Intentional federal policies extended Great Depression by seven years
Hunger sculpture at FDR Memorial in Washington DC. A monument to the man whose policies added extra years to the Depression yet who rarely gets credit for the unnecessary suffering. Photo courtesy of DollarPhotoClub.com.
An extra seven years.
That is the conclusion two economists published back in 2004: intentional policies from FDR added seven years of suffering for the country.
Yes, that analysis was published back in 2004. Sometimes it takes me a while to catch up on the news.
On 8/10/04 the UCLA Newsroom published FDR’s policies prolonged Depression by seven years, UCLA economists calculate. Update: The analysis is from Professors Harold L. Cole and Lee E. Ohanian
Cause
The cause of extending the Great Depression, according to the economists, was the National Industrial Recovery Act (NIRA) which protected industries from antitrust prosecution in return for adopting collective bargaining agreements. The result was unions drove up wages beyond where the market would have set them, companies were intentionally not prosecuted for collusion, thus companies cooperated in setting prices, which in turn drove up prices to consumers. As a result consumers had much more difficulty affording stuff and therefore actually bought less stuff, which further contracted the economy.
