Krugman's View of Corruption By David Henderson

In his column in today’s New York Times, Paul Krugman claims that Franklin D. Roosevelt’s New Deal was “clean” and avoided corruption. So clean was FDR’s Works Progress Administration, writes Krugman, that “when a Congressional subcommittee investigated the W.P.A., it couldn’t find a single serious irregularity that the division had missed.”

A skeptic would immediately want to know who was on that subcommittee and how thorough a job the subcommittee did. Unfortunately, Krugman doesn’t address that issue.

Even if one takes the subcommittee’s claim at face value, though, as Krugman seems to, there are other ways to look for corruption. Here are two:

1. Evidence compiled by Gary M. Anderson and Robert D. Tollison in “Congressional Influence and Patterns of New Deal Spending, 1933-1939,” Journal of Law and Economics, Vol. 34, pp. 161-175, shows that political factors were important in the allocation of such spending. Anderson and Tollison conclude:

New Deal spending went partly to the needy and partly to those with political clout. Our findings here suggest that federal transfer programs did not become captured by interest groups and self-interested politicians recently, but were affected by such factors from their beginnings. The New Deal was not big government’s Garden of Eden, but rather the more familiar stomping ground of Homo economicus.

Krugman might not regard this as corruption. I do. It gets back to the point I made about the governor of Illinois. People seem upset, not about his corruption per se, but about his bluntness and clarity and his foul language.

2. FDR, upset that the Supreme Court was knocking down some of his most-cherished New Deal legislation, threatened to “pack” it by increasing the number of justices beyond nine and, obviously, choosing those new justices. He never did so, but he didn’t have to. Supreme Court justice Owen J. Roberts got the message. Thus the famous saying: “The switch in time that saved nine.” It saved nine alright, but gutted the economic freedom provisions of the U.S. Constitution.