely discussed nowadays, but it was the most ambitious version of industrial policy that the US has attempted — saving capitalism and launching industries from scratch. See @JWMason1 and @pigphilosophy for how: (rooseveltinstitute.org/public-role-in…)
Why don’t we talk about it? Well, typically for US capitalism, it had a “submerged” quality — operating through loans and subsidies rather than outright planning. That has pluses and minuses, as @seattlesquinn explores here: (press.princeton.edu/books/hardcove…)
But aside from the economic arguments in favor of an RFC 2.0, there are three political lessons for both Democrats and Republicans that apply with particular force to the current moment. Bipartisan trust is in the toilet. What to do?
Lesson One: Demand Power Sharing. Dems rightly don’t trust Trump to administer relief funds competently and non-corruptly. But we need funds to flow. That’s why bipartisan oversight by @BharatRamamurti and others is so important. (npr.org/2020/04/19/838…) The RFC went further. In not just oversight but in administration, congressional Democrats demanded representation. Three out of seven board chairs for RFC disbursements went to Dems, thanks to pressure from Carter Glass — the @SherrodBrown of his day. (local12.com/news/local/sen…)
Lesson 2: Leverage this toehold throughout the year. FDR bashed the RFC on the outside, while Sen. Robinson (the @SenSchumer of his day) attached more tasks to the shell they had pressured the WH to create. As the crisis worsened, Dems eventually got a majority on the RFC.
Lesson 3: More toeholds. Dems knew that Hoover wasn’t going to do the RFC at scale of the problem. Nonetheless, over the course of the year, they got authorization for the agency to do all the elements of what was needed. This gave them something to scale up when FDR took office.
In short, there’s lessons for both parties from the RFC founding. Check out the full argument @POLITICOMag. Enjoy your Sunday! (politico.com/news/magazine/…)
(Adapted from this thread.)
