Friday, June 14, 2013 – Essay #85 – Annual Message to Congress by Franklin D. Roosevelt – Guest Essayist: Dr. Roberta Herzberg, Utah State University Department of Political Science

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FDR and the Second Bill of Rights

As World War 2 was winding down, Franklin Delano Roosevelt set his sights for the nation on transitioning the newly expanded role of government from the war effort to an expanded social and economic role. FDR called for the guarantees outlined in this address, as he argued that “true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.” By assuming a role in protecting citizens from the potential problems of their own economic security, government entered an arena in which the citizen operates as a co-producer of the circumstance. Those with the most to gain would seek additional services, while others ignored the pattern of growing government until its scope and size became overwhelming.

The guarantees outlined by FDR constitute one of the most direct statements of the philosophy held by many modern Democrats and referenced in numerous speeches in president Obama’s first term and election campaigns. The continued relevance of these goals suggests the importance of this speech for setting security in terms of quality of life as a goal for modern America.

Unlike the 1789 Bill of Rights, which was designed to protect individuals’ natural rights from government, the 1944 social guarantees were intended to extend rights from government. When government grants such rights, it may also deny or revise them. Citizens are constantly wondering what they may expect and the political pressure to do more is a constant. The result is the continually expanding welfare state we face today with an estimated 75year obligation of $82Trillion, and little prospect for reversal.

This 1944 radio address sketched FDR’s outline for eight major economic “protections” and laid the groundwork for the government we see today:

1. The right to a useful and remunerative job in the industries or shops or farms or mines of the Nation.

While no one can argue that full employment is a desirable feature of any modern economy, nothing government may do in a free society can deliver on such a promise. Unless government becomes the employer of all citizens, how can they guarantee that any free employer will choose to hire a given individual at a specified rate? Clearly, the tax rates necessary to provide such an extensive commitment stretch Americans’ willingness to contribute to any “public good”. Furthermore, since our perceived value is based not on the nominal salary, but instead on the post tax compensation, the high taxes needed to fulfill the promise generate even higher initial salary demands in response. Alternatively, trying to achieve the goal through regulations of the private sector results in either lower salaries or fewer jobs as employers seek to manage their total costs of labor. It is not surprising that since this goal was suggested, the level of unemployment that is natural to our society has ratcheted up as well.

2. The right to earn enough to provide adequate food and clothing and recreation;

Regulations that mandate a living wage in the private sector alter employers’ demand for employees and historically increase unemployment (especially among low skill workers). Moreover, since this “right” is stated in the vague terms of adequate food, clothing, and recreation, it requires officials to define levels for society. The higher it is set, the more likely the problems of reduced demand will occur as evidenced in the debate over minimum wages. Moreover, defining levels of optimal goods will pose problems for a diverse society. Two recent examples illustrate this dilemma – the defined Essential Health Benefit in mandated health care and the level of food stamps designated for low-income families. Reaction to the health benefits example demonstrates that even a high minimum is inadequate for some, but for others this level requires far more than many had purchased voluntarily in the unregulated market. Many analysts fear that the requirement that plans meet the Essential Benefit guidelines will force some to drop coverage as the cost now exceeds their value for health benefits. Likewise, others worry that treatments and coverage left out of the essential plan will eventually be unavailable to those seeking them. Likewise, debate about the adequacy of nutrition and choice associated with food stamps provision generates some of the greatest controversies in social policies. Some worry that the program is abused and used to buy “wasteful” items, while others note the difficulty of purchasing healthier and fresh foods within the limited budget. In each example, we see the challenge of getting agreement across the politically and socially diverse population at the national level. Prior to the New Deal, such decisions were made locally and close to communities where greater social consensus was a more reasonable assumption.

3. The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The agricultural price supports started during the FDR era have continued into modern times, despite significant changes in the agriculture industry that would seem to make them less necessary. Retaining price supports is more a result of politics and rent seeking by agricultural interests, rather than the stabilizing goal of earlier eras. With the resulting costs of price supports spread diffusely across all consumers and the benefits concentrated on a limited number of attentive growers, it is not surprising that such supports continue after economic justification is no longer met. Consumers are unlikely to lobby to stop the extra dime in cost on a pound of sugar, but the millions of dollars each sugar farmer may receive continues to make a trip to DC worthwhile.

4. The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

This commitment requires those charged with regulating economic competition to define what is meant by unfair competition before they can pursue policies to achieve it. Does a business grow large because it satisfies the value decision of an overwhelming majority, or is it manipulation by that business? If it is large because of the free choices of consumers, then we might ask whether the effort to curtail market concentration makes consumers better off or worse off. Frequently, business leaders are critical of their competitors and seek assistance from government in addressing concerns. This does not mean there is a legitimate market failure. The existence of crony capitalism today is a result of the power of government to decide winners and losers in these political fights rather than the marketplace. Market failure can emerge as a result of government intervention. The question citizens must consider is whether the cure of eliminating all market concentration delivers more benefit than the risk it poses from continued crony capitalism.

5. The right of every family to a decent home;

We are just beginning to recover from multiple administrations’ desires that every U.S. family has a home to call its own. During the 1990’s and 2000’s, federal policymakers pressed banks and mortgage lenders to make loans to risky recipients at reduced rates. This excess market demand drove up prices, and eventually resulted in a market collapse that many cities are only now beginning to move beyond. Policymakers wanted to make affordable housing a realizable goal for all, but instead their manipulation imposed the largest loss in capital in the nation’s history on a majority of Americans. Never underestimate the cost of politicians wanting to “do good”.

6. The right to adequate medical care and the opportunity to achieve and enjoy good health;

As noted above, the definition of adequate health care has evolved extensively over the years and continues to generate extraordinary controversy in the latest reforms. It is not that Americans oppose access to basic health care, but when this basic level is defined in the public arena, diverse perspectives on what coverage means creates conflict. Before the recent health reform, this guarantee meant that no person could be denied emergency services if they showed up at a hospital. After reform, that guarantee extends to planned preventive care, which while a good thing to do, is neither unexpected nor rare as needed for most functioning insurance systems. The result will likely be higher costs, not the lower costs promised by president Obama and ACA supporters in passing the bill.

7. The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

One of the central features of the New Deal, the creation of Social Security and Welfare protections, has changed politics forever and locked us into a growing national role in areas once preserved for the states. Today these programs provide benefits for a wide number of vulnerable groups. They shape overall economic activity and employment patterns and they alter individual incentives regarding employment and savings. Politicians continue to promise larger benefits and extended coverage, despite economic realities, and voters continue to reward those who do and punish the limited few willing to convey this future economic reality. As a result, Social Security, Medicare, and extended unemployment and disability benefits have become the third rail of American Politics – touch it and you are likely to die politically.

8. The right to a good education.

While support for education continues as one of the most consistent and strongly held views among the American public, the performance has not always lived up to the promise. The U.S. falls further behind other countries in academic performance, despite spending more. Faced with these results, one might expect policymakers to question the policy direction, but instead they have actually expanded the commitment in recent decades. Originally defined as K-12 public education, this guarantee has now expanded to incorporate mandated assistance for higher education. As spending has increased many times its earlier level, we have not seen education performance and career potential keep pace.

FDR’s 1944 promise set the stage for the modern welfare state in America. Unfortunately, the promise has not always delivered, as the policy outcomes and the continued focus on unmet goals continue to challenge our economy as well as our personal freedoms.

Read President Roosevelt’s Annual Message to Congress here:  http://constitutingamerica.org/?p=4365

Dr. Roberta Herzberg is an Associate Professor of Political Science at Utah State University.

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