Did the New Deal fail to reduce unemployment?

Discussion in 'Current Events' started by Jagger, Feb 15, 2009.

  1. Jagger

    Jagger New Member

    Conservative columnists playing dishonest numbers game to falsely claim the
    New Deal failed to reduce unemployment.

    Recently, conservative columnists George Will and Mona Charen have been playing a dishonest numbers game to falsely claim the New Deal failed to reduce unemployment.

    However, according to data from the Bureau of Labor Statistics, the unemployment rate in 1933 was 24.9 percent and that it fell each year thereafter (to 14.3 percent in 1937) until 1938 when it rose to 19 percent.

    Why the increase from 1937 to 1938? It was a reversal of the New Deal policies, which had reduced unemployment, that actually led to recession and drove the numbers back up.

    It's worth noting, by the way, that these numbers do not include those in federal work-relief programs (at the time, BLS counted those employed by the New Deal's emergency work programs as unemployed). So, the unemployment numbers were actually lower than reported in these years.
  2. av8torntn

    av8torntn Well-Known Member

    Get Over It: New Deal Didn't Do the Job
    by William W. Beach and Ken McIntyre
    "We have tried spending money. We are spending more than we have ever spent before and it does not work."

    Sound like Rep. John Boehner of Ohio, or perhaps another exasperated Republican stalwart, lamenting President Barack Obama's inclination this week to try to spend our way out of the recession?

    Listen again:

    "I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises."

    Sound more like a liberal Democrat -- say, Harlem's Rep. Charlie Rangel -- pushing Obama to "create" jobs?

    How about this:

    "I say after eight years of this Administration we have just as much unemployment as when we started. ... And an enormous debt to boot!"

    Surely this must be House Speaker Nancy Pelosi denouncing the Bush administration's economic policies.

    Wrong. Wrong. And wrong again.

    The words came from none other than Henry Morgenthau Jr. -- pal, lunch companion and loyal secretary of the Treasury to President Franklin D. Roosevelt.

    Morgenthau made this "startling confession," as historian Burton W. Folsom Jr. calls it, during the seventh year of the New Deal he helped FDR create to combat the rampant unemployment of the Great Depression.

    It was May 9, 1939, and Morgenthau was appearing before powerful Democrats on the House Ways and Means Committee.

    "In these words, Morgenthau summarized a decade of disaster, especially during the years Roosevelt was in power. Indeed average unemployment for the whole year in 1939 would be higher than that in 1931, the year before Roosevelt captured the presidency from Herbert Hoover," Folsom writes in his new book,"New Deal or Raw Deal?: How FDR's Economic Legacy Has Damaged America."
    Indeed, Morgenthau confessed what so many keepers of FDR's flame won't admit: The New Deal failed. Massive spending on public works programs didn't erase historic unemployment. It didn't produce a recovery.

    And neither will a "new" New Deal.

    Some of the most desperate defenders of New Deal doctrine are getting a little shrill about this. But it's an important truth, nevertheless, especially because the same characters insist President Obama must push through a "bold" economic stimulus that depends on hundreds of billions in new government spending to create or "save" jobs.

    Budget and financial experts at The Heritage Foundation caution that Obama ought not to repeat Roosevelt's mistakes. In one such effort, Heritage last week distributed a chart showing that FDR's programs didn't succeed in pushing unemployment below 20 percent.

    Some observers -- not just hysterical big government junkies but also dispassionate policymakers and news editors -- took issue with the unemployment data. They cited lower numbers.

    "Leading FDR slanderers," David Sirota hyperventilates on Huffington Post, "base their claims that unemployment during the New Deal didn't go below 20 percent by counting government workers as unemployed."

    Sirota, who calls himself a "political journalist," adds: "And those claims are being echoed by right-wing rags like the National Review and fringe think tanks like The Heritage Foundation."

    Ouch. If Heritage and our conservative principles are "fringe," then FDR's trusted Treasury secretary was what -- a duplicitous traitor?

    What to make of a "journalist" who argues that folks on public assistance must be considered employed -- much less "government workers"?

    For the record, Heritage plotted New Deal unemployment using widely accepted Census Bureau data (Page 6, Series D, column 10), the "official" numbers that were compiled at the time.

    They didn't count Civilian Conservation Corps workers, prisoners or anyone else who got only "three hots and a cot" as a government employee. Neither does Heritage.

    "f we counted people on work relief as employed," as George Mason University economist Alex Tabarrok writes, "then eliminating unemployment would be very easy -- just require everyone on any kind of unemployment relief to lick stamps."

    So why the different sets of numbers?

    Over the years, economists and academics working in good faith calculated "alternative series" of unemployment statistics in hopes of painting a more accurate picture. All begin with census data. The alternative numbers, generally showing somewhat lower levels of unemployment, are available from the Bureau of Labor Statistics.

    Thing is, the statistics preferred by Sirota and other FDR acolytes still reveal the New Deal didn't drive pre-World War II unemployment below 17 percent in any year except 1937 (estimate: 14.3 percent).

    These estimates (developed by economist Stanley Lebergott) show joblessness peaking at 24.9 percent in 1933, dropping over the next four years and -- under New Deal, Part 2 -- shooting back up to 19 percent in 1938. Unemployment then decreased to 14.6 percent in 1940 at the advent of a wartime economy and to 9.9 percent with America's entry into World War II the following year.

    The point, as the chart shows, is that the alternative numbers track the census estimates in showing unemployment during the New Deal remained the worst our nation has seen. World War II ended the run.

    The current recession likely will be deep. It could turn out to be more severe than any economic downturn since the Great Depression. Call it the "Great Recession." Still, the economy and financial markets are working through the difficulties, and eventually will stabilize and strengthen on their own.

    Amid the current economic pain, Heritage has urged Obama and the new Congress to agree on a stimulus that actually will work by softening the recession and speeding recovery. Here's how:

    Extend the 2001 and 2003 tax reductions for as long as possible - at least through 2013 -- to prevent tax increases. Better yet, make the tax cuts permanent.
    Reduce tax rates on individuals, small businesses and corporations through 2013 by lowering the top rate by 10 percentage points and reducing rates by similar amounts for taxpayers with lower income levels.
    Heritage's analysis shows this approach would mean 500,000 more jobs this year and a million jobs in 2010, on the way to creating 3.6 million jobs through 2012. Federal tax receipts would fall by $670 billion over five years.

    These aggressive changes in tax policy, plus intensive activities by the Federal Reserve, are the best combination of federal actions to end or shorten a recession. In contrast, tax proposals being urged for the Obama stimulus would have almost no effect on the economy. House Democrats' plan for $550 billion in new spending, in part for infrastructure projects, would do even less for recovery.

    Don't listen to Heritage if you don't want to. Listen to Henry Morgenthau: "We are spending more than we have ever spent before and it does not work."

    William W. Beach is director of the Center for Data Analysis at the Heritage Foundation and Ken McIntyre is the Marilyn and Fred Guardabassi Fellow in Media and Public Policy Studies at The Heritage Foundation.
  3. av8torntn

    av8torntn Well-Known Member

    Tough Questions for Defenders of the New Deal

    by Jim Powell

    November 6, 2003

    Mr. Powell is a senior fellow at the Cato Institute and author of \"FDR\'s Folly: How Roosevelt and His New Deal Prolonged the Great Depression.\"

    This year marks the 70th anniversary of the launching of Franklin Delano Roosevelt's New Deal, so it's a good time to debate his policies, which have had an immense influence and which remain controversial.

    On the Oct. 29 Wall Street Journal editorial page, Canadian newspaper publisher Conrad Black credits FDR for "swiftly reviving the American banking system" and helping to "banish the Depression." The biggest problem was to revive private sector unemployment -- median joblessness was 17% throughout the New Deal era; but Mr. Black claims welfare recipients should be counted among the productively employed and therefore "unemployment was eliminated." He says, "I know of no serious criticism of the Roosevelt administration's" many policies. But as I report in "FDR's Folly," dozens of economists, including two Nobel Prize winners, have evaluated the bad consequences of New Deal policies, and empirical research at leading universities raises tough questions:

    1. Why did FDR triple federal taxes during the Great Depression? Federal tax revenues more than tripled, from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and "excess profits" taxes all went up. FDR introduced an undistributed profits tax. Consumers had less money to spend, and employers had less money for growth and jobs.

    2. Why did FDR discourage investors from taking the risks of funding growth and jobs? Frequent tax hikes (1933, 1934, 1935, 1936) created uncertainty that discouraged investment, and FDR further discouraged investors by denouncing them as "economic royalists," "economic dictators" and "privileged princes," among other epithets. No surprise that private investment was at historically low levels during the New Deal era.

    3. Why did FDR channel government spending away from the poorest people? Little New Deal spending went to the South, the poorest region; most went to political "swing" states in the West and East, where incomes were more than 60% higher. The South was already overwhelmingly on FDR's side.

    4. Why did FDR make it more expensive for employers to hire people? By enforcing above-market wages, introducing excise taxes on payrolls and promoting compulsory unionism, the New Deal increased the costs of employing people about 25% from 1933 to 1940 -- a major reason why double-digit private sector unemployment persisted throughout the New Deal era.

    5. Why did FDR destroy all that food when millions were hungry? FDR promoted higher food prices by paying farmers to plow under some 10 million acres of crops and slaughter and discard some six million farm animals. The food destruction program mainly benefited big farmers, since they had more food to destroy than small farmers. This policy and subsequent programs to pay farmers for not producing victimized the 100 million Americans who were consumers.

    6. Why did FDR make everything more expensive during the Depression? Americans needed bargains, but FDR signed the National Industrial Recovery Act to establish some 700 industrial cartel codes that forced consumers to pay above-market prices for goods and services. Moreover, he banned discounting by signing the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937).

    7. Why did FDR break up the strongest banks? FDR broke up the strongest banks, which diversified with both commercial banking and investment banking. FDR's federal deposit insurance didn't stop bank failures, but it transferred the cost to taxpayers. About 90% of bank failures occurred because of unit banking laws that prevented small banks from diversifying through branches. Canada, free from branching restrictions, didn't have a single bank failure during the Depression.

    8. What was the point of New Deal securities laws that made it harder for employers to raise capital and didn't help investors to do better? Employers desperately needed to raise capital, but FDR made this harder. New Deal securities laws led to costly regulations for issuing stocks. These laws impeded the raising of capital. The rate of return from new stock issues failed to improve after the SEC was established.

    9. How did the Tennessee Valley Authority become a drag on the economy? FDR taxed 98% of the American people who didn't live in the Tennessee Valley, then used this revenue for the TVA power-generating monopoly, exempt from federal and state taxes and regulations. But non-TVA Southern states such as North Carolina and Georgia grew faster than TVA states, because there was a faster exodus out of farming and into manufacturing and services, which offered higher incomes.

    10. Why did FDR disrupt companies employing millions? In 1938, FDR authorized an unprecedented barrage of antitrust lawsuits against about 150 employers and industries. FDR had big employers tied up in court, discouraging investment for growth and jobs.

    It's ironic political historians give FDR credit for handling the political crisis of the 1930s, even though the most important factor in the crisis was double-digit private sector unemployment prolonged by FDR's misguided policies.

    This article originally appeared in The Wall Street Journal on November 6, 2003.
  4. brett636

    brett636 Well-Known Member

    wow, unemployment fell to a measly 13%? Now thats an unemployment number I want to see today. :rolleyes:
  5. wkmac

    wkmac Well-Known Member

    That's like bragging you are porn superstar with a 3 inch love commando. You might be a porn star but it would be purely on the comedy side!

    I felt the same way as I read those facts and figures. I doubt mom would be proud if you'd been getting F's on your school work and then moved up to a D-. We're not talking real achievement here. How long would a driver be considered successful with those type of numbers of packages not being delivered everyday?

    Jagger forgot to mention that leading up to those drops into the low teens, SCOTUS had ruled unconstitutional many of FDR's plans such as the NRA. Then he tired other approaches and of course the % went back up so in order to do something with the excess manpower, he resorted to govt's favorite jobs program, he got us into a war and yep it worked over time!

    Blood and bodies for filthy lucer. Maybe Jagger is a republican after all!

    Hey Cowardly Lion, if you want to read a real liberal/progressive perspective, forget the neo-con lite mediamatters and read a true liberal progressive from the FDR era and what he had to say about the Roosevelt Myth.


    Another of Flynn's great works is "As We Go Marching" and I'd highly reccommend this to everyone in helping to see the American version of Fascism we've had since the FDR years.


    BTW: FDR liked and admired Mussolini and his fascist model until Mussolini interfered in FDR's work program known as WW2. Flynn points out a lot of the good things FDR had to say about fascism that was once called corporatism.
  6. av8torntn

    av8torntn Well-Known Member

    The new deal seems to be the topic of the month since the President and Congress want to follow this failed path. I for one have a hard time understanding why people think these policies worked. The unemployment rate did not return to the normal rate until about 1942. I believe something big was happening that year besides the new deal. The new deal programs started about 1933. We are still paying for most of these programs today. By any measure it seems like this policy was a huge failure so I am having a difficult time understanding why our Government wants to repeat this failure. It seems from watching their interviews the only thing they can say is that we must do something. If anything it seems like the new deal made things worse so why would we want to make things worse. I understand why the government wants to create inflation and avoid deflation and I don't agree with it but at least I can understand their point of view but this massive spending for no reason other than we must do something I really am having a hard time trying to figure out what the heck is going on. I am beginning to feel like the government must be trying to create some dependency so they can stay in power. Someone please help me understand why the government wants to implement a new deal part II when the first was such a failure. It seems like most everyone outside of the super party line types are willing to admit these failures so why are we going back down this path. I cannot help but wonder why the average joe stands for this madness. I am already hearing the political mouthpieces bring up a national sales tax to pay for all this new spending. At what point does the average person stand up and say enough of the government taking our freedoms? Have we become a nation full of people that fear freedom? We have a government that cannot run anything efficiently whose officials fly around in fleets of private jets telling people running private companies they should not fly in private jets. We have a government run so inefficient that they have 5 trillion in debt telling private companies that they are to successful and they need to confiscate some of their wealth. Why are these things acceptable in this country? Why have we given the government the right to tell us what wage we must work for and then cry about an unemployment rate? Why do we demand that the government over regulate business then cry about business going somewhere they can become profitable? Why do we demand the government force banks to loan money nearly anyone and then cry about people not paying it back?

    The bottom line is the new deal failed not because the intentions were bad but because it was stupid. Not only did it not work but we are still paying for it today. I think we are running down the same path right now and it has become painful to see all the revisionists talk about the new deal.

    Sorry about all that if anyone read it. I know my thoughts are random and unorganized. :happy2:
  7. wkmac

    wkmac Well-Known Member

    I understood where you were coming from and you did fine. Asked a number of good questions many average folk are asking as well.
  8. Jones

    Jones fILE A GRIEVE! Staff Member

  9. diesel96

    diesel96 New Member