Why Did FDR’s New Deal Harm Blacks? | CATO

Here is an excerpt from the CATO article:

…..The flagship of the New Deal was the National Industrial Recovery Act, passed in June 1933. It authorized the president to issue executive orders establishing some 700 industrial cartels, which restricted output and forced wages and prices above market levels. The minimum wage regulations made it illegal for employers to hire people who weren’t worth the minimum because they lacked skills. As a result, some 500,000 blacks, particularly in the South, were estimated to have lost their jobs.

Marginal workers, like unskilled blacks, desperately needed an expanding economy to create more jobs. Yet New Deal policies made it harder for employers to hire people. FDR tripled federal taxes between 1933 and 1940. Social Security excise taxes on payrolls discouraged employers from hiring. New Deal securities laws made it harder for employers to raise capital. New Deal antitrust lawsuits harassed some 150 employers and whole industries. Whatever the merits of such policies might have been, it was bizarre to disrupt private sector employment when the median unemployment rate was 17 percent.

The Agricultural Adjustment Act (1933) aimed to help farmers by cutting farm production and forcing up food prices. Less production meant less work for thousands of poor black sharecroppers. In addition, blacks were among the 100 million consumers forced to pay higher food prices because of the AAA.

The Wagner Act (1935) harmed blacks by making labor union monopolies legal. Economists Thomas E. Hall and J. David Ferguson explained: “By encouraging unionization, the Wagner Act raised the number of insiders (those with jobs) who had the incentive and ability to exclude outsiders (those without jobs). Once high wages have been negotiated, employers are less likely to hire outsiders, and thus the insiders could protect their own interest.”

By giving labor unions the monopoly power to exclusively represent employees in a workplace, the Wagner Act had the effect of excluding blacks, since the dominant unions discriminated against blacks. The Wagner Act had originally been drafted with a provision prohibiting racial discrimination. But the American Federation of Labor successfully lobbied against it, and it was dropped. AFL unions used their new power, granted by the Wagner Act, to exclude blacks on a large scale. Booker T. Washington, W.E.B. DuBois, and Marcus Garvey were all critical of compulsory unionism.

The Tennessee Valley Authority — FDR’s government-power-generating monopoly funded by the 98 percent of American taxpayers who didn’t live in the Tennessee Valley — was touted as a bold social experiment. But, among other things, the TVA flooded an estimated 730,000 acres of land behind its dams, and 15,654 people were forced out of their homes. Farm owners received cash settlements for their condemned property. But tenant farmers — a substantial number of whom were black — got nothing. After chronicling victims of the TVA “population removal program,” historians Michael J. McDonald and John Muldowny reported: “TVA’s social experiment was a failure.”….