Learning from History What Made the U.S. Prosperous

by Burt on May 9, 2012

One of the big problems in studying history is having to unlearn so much of what you are taught in school today. Let’s look at the way history is taught when studying FDR’s New Deal during the 1930s and 1940s, and when studying the Gilded Age, the generation after the Civil War, dating roughly from 1865 to 1900.

The New Deal is almost always presented in history books as a great reform era–lots of new programs. But what the texts omit is that most of these programs were disasters–they increased unemployment, and FDR used them mainly to win votes of special interest groups. The national debt doubled during FDR’s first two terms and then increased nearly another sixfold before he died. The national suicide rate rose during the 1930s, divorces increased, and murders were higher in the 1930s than in the decades before or after. What’s more, FDR’s first two terms were the only period of the 20th century where life expectancy did not increase in the U.S. Yes, we tried to experiment with big government, but increasing government increased taxes and class warfare, not our national standard of living.

The Gilded Age, by contrast, is often distorted in the textbooks as a period of robber barons and greed. Sure, there were unsavory characters, then as now, but many of those men did their mischief with cash from Uncle Sam. The Union Pacific corrupted the railroad business with its federal aid; and Samuel Langley drove two federally subsidized airplanes into the water before the Wright Brothers finally flew airplanes successfully (with no federal aid). During the Gilded Age, as Milton Friedman famously said, there was “no FCC, no SEC, and you pick out any other three letters of the alphabet and it wasn’t there either.” Annual spending by the federal government was only about 3% of GDP, and Americans used their freedom to invent many products like barbed wire and to discover 300 products to be made from the lowly peanut. We had medical breakthroughs with the germ theory of disease, and entrepreneurs funded the science that led to cures for hookworm. Entrepreneurs also started libraries all over the nation and funded missionaries to preach Christianity in China, Africa, and other places around the world. The U.S. became a great industrial power during the Gilded Age; millions of immigrants flocked to New York City. American oil and steel dominated the world. A free people showed the world how freedom could improve lives across the globe.

What we can learn from history is that the Gilded Age gave the U.S. a recipe for greatness, and the New Deal almost poisoned that legacy of achievement 50 years later. Today, will we seek again the freedom of the late 1800s, or the false security of the federal programs of the 1930s?

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