Oh hai Heritage. And what's your
Chief Economist Stephen Moore got to cheer about today?
Mr. Burns’ docudrama on the Roosevelts—for those who weren’t bored to tears—repeats nearly all the worn-out fairy tales of the FDR presidency, including what I call the most enduring myth of the 20th century, which is that FDR’s avalanche of alphabet-soup government programs ended the Great Depression. Shouldn’t there be a statute of limitations on such lies?
Well, hm, and what's today's argument about how the New Deal didn't work?
U.S. unemployment averaged a rate of 18 percent during Roosevelt’s first eight years in office. In the decade of the 1930s, U.S. industrial production and national income fell by about almost one-third. In 1940, after year eight years of the New Deal, unemployment was still averaged a god-awful 14 percent.
Ah, I see. But then as far as the unemployment thing goes, the unemployment rate did actually
change in the course of time, and it was
lowered from a high of 25.2% at the start of FDR's term in 1933 to a low of 14.3% at the beginning of 1937, which looks like progress. Then it went back up to 19.1% during the recession of 1937-38, when the New Deal was in temporary abeyance, with drastic cuts in Federal spending in an ill-advised early budget-balancing and money-tightening exercise, after which it headed back downward. So that it is clear that New Deal policies went along with a shrinking unemployment rate
when they were followed. Had the budget-balancing error of 1936-37 not taken place, it might well have gone down to 10%.
Also I don't know why people use the number that includes workers with jobs supplied by the WPA and other federal programs as "unemployed". If you use the numbers represented by the blue line in the chart you see that the number of people who
didn't have jobs decreased from around 22% to around 9%, which is probably less god-awful. And "unemployment was still averaged" is not English.
On the industrial production question I'd certainly like to know where your numbers come from. One problem is that you seem to have forgotten that three of the years of the 1930s were before the New Deal—
—and the industrial production index fell during that period by more than half. It then climbed, from FDR's inauguration to 1937, to well beyond 1929 highs, falling again less drastically in the budget-balancing recession, and then rising more or less continuously all the way to the War. Real GDP, much less affected by the 37-38 recession, rose more steadily still. So I really don't have a clue what you're talking about, but you're certainly doing it wrong.
Hence not one of the horrors you explain as devastating effects of the New Deal—
Almost everything FDR did to jump-start growth retarded it. The rise in the minimum wage kept unemployment intolerably high. (Are you listening, Nancy Pelosi?) 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.
—actually happened. You just made them all up. That is, it's true that a federal minimum wage was attempted in 1933 and established in 1938 (not that it "rose") and that income tax was made more progressive and that the work programs and Social Security were set up, but not that they did the alleged harm to the economy. Your argument reduces to, "New Deal policies could not have ended the Great Depression because that's what my theory says," even though all the data demonstrate that your theory is wrong, unless you just lie about them.
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