Conservatives hated Roosevelt and the New Deal. Watch out for revisionist myths as we enter an era that seems to rhyme with, if not repeat, some of the Depression-era conditions.
I don’t pretend to have any great knowledge of the Depression, Roosevelt, or the New Deal. But, at least, I’d be very skeptical of historical analyses of Roosevelt’s policies coming from folks who are philosophically inclined toward maintaining the status quo that suggest that the rich should not have been relieved of some of their money and power. That’s not to say such analyses are necessarily wrong; only that the potential for bias to skew the analysis is very strong.
There has already been a lot of review of the New Deal.
It’s my opinion that large scale spending by the Federal government is what (finally) brought us out of the Great Depression. Unfortunately, most of that spending didn’t begin in earnest until 1940 (and became predominately military spending).
Can’t rememeber the details, but the Great Depression came (slowly) because of the acts of both the Hoover administration -and- the Roosevelt administration. It didn’t happen overnight, or even in the next year after the Market Crash of 1929.
The problem is that economists can’t agree on solutions, then or now. Too little, too late; misdirected efforts; lack of focus.
Fiscal conservatives aren’t going to like the idea of MORE spending, but I can’t see any other way to mitigate the problems we already face.
The real argument is going to be how and where to spend it. Bailouts probably aren’t the best solution. The economy may just be due for a major realignment, and this may be the onset of it.
My preference would be massive spending on rebuilding the country’s infrastructure (and maybe in different ways). It’s tangible, it’s long term, and maybe workers will feel like they are making a difference for their childrens’ sake.
I would agree that infrastructure seems to be a great place to direct the spending. My theory is that we either spend the money stabilizing things now or spend it later fighting a war if things stay bad for too long. Probably the stabilization effort has to be world wide.
If people are starving and some power hungry lunatic comes along on a white horse telling them that their problems are because of those guys over there; the starving folks will happily follow the lunatic to go fight those guys over there.
My best takes on the Depression were from my grandparents who lived it. If you had a school teachers job in a one-room school house for $30 a month you were set for life and were the envy of those who were out of work.You could buy 3 huge rings of baloney for a quarter,but nobody had a quarter.If you had bought a car during the late 20s in good times you couldn’t afford to buy replacement tires in the 30s and in the 40s war years they weren’t available to buy at any price because of rationing. I can remember my father constantly patching the same innertube.These are just little vignettes,but kind of catch the spirit of this era.
Can’t rememeber the details, but the Great Depression came (slowly) because of the acts of both the Hoover administration -and- the Roosevelt administration.
We’re agreed, then. You can’t remember the details. (insert smiley face thing)
The Crash was in October. The market low that year came a month later. That rippled through the economy in 1930, and banks started failing. That created a panic, and a run on the banks, which the laissez-faire-era Fed was more or less powerless to control.
The Great Depression was not a slow-motion slide; it was a cascading disaster. Unemployment quadrupled in 1930, then nearly doubled in ’31, and rose another 2/3 in 1932. It fell two more points to its nadir-25%-in 1933, the year FDR took office (in March, recall). By the end of 1933 GNP and unemployment had stabilized, which might not be great, but was better than it might have been.
Of course not everything the New Dealers did worked (what a ridiculous standard!). Of course deficit spending that arrived with WWII finally pulled us out. But economic growth began in 1934; the GNP rose almost 10% a year between then and the recession of 1938, and unemployment in 1937 was better than it was in 1931.
It’s apparently outside the range of normal modern American experience to realize just how vehement were the anti-Roosevelt forces unleashed in the 1930s, and how pathetic their third-generation Xeroxers like Amity Shlaes are today. (Fun fact: few Americans today are even aware today that the DuPonts, the Morgans, the Pews, the Melons, and others might have actively sought to overthrow Roosevelt and install a Fascist regime. They are, however, familiar with the fact that Barack Obama and Bill Ayers used to blow shite up together.)
See, DR? You are already expounding an extended time-line. You go from October, 1929 to the end of 1932.
I agree things began to go sour right away, but it didn’t go from the Roaring Twenties to the Great Depression in the blink of an eye.
In fact, Hoover’s administration had probably just begun to get a handle on how to draw back from the abyss, then lost the election. FDR didn’t want Hoover’s advice, and so the slide downwards continued.
The thing about many features of the New Deal is that it just wasn’t enough. The fact that the economy began another retrenchment in 1937 should have been an alarm that things just weren’t getting better fast enough. It wasn’t until late 1937 that FDR even began to believe in anything J.M. Keynes had been saying since the market crashed.
If not for the US involvement in another European conflict, the US economy would have sputtered on well into the 1940s. Not exactly a ringing endorsement for FDR’s economic acumen. History has looked kindly on FDR because he was the consummate used car salesman. That doesn’t make him a bad President, but things could have gotten better sooner, economically speaking.
The chances that some US industrialists/magnates might have thrown over FDR (the Federal government) was slim. Like most “revolutionaries” in the US, they talked a better game than they played. I do agree that people who didn’t like FDR – DIDN’T like FDR. It’s kind of like that physics thingy, for every action there is an equal and opposite reaction. Still, I find FDR a fascinating President who easily makes my top 10 list of US Presidents.
If President-elect Obama really was a genius, he have some people corraling the experts on this era (both on Hoover and FDR) and wringing out their knowledge about the slide into the Great Depression.
Doug, I agree with you about infrastructure. Here in little North Judson we have a lovely amphitheater built by the WPA in the 1930s; the project not only created a civic improvement that is still in excellent condition today, but it also served as a classroom teaching construction skills to the unemployed.
We have pressing infrastructure needs today, and if you’re spending money, it’s a lot different investing it in useful improvements than just burning it (Iraq comes to mind). Transit and energy related projects are obvious but parks and brown-fields restorations make sense too.
Energy infrastructure is key. Is simultaneously increases federal spending into the market while solving a key strategic need. So we have something to show for a deficit (what do we have to show for our current deficit?).
The New Deal spending following FDRs entrance into office resulted in an improvement in every economic benchmark for every year from 1933 to 1937.
Things stalled in 1937 because Congress and some WH advisors became confident that the hump was passed and lobbied FDR to pursue a balanced budget and cut spending. Then everything stagnated or fell by 1938 and wasnt righted again until the massive got spending of WWII.
OK, the first thing decried as a ‘myth’ in that blog is in fact true. It assailed the idea that the prevailing statistic about unemployment in 1938- 5+ years into FDR’s Administrations- was nearly 20%. It was indeed nearly 20%. Well, your cited blog delves into its’ own revisionist history, sporting claims that the figures were misread.
Maybe some folks are anxious to get us not to really look at FDR’s record too carefully, because it really isn’t that glorious. Seems a little pre-emtively defensive, actually.
I don’t figure that today’s Americans aren’t too likely to be satisfied with an eventual recovery that depends on the very deficit spending so roundly so recently criticized of the Bush Administration, the necessity of a world war to generate production demand, nor so long a timeline.
President Obama would do well to have economic advisors who recognize that FDR’s New Deal wasn’t 100% successful, did include a 1937 recession, and is generally better regarded because the man died in office and we won the war than because of the literal economic track record produced.
I can’t speak for others, but I am pre-emptively defensive because I know there is a certain contingent out there that’s still pissed off about the end of the Gilded Age and the creation of the social safety net; and because I know how quickly unrebutted assertions can take hold. (See, e.g., “Al Gore claims he invented the Internet.”) And, once they do, mere facts aren’t going to change anything.
The way I have interpreted the economic dialogue the last few years is that free market and safety nets are mutually exclusive.
And even now a significant segment of freemarketers are saying:’let the big 3 go bankrupt,because it will serve them right for their bad management’. To me, this is the perfect example of throwing all the babies out with the dirty bath water.
I don’t know what Obama will do to try to mitigate these difficult economic times, but I’m sure he he will choose people over any idealogy.
Well, the other way of looking at providing the bailout is to say, “I’m in favor of rewarding poor management!” Remember: Anything subsidized results in more of that thing. In this case, bad management.
If one isn’t driven by ideology, i.e.: that thing they believe in, then what is it? Tacking potential solutions to the wall and throwing a dart?
By the way- ‘choosing people over ideology’ is ideology, it’s just wrapped in some heavy spin and rhetoric.
Mike…Thanks for your response.
If poor mangement is inadvertently rewarded today so we can be more equitable for all, we should be willing to live with that. But let’s make sure the rules are changed for tomorrow.
I’ll admit to being an idealogue for looking at each situation to identify winners and losers,but I look to the ones getting the short end before I look to who’s gaining.
If everyone has an idealogy then that’s mine. I hope it isn’t just ‘idealogy wrapped in spin’.But being an idealogue for the day destroys the definition of idealogue I’d say.
Throwing darts at a board would be effective only for short term winning and losing.But it’s a good place to start.
Government is entirely to blame for the current breakdown in our economics,so only government can step in to be a catylist for change. There have been no rules except for abritrary ones.Only government could have overseen from the start.
If I’d blame anyone politcially I’d start with Ronald Reagan,whom I voted for twice, and then Bill Clinton,whom I also voted for twice, who followed along with Reagan’s government deregulation of America’s money flow. Bush is his own separate story.
I was entirely for NAFTA at the time because I trusted Clinton,and I thought that finally we’d get some much needed workers’ safeguards with higher pay and better working conditions. And at that time I didn’t see clearly the negative side to international agreements. So we’re all to blame for this mess.
A bunch of small, quick responses as I head out the door…
-Of course, sending off a lot of your labor force to war is good for “unemployment”.
-Spending by the Federal govt cannot bring us out of anything. (The only notable exception here is spending on [good] infrastructure which the private sector has difficulty in producing.) Whatever they take/tax or borrow or print has to come out of someone’s pocket, destroying at least as much as they create.
-FDR pursued impressive fiscal policy efforts in the 1930s.
-The GD got rolling in late 1929 and peaked in 1933 with 25% unemployment. Unemployment moved around as the govt did all sorts of things and as the market tried to adjust to the economic and political. Unemployment was 19% in the 7th year of New Deal policies. Not very impressive.
-FDR was fortunate to have his history written by people sympathetic to him and his approach. One might argue that this is the revisionism of note.
-Hoover (like Bush) was an impressive interventionist– although not on the level of FDR (and perhaps Obama). They knew they were in trouble immediately and tried all sorts of FDR-like things that failed.
-The new Social Security payroll tax on labor (!) is a key to understanding how Congress and FDR grasped defeat from the jaws of economic recovery in 1937-38.
I agree with Eric that the infrastructure spending would have to be “good”. Stuff like finishing the separation of storm and sanitary sewers in older cities, replacing sewers, updating water treatment, updating power plants, replacing crumbling bridges, and the like.
I disagree that FDR had an impressive fiscal record during his first term. Eric likes it (I think) because the Federal government reined in spending dramatically, but I really feel that policy exacerbated the problem, instead of helping to mitigate anything.
The thing that started the return of the economy during the 1937 recession was the approval for the capital naval spending appropriations in 1938, which began the process of arming for WW2. It was the confidence that if the Feds were spending, then industry could begin to rehire and retool that got the economy rolling again.
There again, is that what it’s going to take? Re-tooling for war? I doubt the voters who made history this fall are going to be huge for that.
No, at least I hope not. Domestic spending on something tangible and long term, not banker bonuses or trips to the spa.
Domestic spending, that’s key.
I suppose “impressive” fiscal policy efforts could be in the eyes of the beholder. But FDR certainly did a series of things in fiscal policy that were unprecedented in size and scope. It was a “New” Deal regardless of whether it was a good deal.
As for overall government spending, it went up quite a bit over this period: from $12.6B in 1933 to $20.4 in 1940. From 1929 to 1940, GDP increased by less than 2%, but govt spending rose by nearly 75%.