The Eurozone Embraces the Austerity Albatross

Dec 7, 2011Jeff Madrick

Europe's leaders are determined to repeat the mistakes of the past, but they've forgotten their own recent history.

Europe's leaders are determined to repeat the mistakes of the past, but they've forgotten their own recent history.

It is not quite clear what the French president, Nicolas Sarkozy, and the German chancellor, Angela Merkel, agreed upon this week, but what we know is more than a little disturbing. They have baked austerity economics into the eurozone. Germany wants all of the eurozone to act like it does: get control of your finances, suppress wage growth, and subsidize manufacturing. In what seems like yet another monumental case of national egotism, they believe that a little discipline is all that is needed and that the profligate must pay the price.

Of course, the German model could not have worked if everyone had followed it. Someone has to buy the goods that are being made and exported. This requires rising wages.

Mr. Sarkozy seems to sympathize with the disciplinarian approach, though he advocates a softer form of it. The result is that everyone will have to abide by the deficit restrictions handed down. Never mind that France and Germany were the main violators of the Maastricht agreement that was supposed to hold deficits to 3 percent of GDP early in the previous decade.

The fantasy is that this will somehow produce growth, but it won't. To repeat, someone has to boost aggregate demand.

What gets one angry, in particular, is that most of the countries in trouble had their public finances well under control. This was true in Ireland, Portugal, Spain, and Belgium. Germany's deficit levels were not as well controlled. Where is the cause and effect here?

And then there is the nonsensical idea that private creditors will not have to take any losses. As many are now pointing out, Ireland refused to allow its remarkably irresponsible banks, which financed a property boom that made America's look fairly tame, to take any losses. Instead, the taxpayers took on all the debt themselves. As for Ireland's recent bounce back, GDP is still way below pre-recession levels and unemployment is devastating. The Irish people, who seem to believe sacrifice is a national fate, are leaving in droves. But the Irish government is praised, perhaps by those who advise Sarkozy and Merkel, for cutting social spending and forcing its people to suffer even more. Meanwhile, the business model of Ireland is all about tax breaks for international companies who don't really hire that many people in Ireland.

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The point of all this is that it is supposed to give the European Central Bank, the world's tallest ostrich, cover to remove its head from the sand for a moment. Then it could perhaps support collapsing sovereign debt, which is a task it should be undertaking anyway.

Imagine it is 1931 or so. An enraged establishment of wise men (and perhaps a couple of women) think they know what's good for America in a depression. They say we should pass a law limiting the size of any deficit financing. Meanwhile, the Federal Reserve will continue to maintain vigilance lest inflation raise its head again -- which it will inevitably do. If that had happened, we might still be in the Great Depression.

Of course, no one will really abide by the new principles when and if this crisis passes. And that's the good news. The bad news is that it delays the day of reckoning when Europe must restructure sovereign debt, accept that the Greeks and Irish, and perhaps the Italians and Spaniards, have suffered enough penance, and issue some eurozone bonds to cover the financial holes and perhaps provide social transfers to the suffering countries. All this will require an ECB with its head facing the sun, willing to be the lender of last resort for a while.

They may get to this point. And after that? Will Germany begin to provide sufficient stimulus to enable the eurozone to grow again? I think the odds are slightly above 0.5 that the eurozone will develop an adequate rescue package. Austerity economics will not lead to growth, but the very opposite. Don't we all know that?

One of the great clichés is that those who forget history are destined to repeat it. More relevant and more interesting is that those who do know history repeat it anyway. The baser human instincts keep tugging us in the direction of monumental error. They are at work in Europe again.

Roosevelt Institute Senior Fellow Jeff Madrick is the author of Age of Greed.

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The Lesson of Pearl Harbor: America's Greatest Challenges Create Its Greatest Generations

Dec 7, 2011Reese Neader

Under FDR's leadership, the U.S. reacted to defeat at Pearl Harbor by working together to build a new world order. How will millennials measure up?

Under FDR's leadership, the U.S. reacted to defeat at Pearl Harbor by working together to build a new world order. How will millennials measure up?

When Japan attacked our nation on December 7, 1941, FDR responded decisively. He called on the federal government to marshal all of its resources and cited the "unbounding determination of the people" to rise to the challenge. Our grandparents rallied to the call of the federal government and marched to victory in World War II. In the wake of that conflict, they built an international system that enshrined democratic values and a global economic framework for shared prosperity.

Throughout history, the United States has consistently used its crushing defeats as a springboard to rise to national action. Those defeats are a reminder to us that we are stronger together and that we can only succeed by facing our challenges with determination and innovation. An energetic government built the railroads, constructed the interstate highway system, and put a man on the moon. A strong government ended slavery, desegregated our schools, and defeated the forces of fascism and Nazism.

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Today our country again faces the specter of defeat. Our economy has stalled, our financial system continues to hover near collapse, and the international system is under assault from new threats like terrorism, climate change, and energy scarcity. But in the face of economic catastrophe, our leaders bailed out Wall Street instead of Main Street. And instead of engaging global leaders to build a plan for joint action to face down threats to the international order, our leaders are calling for reductions in U.S. foreign assistance and reducing our role in world affairs.

Right now, millions of people around the world are living in a state of desperation. And right now, millions of Americans are living in poverty and out of work. There is no other solution to these problems except for bold, strong, and coordinated government action.

Every generation is defined by the challenges it meets and overcomes. In our time, we have the same mission our grandparents had when they battled through the Great Depression and won World World II: We need to build a foundation for shared prosperity and make the world safe for democracy. We can honor their sacrifice and honor the vision of FDR by responding to our challenges together as a country.

Reese Neader is the Roosevelt Institute | Campus Network's Policy Director.

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Frank Luntz and the Battle Over Economic Freedom

Dec 5, 2011Mike Konczal

Occupy Wall Street has some conservatives running scared, leaving a window of opportunity to change the dialogue on what freedom really means.

Occupy Wall Street has some conservatives running scared, leaving a window of opportunity to change the dialogue on what freedom really means.

Last week, Republican strategist and wordsmith Frank Luntz shared his concerns about the Occupy movement with a group of Republican governors in Florida. "I'm so scared of this anti-Wall Street effort. I'm frightened to death... They're having an impact on what the American people think of capitalism." Chris Moody wrote a must-read article on the matter, including the ten dos and don'ts that Luntz suggested to his audience.

As Seth Ackerman pointed out, there's an entire industry around Democrats and liberals trying to get an edge on Luntz with even more carefully polled wordplay. However, by talking directly about the power of the 1 percent over our lives, the broken political process, burdensome debts, and a collapsed labor market, the Occupy movement has gotten Luntz's attention in a few short months. As Ackerman puts it:

For twenty or thirty years, Democratic politicians... have been paying what must amount to billions of dollars by now to consultants, pollsters, and think tank gurus to tell them how to talk to the public about inequality in some way that might spark sustained public engagement... Then the Occupy movement comes along and after two and a half months shifts the national consciousness so palpably that Republican governors are scrambling to ask their Rasputins how capitalism can be defended to their constituents back in Peoria.

Luntz suggests 10 sets of words, phrases, and concepts to abandon and has some easily defended ones to use instead. "Jobs" and "entrepreneur" are out. "Careers" and "job creators" are in. Many people across the spectrum are noticing that Luntz is suggesting a retreat from the word "capitalism," but few reference where he wants to retreat to:

1. Don't say 'capitalism.'

"I'm trying to get that word removed and we're replacing it with either 'economic freedom' or 'free market,'" Luntz said. "The public...still prefers capitalism to socialism, but they think capitalism is immoral. And if we're seen as defenders of quote, Wall Street, end quote, we've got a problem."

Luntz suggests retreating to "economic freedom" as an easily defensible phrase conservatives can use to describe the economic status quo. This is astute, as there's been a long, 30-year conservative project to locate freedom in the laissez-faire marketplace.

It hasn't always been this way. Take this 1930 cartoon in the Chicago Defender, where economic freedom is seen as part of the right to unionize (click for larger image):

(Source: Foner, The Story of American Freedom.)

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Economic freedom as freedom from coercion was once a core part of progressive thought. Economic freedom as economic security was a central part of the New Deal and Roosevelt's four freedoms. And economic freedom as freedom from domination in the workplace is a central aspect of what unionization brings to the country. This was thought of as essential to the lives of the individuals and democracy itself -- as Samuel Gompers said, "Men and women cannot live during working hours under autocratic conditions, and instantly become sons and daughters of freedom as they step outside the shop gates."

This is on the minds of people I've talked with at various Occupy movements. Early on in Occupy Wall Street I went and asked 15 random people at Zucotti Park what "freedom" meant to them. Their answers invoked these earlier versions of economic freedom as essential aspects: “I think that freedom is your ability to carry out what you want to do. It’s not just about your social freedom, it is also about economic freedom." "Freedom is...when people can go to public universities and not have to go into debt. So not only so they can get the careers they want, but so they can be productive people in society." With the movement, we have an opportunity to change the dialogue.

Corey Robin's excellent essay in The Nation, "Reclaiming the Politics of Freedom," can act as a guide to why this is so important and what the roadmap toward changing it could look like. He says:

The secret of conservatism’s success -- as any reading of Reagan’s speeches and writings will attest -- has been to locate this notion of freedom in the market... We must confront this ideology head-on: not by temporizing about the riskiness or instability of the free market or by demonstrating that it (or its Republican stewards) cannot deliver growth but by mobilizing the most potent resource of the American vernacular against it. We must develop an argument that the market is a source of constraint and government an instrument of freedom. Without a strong government hand in the economy, men and women are at the mercy of their employer, who has the power to determine not only their wages, benefits and hours but also their lives and those of their families, on and off the job...

The politics of freedom does not dismiss the value or importance of state resources. But rather than conceiving of them as protections against the hazards of the market or indices of public compassion, it sees them as sources of power, as the tools and instruments of personal and collective advance. Armed with universal healthcare, unemployment benefits, public pensions and the like, I am less vulnerable to the coercions and castigations of an employer or partner. Not only do I have the option of leaving an oppressive situation; I can confront and change it -- for and by myself, for and with others. I am emboldened not to avoid risks but to take risks: to talk back and walk out, to engage in what John Stuart Mill called, in one of his lovelier phrases, “experiments in living.”...

That is why the politics of freedom refuses to view the state as the conservative does: as a constraint. Or as the welfare-state liberal does: as a distributive machine. Instead, it views the state the way the abolitionist, the trade unionist, the civil rights activist and the feminist do: as an instrument for disrupting the private life of power. The state, in other words, is the right hand to the left hand of social movement.

It will be challenging to square this idea of the state as a partner in economic freedom with the more anarchist-leaning tendencies of much of Occupy thought, but it's a debate worth having.

Mike Konczal is a Fellow at the Roosevelt Institute.

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A Feast for the 1%, a Famine for the One Third

Nov 23, 2011David B. Woolner

As we celebrate this Thanksgiving, we should remember that 100 million of our fellow citizens are struggling to get by.

[H]ere is the challenge to our democracy: In this nation I see tens of millions of its citizens -- a substantial part of its whole population -- who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.

As we celebrate this Thanksgiving, we should remember that 100 million of our fellow citizens are struggling to get by.

[H]ere is the challenge to our democracy: In this nation I see tens of millions of its citizens -- a substantial part of its whole population -- who at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life.

I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.

I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago.

I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children.

I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions.

I see one-third of a nation ill-housed, ill-clad, ill-nourished.

-Franklin D. Roosevelt, January 20, 1937

Nearly three quarters of a century ago, Franklin Roosevelt rededicated himself and his administration to the creation of an America where the government and the people alike would strive to eliminate the destructive and unjust disparities of wealth that had wrought such great economic hardship that they threatened to undermine the very essence of our democracy. Thanks to this commitment, generations of Americans embraced the idea that, as President Obama once said, "in this country, hard work and responsibility should be rewarded by some measure of security and fair play."

But in a disturbing article published earlier this week, the New York Times took note of the growing number of Americans whose hard work and responsibility have not brought them the measure of economic security they deserve. Struggling with incomes that stand just above the poverty line, they are labeled the "near poor." This diverse group of individuals and families lives paycheck to paycheck under the constant threat of economic ruin, often working multiple jobs at low wages that have remained stagnant for decades. According to data that has yet to be published by the Census Bureau, the number of "near poor" in the United States has risen to 51 million individuals, which, as the Times reports, places approximately 100 million people, or one in three Americans, "either in poverty or in the fretful zone just above it."

The fact that one in three Americans now lives in poverty or just above the poverty line provides us with another distressing link between the Great Recession and the Great Depression. It harkens back to Franklin Roosevelt's Second Inaugural Address, when, after noting the nation's economic progress since the beginning of his first term, he challenged the American people to do better and join him in an effort to "paint out" from our national canvas the sight of "one third of a nation ill-housed, ill-clad, ill-nourished."

It was true, Roosevelt said, that since the day of his fist inauguration, the country had made great strides in reversing the downward economic spiral that had gripped the nation in paralyzing fear. Faced with an unprecedented economic catastrophe, the people of the republic had dedicated themselves "to the fulfillment of a vision -- to speed the time when there would be for all the people that security and peace essential to the pursuit of happiness." But, he went on, "our covenant with ourselves did not stop there. Instinctively we recognized a deeper need -- the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization."

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In that purpose, he continued:

...we have been helped by achievements of mind and spirit... We have always known that heedless self-interest was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity whose builders boasted their practicality has come the conviction that in the long run economic morality pays. We are beginning to wipe out the line that divides the practical from the ideal; and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world.

This new understanding undermines the old admiration of worldly success as such. We are beginning to abandon our tolerance of the abuse of power by those who betray for profit the elementary decencies of life.

It is odd that in this time of Thanksgiving, one hears little about the millions of Americans trapped in or threatened by poverty or the need to fashion a society where the "elementary decencies of life" -- a job with a decent wage, access to health care and higher education -- are within the reach of all. It is even more perplexing that in a time of serious economic depravity, the focal point of our all-but-dysfunctional Congress is not how "to find through government the instrument of our united purpose" but how to obstruct the very sort of structural reforms needed to help average Americans secure better lives for themselves and their children.

Part of this stems from the blind faith that free market fundamentalists have falsely promoted as the solution to all of our problems and from the inordinate amount of money that now flows from Wall Street to Washington, creating a new Gilded Age where the 400 wealthiest individuals in the United States possess more wealth than the bottom 150 million combined. But another part of it stems from our own misguided perception of what constitutes wealth and progress. In this second Gilded Age, wealth and progress have come to mean one and the same thing -- the acquisition of an inordinate amount of capital or other assets by an individual, often obtained through mere financial transactions.

For Roosevelt, however -- and for much of his generation -- the definition of wealth and progress was much more in keeping with the spirit of Thanksgiving. "Happiness," as FDR famously said in his First Inaugural Address, "lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort." Four years later, he added that the "test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."

For the 100 million citizens of our nation now struggling to keep a roof over their heads and food on the table, these words sadly offer little comfort, for it appears we have abandoned the noble effort of the Depression generation to paint the specter of poverty out of our national canvas.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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Dredging Up the Submerged State: How Democrats Lost Their Nerve

Nov 14, 2011Mark Schmitt

The greatest obstacle to a New Deal-worthy response to our current economic crisis is Americans' distrust of government. But what causes that distrust? Is it just bred in the American spirit, from the Founding Fathers? If so, how were FDR and his successors able to overcome the distrust and bring newfound powers of government to bear against an economic crisis? Is it just propaganda carried over from the Reagan era?

The greatest obstacle to a New Deal-worthy response to our current economic crisis is Americans' distrust of government. But what causes that distrust? Is it just bred in the American spirit, from the Founding Fathers? If so, how were FDR and his successors able to overcome the distrust and bring newfound powers of government to bear against an economic crisis? Is it just propaganda carried over from the Reagan era?

Last year, a fresh answer emerged in a couple of articles and now an important book, The Submerged State, from Cornell political scientist Suzanne Mettler. Mettler showed that Americans distrusted government in part because, unlike in the New Deal era, they don't see or feel what government does. We've created programs that are so complicated, vague, and nuanced -- tax credits and public-private partnerships -- that many of their beneficiaries don't know that they are benefiting from government at all. Mettler's analysis has multiple implications: We have to call attention to the purpose of government and how programs like student loans help to achieve it, but we also need a new approach to the structure of government and a willingness to move decisively and visibly on big public missions.

I reviewed The Submerged State in The New Republic in October, and have subsequently had the pleasure of asking Suzanne some questions about her new book. The answers will appear in a question-and-answer format, expanding on points in the book, over the next few weeks.

Mark Schmitt: In your wonderful book, you show how the "submerged state" programs of the current era, like the tax credit for education savings, are invisible to their beneficiaries, thus fostering their feeling that government does nothing for them. You draw a contrast to older programs like Social Security and the GI Bill that recipients knew about and could feel. Most of the New Deal and Great Society programs were much more visible. How do you explain that? Was it that FDR, Harry Truman, and Lyndon B. Johnson were smarter about creating programs that people would appreciate? Or were those just simpler times?

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Suzanne Mettler: Social welfare policies created as part of the New Deal and Great Society did tend to feature a more visible role for government, for various reasons. Presidents Franklin D. Roosevelt and Lyndon B. Johnson benefitted from large majorities of Democrats in Congress, so they more often had the political clout to enact policies with designs they favored. The policies of the submerged state, some of which date back to the early and mid-twentieth century, were typically promoted by Republicans or by conservative Democrats who favored arrangements that worked through market mechanisms rather than government bureaucracies. In addition, submerged policies often emerged as the fruit of compromises with powerful interests -- groups who would only support reform if it channeled funds in their direction. This is exemplified by the creation of bank-based student lending in 1965.

In the period of conservative governance that the United States has experienced since 1980, creating and building the submerged state has become a bipartisan affair. Such designs appear, at least at first blush, to embrace the market-based priorities of this period, the view that the private sector does things more effectively and efficiently than government. In reality, submerged policies are antithetical to genuine laissez faire principles, because they actually intervene in the market and channel government resources to promote particular industries at the expense of others.

In addition, as partisan polarization has escalated, submerged policies have grown more attractive to Democrats because they offer a more politically feasible manner of channeling resources to low- and moderate-income people than the creation or expansion of direct policies. This is the case not only because conservatives are more willing to support them, but also because they encounter fewer procedural hurdles in Congress. They are not subject to the public glare and multiple veto points of normal budget items, and once enacted, they can grow automatically and are not subject to annual appropriations.

Mainstream Democrats have increasingly come to recognize that such policies poll well. This point is explored in fascinating new research by Jake Haselswerdt and Brandon Bartels, discussed recently at The Monkey Cage, and by Kevin Drum at Mother Jones. But contrary to Drum's conclusion that these policies show "how to fool conservatives into spending money," in the longer run it is liberals and moderates who are shown to be the fools for embracing such policies. As I show in The Submerged State, government's role in such policies eludes Americans, including even the beneficiaries. This makes it possible for people to become increasingly indifferent or even hostile to government, not recognizing that it is the source of policies they depend on. In turn, it prevents people from mobilizing to support reforms to address the major social problems that concern them.

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2012: 1932 Redux?

Nov 8, 2011David B. Woolner

 

If Congress continues to obstruct efforts to revive the economy, today's incumbents may suffer the same fate as Herbert Hoover.

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.

 

If Congress continues to obstruct efforts to revive the economy, today's incumbents may suffer the same fate as Herbert Hoover.

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.

We need enthusiasm, imagination, and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer.

-Franklin D. Roosevelt, May 22, 1932

Seventy-nine years ago today, on November 8, 1932, the people of the United States elected Franklin D. Roosevelt President of the United States.  No one was absolutely sure what FDR would do as president, but everyone understood that the United States -- and much of the rest of the world -- was in deep trouble.

Since the start of the Great Depression three years earlier, unemployment had climbed above 20 percent, average annual family income had fallen by 40 percent, and thousands of banks had closed their doors, wiping out the savings of 9 million individual bank accounts. Roughly half of all the home mortgages in the United States were in default, with another 1,000 homes going under every day. American industry had all but collapsed. To take but one example, in 1929 United States Steel Corporation had 225,000 full-time employees; by the end of 1932 it had no full-time employees save its corporate officers and a mere handful of part-time workers. The same was true in the financial sector, where overall stock market values had declined by 85 percent since their high in September 1929.

The human side of this story is even more distressing. In its November 1932 issue, The Nation estimated that approximately 20 million Americans -- one sixth the total population -- were at risk of starvation during the coming winter. By the end of the year, more than 2 million homeless people were roaming the streets looking for work or relief, of which approximately 200,000 were children -- mostly boys under the age of 14. In the coal mining regions of West Virginia and Kentucky, over 90 percent of the young were already suffering from malnutrition, as were more than 160,000 young people in New York City.

In the face of such a devastating crisis, FDR came to the conclusion that the forces of the market place had failed to deliver basic economic security to millions upon millions of Americans. He rejected the laissez-faire ideology that dominated the 1920s and understood that the forces of greed and avarice -- led by what his cousin Theodore Roosevelt called "the malefactors of great wealth" -- had created such an imbalance in our economic system that without immediate, significant reform, the U.S. might find itself in the throes of a revolution. This became all too clear with the rise of fascism and other forms of totalitarianism in parts of Europe and Asia.

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In essence, FDR believed that for democracy to work, capitalism had to work -- not for the few, but for all. He dedicated himself to the idea that against the forces of "economic tyranny" that had brought about this great crisis, "the American citizen could only turn to the organized power of government."

It was out of this basic conviction that FDR launched the New Deal, not to destroy the free market system, but to save it. Under his guidance the American people embraced the notion that in a complex modern industrial society the government can and must serve as the primary instrument of social and economic justice. It was this simple philosophy that brought us Social Security, unemployment insurance, banking and financial reform, the minimum wage, the right of labor to organize, and a host of other reforms that fundamentally altered the relationship between the American people and their government. The New Deal also offered millions of unemployed the dignity of work -- the chance for the laborers, architects, artists, and engineers of this great nation to build much of the economic, artistic, and environmental infrastructure that we still enjoy today.

Above all, FDR understood -- as he said in his first inaugural -- that "this nation asks for action and action now." Thanks to the support he enjoyed among most congressional Democrats and a significant number of liberal Republicans, he was able to push through the most significant slate of legislative reforms in our nation's history. In doing so, he not only helped alleviate a great deal of economic suffering but also restored the American people's faith in democratic government.

There is no question that a good share of the support FDR received in his campaign for the White House in 1932 stemmed from his repeated calls for action and his criticism of the lack of initiative on the part the Hoover administration to meet the economic crisis. After more than two years of unemployment at or above 9 percent, the mood of the electorate today is not all that different than it was in 1932. Polls show a mixture of anxiety, despair, and frustration at Congress's refusal to pass common sense measures -- like President Obama's jobs bill -- that would offer some relief to the millions of unemployed Americans.

To date, the deficit hawks in Congress seem unconcerned about the cost of their obstructionism, but if 1932 is any guide, this may prove a risky strategy for the coming election. To paraphrase FDR, the American people may tire of a "hear-nothing, see-nothing, do-nothing government" -- except that this time they may take out their frustration not on the president, but on Congress.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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A Woman with a Plan: The Real Story of Margaret Sanger

Nov 2, 2011Ellen Chesler

Her opponents have smeared her as a racist and classist, but she devoted her life to fighting for equal access to reproductive choice.

Her opponents have smeared her as a racist and classist, but she devoted her life to fighting for equal access to reproductive choice.

Birth control pioneer Margaret Sanger is back in the news this week thanks to GOP presidential candidate and abortion rights opponent Herman Cain, who claimed on national television that Planned Parenthood, the visionary global movement she founded nearly a century ago, is really about one thing only: "preventing black babies from being born." Cain's outrageous and false accusation is actually an all too familiar canard -- a willful repetition of scurrilous claims that have circulated for years despite detailed refutation by scholars who have examined the evidence and unveiled the distortions and misrepresentations on which they are based (for a recent example, see this rebuttal from The Washington Post's Glenn Kessler).

It's an old tactic. Even in her own day, Sanger endured deliberate character assassination by opponents who believed they would gain more traction by impugning her character and her motives than by debating the merits of her ideas. But when a presidential candidate from a major U.S. political party is saying such things, a thoughtful response is necessary.

So what is Sanger's story?

Born Margaret Louisa Higgins in 1879, the middle child of a large Irish Catholic family, Sanger grew into a follower of labor organizers, free thinkers, and bohemians. Married to William Sanger, an itinerant architect and painter, she helped support three young children by working as a visiting nurse on New York's Lower East Side. Following the death of a patient from a then all-too-common illegal abortion, she vowed to abandon palliative work and instead overturn obscenity laws that prevented legal access to safe contraception.

Sanger's fundamental heresy was in claiming every woman's right to experience her sexuality freely and bear only the number of children she desires. Following a first generation of educated women who had proudly forgone marriage in order to seek fulfillment outside the home, she offered birth control as a necessary condition to the resolution of a broad range of personal and professional frustrations.

The hardest challenge in introducing Sanger to modern audiences, who take this idea for granted, is to explain how absolutely destabilizing it seemed in her own time. As a result of largely private arrangements and a healthy trade in condoms, douches, and various contraptions sold under the subterfuge of feminine hygiene, birth rates had already begun to decline. But contraception remained a clandestine and delicate subject, legally banned under obscenity statutes, and women were still largely denied identities or rights independent of their relationships with men, including the right to vote.

By inventing the term "birth control," Sanger brought the practice -- and by implication, women's entitlement to sexual pleasure -- out into the open and gave them essential currency. She went to jail in 1917 for opening a clinic to distribute primitive diaphragms to immigrant women in Brooklyn, New York, and appeal of her conviction led to a medical exception that licensed doctors to prescribe contraception for reasons of health. Under these constraints she built a network of independent local women's health centers that eventually came together under the banner of Planned Parenthood. She also lobbied for the repeal of federal obscenity statutes that prevented the legal transport of contraception by physicians across state lines, which were struck down in federal court in 1936.

Sanger sought and won scientific validation for various contraceptive methods, including the birth control pill, whose development she supported and found the money to fund. In so doing, she helped lift the religious shroud that had long encased reproduction and secured the endorsement of contraception by physicians and social scientists. From this singular accomplishment, which some still consider heretical, a continuing controversy has ensued.

Sanger always remained a wildly polarizing figure, which clarifies the logic of her decision after World War I to jettison "birth control" and adopt the more socially resonant term "family planning." This move was particularly inventive but in no way cynical, especially when the Great Depression brought attention to collective needs and the New Deal created a blueprint for bold public endeavors.

Some have falsely charged that Sanger defined family planning as a right of the privileged but a duty or obligation of the poor. To the contrary, she showed considerable foresight in lobbying to include universal voluntary family planning programs among public investments in social security. Had the New Deal incorporated basic public health and access to contraception, as most European countries were then doing, protracted conflicts over welfare and health care policy in the U.S. might well have been avoided.

Having long enjoyed the friendship and support of Franklin and Eleanor Roosevelt, Sanger also had ample reason to believe the New Dealers would fully legalize and endorse contraception as a necessary first step to her long-term goal of transferring responsibility and accountability for voluntary clinics to the public health sector. What she failed to anticipate was the force of opposition family planning continued to generate from a coalition of religious conservatives, including urban Catholics and rural fundamentalist Protestants, that held Roosevelt Democrats captive much as today's evangelicals have captured the GOP.

The U.S. government would not overcome cultural and religious objections to public support of family planning through its domestic anti-poverty and international development programs until the late 1960s, after the Supreme Court protected contraceptive use under the privacy doctrine created in Griswold v. Connecticut. At this time, Planned Parenthood clinics became major government contractors, since there were few alternative primary health care centers serving the poor. Today, one in four American women funds her contraception through government programs, many of them still run by Planned Parenthood -- a number likely to rise under the Affordable Care Act.

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Sanger's eagerness to mainstream her movement explains her engagement with eugenics, a then widely popular intellectual movement that addressed the manner in which human intelligence and opportunity is determined by biological as well as environmental factors. Hard as it is to believe, eugenics was considered far more respectable than birth control. Like many well-intentioned reformers of this era, Sanger took away from Charles Darwin the essentially optimistic lesson that humanity's evolution within the animal kingdom makes us all capable of improvement if only we apply the right tools. University presidents, physicians, scientists, and public officials all embraced eugenics, in part because it held the promise that merit would replace fate -- or birthright and social status -- as the standard for mobility in a democratic society.

But eugenics also has some damning and today unfathomable legacies, such as a series of state laws upheld in 1927 by an eight-to-one progressive majority of the U.S. Supreme Court, including Justices Oliver Wendell Holmes and Louis Brandeis. Their landmark decision in Buck v. Bell authorized the compulsory sterilization of a poor young white woman with an illegitimate child on grounds of feeble mindedness that were never clearly established. This decision, incidentally, was endorsed by civil libertarians such as Roger Baldwin of the ACLU and W.E.B. Dubois of the NAACP, both of whom Sanger counted among her supporters and friends.

For Sanger, eugenics was meant to begin with the voluntary use of birth control, which many still opposed on the grounds that the middle class should be encouraged to have more babies. She countered by disdaining what she called a "cradle competition" of class, race, or ethnicity. She publicly opposed immigration restrictions and framed poverty as a matter of differential access to resources like birth control, not as the immutable consequence of low inherent ability or character.

As a nurse, Sanger also understood the adverse impacts of poor nutrition, drugs, and alcohol on fetal development and encouraged government support of maternal and infant health. She argued for broad social safety nets and proudly marshaled clinical data to demonstrate that most women, even among the poorest and least educated populations, eagerly embraced and used birth control successfully when it is was provided.

At the same time, Sanger did on many occasions engage in shrill rhetoric about the growing burden of large families of low intelligence and defective heredity -- language with no intended racial or ethnic content. She always argued that all women are better off with fewer children, but unfortunate language about "creating a race of thoroughbreds" and other such phrases have in recent years been lifted out of context and used to sully her reputation. Moreover, in endorsing Buck v. Bell and on several occasions the payment of pensions or bonuses to poor women who agreed to limit their childbearing (many of whom enjoyed no other health care coverage), Sanger quite clearly failed to consider fundamental human rights questions raised by such practices. Living in an era indifferent to the obligation to respect and protect individuals whose behaviors do not always conform to prevailing mores, she did not always fulfill it.

The challenge as Sanger's biographer has been to reconcile apparent contradictions in her beliefs. She actually held unusually advanced views on race relations for her day and on many occasions condemned discrimination and encouraged reconciliation between blacks and whites. Though most birth control facilities conformed to the segregation mores of the day, she opened an integrated clinic in Harlem in the early 1930s. Later, she facilitated birth control and maternal health programs for rural black women in the south, when local white health officials there denied them access to any New Deal-funded services.

Sanger worked on this last project with the behind-the-scenes support of Eleanor Roosevelt and Mary McLeod Bethune, founder of the National Council for Negro Women and then a Roosevelt administration official. Their progressive views on race were well known, if controversial, but their support for birth control was silenced by Franklin's political handlers -- at least until he was safely ensconced in the White House for a third term, when the government rushed to provide condoms to World War II soldiers.

Sanger's so-called Negro Project has been a source of controversy first raised by black nationalists and some feminist scholars in the 1970s and later by anti-abortion foes. Respecting the importance of self-determination among users of contraception, she recruited prominent black leaders to endorse the goal, especially ministers who held sway over the faithful. In that context, she wrote an unfortunate sentence in a private letter about needing to clarify the ideals and goals of the birth control movement because "we do not want the word to go out that we want to exterminate the Negro population."  The sentence may have been thoughtlessly composed, but it is perfectly clear that she was not endorsing genocide.

America's intensely complicated politics of race and gender has long ensnarled Sanger and all others who have sought to discipline reproduction. As many scholars of the subject in recent years have observed, much of the controversy proceeds from the plain fact that reproduction is by its very nature experienced individually and socially at the same time. In claiming women's fundamental right to control their own bodies, Sanger remained mindful of the dense fabric of cultural, political, and economic relationships in which those rights are exercised.

In most instances the policies Sanger advocated were intended to observe the necessary obligation of social policy to balance individual rights of self-expression with the sometimes contrary desire to promulgate and enforce common mores and laws. She may have failed to get the balance quite right, but there is nothing in the record to poison her reputation or discredit her noble cause. Quite the contrary.

The Reverend Martin Luther King, Jr. may have put it best in 1966, when he accepted Planned Parenthood's prestigious Margaret Sanger Award and spoke eloquently of the "kinship" between the civil rights and family planning movements. Here is what he said, since it bears repeating:

There is a striking kinship between our movement and Margaret Sanger's early efforts. She, like we, saw the horrifying conditions of ghetto life. Like we, she knew that all of society is poisoned by cancerous slums. Like we, she was a direct actionist -- a nonviolent resister... She launched a movement which is obeying a higher law to preserve human life under humane conditions. Margaret Sanger had to commit what was then called a crime in order to enrich humanity, and today we honor her courage and vision; for without them there would have been no beginning.

Ellen Chesler is a Senior Fellow at the Roosevelt Institute and author of Woman of Valor: Margaret Sanger and the Birth Control Movement in America.

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After Violence in Occupy Oakland, Remembering FDR's Engagement with Another Occupation

Oct 28, 2011David B. Woolner

FDR engaged with the Bonus Army instead of cracking down. Today's mayors should take note.

The violence that broke out in Oakland earlier this week and the wounding of Scott Olsen, a Marine veteran, recalls a similar "occupy movement" involving veterans that took place in Washington at the onset of the Great Depression.

FDR engaged with the Bonus Army instead of cracking down. Today's mayors should take note.

The violence that broke out in Oakland earlier this week and the wounding of Scott Olsen, a Marine veteran, recalls a similar "occupy movement" involving veterans that took place in Washington at the onset of the Great Depression.

In 1932, thousands of unemployed World War I veterans, desperate from lack of work, converged on Washington, mostly by riding the rails, in support of a bill that would have allowed them to receive immediate cash payment of the war service "bonus" they were due in 1945. The veterans called themselves the "Bonus Army" or "Bonus Expeditionary Force." By the end of May of that year, more than 20,000 had occupied a series of abandoned buildings near the Washington Mall and a sprawling shantytown they built on the Anacostia Flats not far from the Capitol. On June 15, 1932, the House of Representatives passed a bill in favor of the veteran payments, but as both President Hoover and a majority in the Senate opposed it, the "Bonus bill" went down to defeat two days later.

In the wake of this defeat, roughly 15,000 members of the Bonus Army decided that they would continue their occupation as a protest against the government's decision. By late July, President Hoover decided it was time to clear the city of the protesters, using four troops of cavalry under the command of General Douglas MacArthur. Late in the afternoon of July 28, General MacArthur's troops -- with sabers drawn -- cleared the buildings near the Mall. They then fired tear gas among the men, women, and children encamped in Anacostia (many veterans were accompanied by their families); stormed the area on horseback, driving them out; and intentionally burned the shantytown to the ground in the process. More than 1,000 people were injured in the incident and two veterans and one child died.

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In attacking the shantytown, MacArthur had exceeded his orders, which were simply to clear the buildings and surround the camp so as to contain it. But this meant little to the public, who were outraged at the treatment the veterans had received at the hands of the government and furious at Hoover for ordering the operation. Hoover, nevertheless, remained publically unrepentant and refused to apologize to the veterans -- moves that contributed greatly to his massive loss to Franklin Roosevelt a few months later.

FDR, for his part, was disgusted by the whole affair. When a smaller group of about 3,000 Bonus Marchers converged on Washington with the same demand a year later, FDR took quite a different approach. Where Hoover had refused to meet with the protesters, FDR invited a delegation to come to the White House. He also provided the marchers housing in an unused army fort, made sure that they were given three meals a day plus medical attention, and sent Eleanor Roosevelt to engage them in further discussions and check on their condition. Not wanting to single out any group for special treatment, in the end he refused to support their demand for the early payment of their pensions. But the men were offered work in the newly formed Civilian Conservation Corps (CCC), which 90 percent accepted. Shortly thereafter the Bonus Marchers voted to disperse, and those that opted to return home rather than join the CCC were given free rail passage.

Perhaps the municipal authorities in Oakland, New York, and elsewhere might learn something from FDR. They could use a lesson on the value of dialogue and the benefits a government that is responsive to the needs -- if not the demands -- of its citizens.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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What Would Keynes Do? More Stimulus, More Monetary Policy

Oct 24, 2011Mike Konczal

Keynes's advice to FDR still holds overwhelmingly true for combatting our own crisis.

Keynes's advice to FDR still holds overwhelmingly true for combatting our own crisis.

The Franklin D. Roosevelt President Library and Museum has put scans up of several important documents that highlight FDR's transition from trying to balancing the budget in the Great Depression to, after the crash of 1937, his ability to see that Keynesian deficit spending could help the recovery. The page that has the resources, plus a history, is located here: FDR: From Budget Balancer to Keynesian.

It includes several campaign speeches by Roosevelt as they evolved over the 1930s, and it also includes John Maynard Keynes's 1938 private letter to President Roosevelt. The Keynes letter is great. He is a model of clarity, wit, and seriousness with a towering intellect on all matters economic.

After the fiscal and monetary contraction that brought on the crash of 1937, liberals in the Roosevelt administration weren't sure what to do. Keynes, in his letter, outlined a five step plan including both what had just worked and what to continue doing until the economy healed:

This is how we should judge our current elites and opinion leaders. How well do they understand this game plan for addressing a massive crisis like the one we are in, and under what economic ideology and rationality are they deviating from it? Right now it is a full-time job trying to convince elites that this is the right program for the country, rather than rewriting federal and state law to businesses' liking and focusing obsessively on the deficit. So little has been learned, and what we've learned has been forgotten.

Keynes also noted that getting the housing market straightened out is one of the best ways to handle the Depression. "Housing is by far the best aid to recovery because of the large and continuing scale of potential demand; because of the wide geographical distribution of this demand; and because the sources of its finance are largely independent of the Stock Exchanges." Getting the housing market right is also an uphill battle for our recession and administration.

Keynes Does the Twist

There's a debate within left-liberal economic circles over the relative importance of monetary versus fiscal policy in dealing with the economic downturn. Often you hear that all the stuff Bernanke is doing, from QE to Operation Twist, is a rejection of what Keynes would advise if he was living today.

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Since we are looking at Keynes' letters to President Roosevelt, let's look at his 1933 open letter to FDR, published in the New York Times. Among other recommendations, he advises the new administration to do two things on the domestic front (my bold):

If you were to ask me what I would suggest in concrete terms for the immediate future, I would reply thus... In the field of domestic policy, I put in the forefront, for the reasons given above, a large volume of Loan-expenditures under Government auspices. It is beyond my province to choose particular objects of expenditure. But preference should be given to those which can be made to mature quickly on a large scale, as for example the rehabilitation of the physical condition of the railroads... You can at least feel sure that the country will be better enriched by such projects than by the involuntary idleness of millions.

I put in the second place the maintenance of cheap and abundant credit and in particular the reduction of the long-term rates of interest. The turn of the tide in great Britain is largely attributable to the reduction in the long-term rate of interest which ensued on the success of the conversion of the War Loan. This was deliberately engineered by means of the open-market policy of the Bank of England. I see no reason why you should not reduce the rate of interest on your long-term Government Bonds to 2½ per cent or less with favourable repercussions on the whole bond market, if only the Federal Reserve System would replace its present holdings of short-dated Treasury issues by purchasing long-dated issues in exchange. Such a policy might become effective in the course of a few months, and I attach great importance to it.

His first suggestion constitutes fiscal stimulus. But his second suggestion is urging the Federal Reserve to replace its short-term bonds with long-term bonds to bring down the rates on the long-term bonds -- just like Operation Twist! Equally interesting, instead of naming an amount of Treasuries to buy, like $800 billion or $2 trillion, Keynes says to hit a specific rate. The Federal Reserve can either set a rate or an amount, and we've been doing QE through setting purchase amounts. Maybe this other way that he suggests, having QE set a target for long-term rates, is a better way of doing QE? He's a pretty smart fellow.

Keynes "terrified lest progressives causes...suffer injury"

Going back to the 1938 letter, I find Keynes' conclusion chilling.

In this letter, Keynes is saying that if FDR didn't handle the recovery correctly the whole New Deal would be at risk. Full employment is hard to accomplish, very hard, but it isn't impossible. And the stakes are higher than just the economic recovery -- failure means that progressive governance and polices are both at "risk to their prestige" from a prolonged downturn. Taking the economic downturn "too lightly" puts all of it -- from responsibly combating global warming, to bringing fairness and justice to those working in the shadows of labor market, to making sure everyone has access to insurance against sickness and poverty in old age, to the rest of the liberal governance project -- at risk. And, as we see the years pass by, it is too easy to lose precious time.

Mike Konczal is a Fellow at the Roosevelt Institute.

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FDR, Obama, and Occupy Wall Street: Time for Another New Deal?

Oct 20, 2011David B. Woolner

FDR didn't just extend his sympathies to protesters. He listened to their demands and worked to implement real solutions to their problems.

As the Occupy Wall Street protests that originated in lower Manhattan gain momentum, a good deal of speculation has arisen in the press. Will the protesters coalesce around a set of demands? Will President Obama and the Democratic Party embrace the movement? What impact will the protests, which have now spread to other parts of the country, have on the 2012 presidential election?

FDR didn't just extend his sympathies to protesters. He listened to their demands and worked to implement real solutions to their problems.

As the Occupy Wall Street protests that originated in lower Manhattan gain momentum, a good deal of speculation has arisen in the press. Will the protesters coalesce around a set of demands? Will President Obama and the Democratic Party embrace the movement? What impact will the protests, which have now spread to other parts of the country, have on the 2012 presidential election?

Although there has been some resistance to the idea of the movement adopting a formal agenda for reform, many of the demands and some of the rhetoric generated by the protesters echo similar calls for reform that emanated during the New Deal. Last Sunday evening, for example, it was reported that Occupy Wall Street's Demands Working Group had endorsed the idea of a New Deal-style public works program that would put millions of Americans on the government payroll rebuilding the nation's crumbling infrastructure. Another idea that has surfaced within the movement is the restoration of the Glass-Steagall Act.

What is most significant, however, is the possibility that the Occupy Wall Street movement might spur the Obama administration and Congress to embrace reform and take stronger government action to combat the current economic crisis. In this respect, it has the potential to mirror the powerful social justice movements that emerged during the 1930s -- movements that not only drew national attention to the great disparities in wealth between the rich and the poor in the United States, but also pushed the Roosevelt administration and Congress to adopt some of the most significant pieces of reform legislation in U.S. history. The passage of the all-important Wagner Act, which established a permanent National Labor Relations Board and enshrined the right of private sector workers to form unions, was inspired in large part by the more than 1,800 strikes that broke out in 1934. The Social Security Act, which provided an old-age pension and established unemployment insurance, was spurred on in part by the 2 million-member Townsend movement that put forward a tax and pension scheme that made it clear that the government had to do something to provide basic economic security for the elderly. For the millions of unemployed, who often took to the streets in frustration, Roosevelt created the Works Progress Administration, which put over 8.5 million Americans to work building the roads, bridges, airports, and schools that still make up a significant portion of our nation's economic infrastructure.

On Oct. 23, the FDR Library presents a free forum on FDR’s foreign policy advisers. Click here to find out how you can join the conversation!

President Obama has recently indicated that he sympathizes with the concerns of the Occupy Wall Street movement, but he has yet to embrace it. FDR was not nearly so circumspect. It is true that during his initial year in office, FDR -- much like President Obama -- adopted what can best be called national unity politics. This, coupled with his innate political caution and abhorrence for ideology, made him reluctant to join ranks with those who were in the streets demanding reform.

But as early as mid-1934, the president -- who in his heart of hearts agreed with the calls for more progressive government -- began to change his tune. In one of his famous Fireside Chats, delivered near the end of June 1934, FDR took note of the fact that in spite of the great progress that had been made stabilizing the economy and meeting the immediate crisis, it was time to look to the future -- time for the country "to find a way once more to well-known, long established but to some degree forgotten ideals and values," and time for the Government and Congress to "seek the security of the men, women and children of the nation." He continued:

That security involves added means of providing better homes for the people of the Nation. That is the first principle of our future program.

The second is to plan the use of land and water resources of this country to the end that the means of livelihood of our citizens may be more adequate to meet their daily needs.

And, finally, the third principle is to use the agencies of government to assist in the establishment of means to provide sound and adequate protection against the vicissitudes of modern life -- in other words, social insurance...

A few timid people, who fear progress, will try to give you new and strange names for what we are doing. Sometimes they will call it "Fascism," sometimes "Communism," sometimes "Regimentation," sometimes "Socialism." But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.

I believe in practical explanations and in practical policies. I believe that what we are doing today is a necessary fulfillment of what Americans have always been doing -- a fulfillment of old and tested American ideals.

In the coming 18 months, FDR -- inspired and motivated by the determination of the millions of Americans who embraced a number of mass movements demanding social and economic justice -- would launch his famous Second New Deal. It was a wave of legislation that, through such programs as Social Security and the Wagner Act, is still very much with us to this day.

As the Occupy Wall Street movement continues to grow, perhaps the president and our leaders in Washington should do more than merely extend their sympathy. Perhaps they should take a lesson from the New Deal and act to address the concerns of a new generation -- a generation that may not yet have articulated a specific set of demands, but one that is crying out for a government animated by the same spirit that stood at the heart of the New Deal, driven by the desire to provide social and economic justice for all.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book on U.S.-UK economic relations in the 1930s, entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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