Franklin Roosevelt’s New Deal is a popular touchstone in these Depressionary days. It’s evoked by everyone from Barack Obama (“Green New Deal!”) to Robert Higgs (“No New Deal!”), from Paul Krugman to Peter Schiff.
Roosevelt’s New Deal rescued America from the Great Depression OR Roosevelt’s New Deal prolonged America’s Depression, and caused even further economic woes. Both these propositions can’t be true. Whichever side of this historic debate you’re on, however, it’s agreed by all sides that the economic predicament of today can find lessons in that Great Disaster of yesteryear:
- Do we spend dramatically to stimulate ever bigger bubbles?
- And if so, how much?
- Or do we cut our coats according to our rapidly-shrinking cloth, and learn to do more with less?
- And to save more of what we have left over?
Different lessons based largely on different readings of the success or otherwise of FDR’s New Deal – so a debate on the effectiveness or otherwise of the New Deal could not be timelier.
Head therefore to Public Square, where Jeff Madrick (author of The Case for Big Government) and Robert Murphy (author of The Politically Incorrect Guide to the Great Depression and the New Deal) go head to head to answer the question Was the New Deal a Raw Deal?
(You can see an index for each salvo in the debate on each page. And you can see some perceptive comments on the debate over at the Mises Blog, and you can join it at the Public Square Forum.)
- 'Great Myths of the Great Depression' - Lawrence Reed [sixteen-pages in PDF]
- 'Saving the Depression: A New Look at World War II' - Mark Skousen [online article]
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4 comments:
Whichever side of this historic debate you’re on, however, it’s agreed by all sides that the economic predicament of today can find lessons in that Great Disaster of yesteryear
Actually I'm not sure that's true. Anna Schwartz (who co-wrote Monetary Of The US in 1961 with M Friedman) has argued that the Fed is fighting the last war. They are pumping money into the economy when, unlike in the Great Depression, liquidity isn't the problem - knowing who is solvent and who isn't is the problem. That is why credit markets have been frozen - its not a question of having the money to lend, it is not knowing who is able to repay.
Whether it prolonged the Depression is certainly a matter for debate.
But what the New Deal did do is usher in a substantial reduction in freedom in America which has continued until the present.
It took a fairly short period of time before the 'Liberty League' was formed by members of FDR's own party horrified at his policies and their attacks on freedom.
On balance I am in opposition to anything which reduced freedom and increased the power of the State.
Actually I'm not sure that's true either. (Sorry, couldn't resist that.)
I'm not sure that's precisely true because Ms Schwartz's arguments are themselves based on a view of the "liquidity" problem in the early days of the Great Depression.
Whether it prolonged the Depression is certainly a matter for debate.
No it is not. It is a matter of basic, objective science and mathematics and economic history. And all of those are absolutely clear on that point! it is no more a matter of debate as the holocaust, the existence of evolution or the flatness of the Earth - and as with any of those topics, anyone at all who disagrees should be removed from society as with all available force.
The best arguments against the New Deal, come, funnily enough from the UK and from NZ (yep that's right). Both the UK and NZ had a far quicker and shallower depression than the US. Both recovered much more quickly. The solutions: no government "help" for industry, and especially no extra "welfare" of any kind - soup lines, work camps, and families starving in the street. Ask anyone who lived through it how horrible the depression and then the war was! No Dole, no DBP, especially no extra pathetic training schemes.
Just cutting the cloth, a stiff upper lip, not sending the kids to school, not eating meat, digging up turnips and swedes for the vege garden, not even having a radio, not having indoor plumbing because you couldn't afford the mortgage
If NZ is serious about rebuilding it's economy: that is the path we need to follow, and those are the examples we need to be listening too! Training won't help; benefits won't help; health and education we can no longer afford won't help.
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