Don't Repeat Errors Of New Deal

NY Post ^ | 10 Nov 2008 | Amity Shlaes

[BGHater]

The historical model that the Democrats are choosing to hold up as they ponder our financial crisis isn't Harry Truman's Fair Deal or Lyndon Johnson's Great Society. It is Franklin D. Roosevelt's New Deal. At least three economic reforms under discussion now were also central in the New Deal package. Trouble is, these reforms didn't necessarily work well when they were first tried - and some failed outright.

Consider, for starters, a stimulus package. President-elect Obama has said that "the one thing I can say with certainty is that we are going to need a stimulus package passed either before or after my inauguration."

The idea, presumably, is that handing consumers a check - pre-Christmas bonus, perhaps - will encourage them to spend. Businesses will in turn benefit and then spend themselves.

Last summer saw the failure of just such a stimulus - President Bush's. University of Michigan economists found that, instead of spending as proposed, consumers saved their money. But the original stimuli of the New Deal also failed. Although Roosevelt got a slow start, he poured billions into the economy in his first term - an unprecedented action for a US leader in peacetime. Federal spending doubled between 1933 and 1936, the year he ran for reelection. The year 1936 saw a deficit of 2.6 percent of the economy, compared with say, a surplus in 1930. The economy did grow in those years. But it never got back to its old 1929 level. As soon as FDR stopped doling out the cash (in 1937, after the election) the economy crashed again. The stock market plummeted. Five years into the New Deal, in the winter of 1937-1938, two in 10 were again unemployed.

[jamaksin]

Giddy Minds and Foreign Quarrels - problem now is that we have the US military already engaged across the globe.

From “Giddy Minds and Foreign Quarrels - AN ESTIMATE OF AMERICAN FOREIGN POLICY (1939)” by Charles Austin Beard, 1874-1948.

[swift15]

Read “The Forgotten Man” by Amity Shlaes for her excellent insight into the New Deal. Also, her earlier work, I think was called “The Greedy Hand”, says a lot about how our tax system functions.

[Cacique]

btt

[SeekAndFind]

One thing that has never been explained totally to my satisfaction is this -— it has been argued by many that World War II and the industry that it spawned actually was the main factor that took us out of the great depression.

This explanation to me sounds fishy. If this were so, then why don’t we just create another big war today to take us out of our financial morass ?

The idea that WWII took us out of the depression sounds like another “broken windows” fallacy argument.

Anyone out there has a better explanation on what factors really helped our economy finally overcome the Hoover-FDR depression ?

[SeekAndFind]

What finally brought America out of the Great Depression?

a. Works Progress Administration
b. Regulating big businesses
c. Preparation for WWII (THIS IS THE MOST POPULAR ANSWER)
d. American came out on its own

e Give your best explanation

[rottndog]

It was the fact that during the war, most of the worlds industrial capacity was destroyed, with the US being the exception. After the war, we were in the perfect position to provide most all the goods needed to rebuild much of what was destroyed, since our industrial base had been expanded to support the war, hence the post war boom.