What ended the Great Depression? #2

It is common belief that the massive federal spending and even more massive federal rules and regulations during the New Deal ended the Great Depression.

There are many books and articles refuting that falsehood.

For a brief explanation, check out Stephen Moore’s article, The enduring myth of FDR and the New Deal / Rather than end the Great Depression, his policies prolonged it.

In 1940, after 8 years of the New Deal, and FDR getting practically everything on his dream list he wanted (gaining complete control of the Supreme Court and turning it into a rubber-stamp formality being the main exception), unemployment was still at 14.6%. That is a slight improvement from the average of 18% during FDR’s first two terms.

Hardly a recovery. Certainly nothing to support the claim of the Great Depression having been brought to an end.

Federal spending went from $4.6 billion in ’33 to about $13.6 billion in ’41. Yet unemployment still hung in at over 14%.

Mr. Moore describes the damage from the flagship New Deal programs, which I’ll quote for the nice turns of phrases:

The rise in the minimum wage kept unemployment intolerably high. … Roosevelt’s work programs like the Works Progress Administration, National Recovery Administration and the Agricultural Adjustment Administration were so bureaucratic as to have minimal impact on jobs. Raising tax rates to nearly 80 percent on the rich stalled the economy. Social Security is and always was from the start a Madoff-style Ponzi scheme that will eventually sink into bankruptcy unless reformed.

I like that last description of Social Security – an intentional “Madoff-style Ponzi scheme.”

Mr. Moore notes the sad irony of the New Dealers’ programs. Their

…honorable intentions to help the poor and the unemployed caused more human suffering than any other set of ideas in the past century.

I must disagree. Communism and Fascism each produced far more suffering by orders of magnitude. Yet if we limit our candidates for the most damaging policies to just the United States boundary, then the New Deal still wins the prize.

So the New Deal didn’t end the Great Depression. Neither did World War II.

Advertisements
Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: