Sat
Mar 28 2009
05:28 pm
You say the New Deal didn’t work? Prove it
By: R. Neal

You love certainty.

Even when it turns out to be wrong, most of us love the sound of a voice speaking with inspired conviction.

Which brings me to a bit of bombast one hears over and over from the usual suspects--Rush Limbaugh, George Will, Charles Krauthammer and others who declare that Franklin Roosevelt’s New Deal didn’t end the Great Depression. World War II ended the Great Depression, they cry in harmony, and so we shouldn’t buy into President Obama’s stimulus spending plan.

continued...

If you set aside the historical truth that unemployment declined nearly every year of Roosevelt’s administration, this argument makes a certain sense to dewy-eyed children growing up among Republicans, because WWII changed damn near everything. It was a conflagration--outrageous chaos melded to unprecedented technology—and it swept Hitler off the world stage.

As a by-product, so the theory goes, it birthed the greatest economic juggernaut the world has ever seen, the U.S. post-war economy. So, the New Deal was beside the point, the argument runs, and one should resist Obama’s massive spending program, which is nothing but warmed over New Deal socialism they inform us with condescension dripping.

In order to spot the central fallacy of this argument, however, one need only play throw-and-catch with the following common sense question:

What in heck was WWII if not a massive government spending and employment program married to unparalleled protectionism?

Yes, yes, it was a war against Nazi-ism and so on, but when it comes to the key question of its effect on the U.S. and global economy, the U.S. war effort was the last word in Keynesian economics, government spending and protectionism—socialism if you will—long as we’re bandying about that hot-button word.

Honest, what was World War II if not the ultimate jobs-programs? Hundreds of thousands of American men were drafted into the military, and Rosie the Riveter’s job at the airplane factory was funded by fat government contracts paid for by tax dollars and federal deficits.

Face it. Nothing is more socialistic than the military culture, where you have men and women living in government housing, driving government jeeps, tanks, planes and boats, shooting government guns, eating government food, wearing government clothing and partaking of government healthcare. Everyone’s pay falls within well-defined boundaries, so the staggering inequities in pay—the kind dragged into the light by so many Wall Street scandals--scarcely exist in the military.

Privates and generals make a guaranteed annual income and salaries are capped by the government. Everyone who signs up for service is treated to goodies at taxpayer expense for the rest of their lives. Government counseling, medical care, pensions, disability payments, education and so on are provided for by a grateful public all too willing to be taxed in order to support the troops.

Moreover WWII provided near-perfect protectionism for American industry. Not only did the war render about half the industrialized world off-limits as trading partners—thanks to blockades, attacks on shipping and laws against trading with enemies—but much of our competition was bombed back to a pre-industrial state by both sides in the conflict, especially in Germany’s Ruhr Valley, Northern Italy, and much of England, France, Russia, Japan, Poland, China and other countries. England was so strapped by the end of the war—in part because of American demands for compensation for helping that nation—that the British public turned Winston Churchill out of office in bitter protest of the fiasco that had stricken their empire.

In addition, the Allies surrendered Central Europe to the trusting hands of Stalin’s radical post-Marxist empire, which sealed them off as trading partners as well.

You could say America was the last man left standing. Aside from Pearl Harbor, hardly a glove was laid on America’s infrastructure. Every power that might’ve challenged our selling of goods and services throughout the world was either off-limits or near-fatally damaged.

It’s true that the Marshall Plan mitigated the damage and brought about a blossoming of European economies. Similarly, Japan was brought back from the ashes.

But what was that if not more Keynesian-style manipulation of economies here and abroad through massive government spending and management?

I bring this up not to advocate turning America into a military welfare state, but just for clarity’s sake. The chief point is that anyone who says Roosevelt’s big-spending policies didn’t end the Great Depression has no leg to stand on, not even one of those expensive titanium legs our government hires doctors to provide wounded troopers. Roosevelt spent more, not less, after the war started.

So whether it was the New Deal or World War II that ended the Great Depression, the chief engine of change was a massive infusion of federal dollars into the American and global economy for more than a decade. It’s a transfer on the order of what Obama intends as he retools the grid, healthcare, education and transportation infrastructure.

To those who say it can’t work, I have two words.

Prove it.

Don Williams is a prize-winning columnist, short story writer and the founding editor and publisher of New Millennium Writings, an annual anthology of literary stories, essays and poems. His awards include a National Endowment for the Humanities Michigan Journalism Fellowship, a Golden Presscard Award and the Malcolm Law Journalism Prize. He is finishing a novel, "Orchid of the Orchid Lounge," set in his native Tennessee and Iraq. His book of selected journalism, "Heroes, Sheroes and Zeroes, the Best Writings About People" by Don Williams, is due a second printing. For more information, email him at donwilliams7@charter.net. Or visit the NMW website at www.NewMillenniumWritings.com.

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ANGRYWOLF's picture

So those repubs are full of bs...

Submitted by ANGRYWOLF on Sat, 2009/03/28 - 5:34pm.

Anyone with a teaspoon full of sense knows that and the statistics prove it.

GoodScout's picture

East Tennesseans Rejection of New Deal Hypocritical

Submitted by GoodScout (not verified) on Sat, 2009/03/28 - 7:31pm.

This Georgia blog did a good job pointing out the hypocrisy and ungratefulness of Tennesseans regarding FDR.

Sarge's picture

Show me the stats that

Submitted by Sarge on Sat, 2009/03/28 - 9:02pm.

Show me the stats that proves that the GOP is not full of it.

Effor's picture

A few facts

Submitted by Effor (not verified) on Sat, 2009/03/28 - 9:02pm.

I don't disagree that WWII was what ultimately brought us out of the great depression, but I do disagree that government spending - short of an all out mobilization for war - has much effect on the economy.

A popular misconception is that Hoover cut spending and FDR increased it. The facts are that Hoover increased federal spending from $2.9 billion in 1928 to $4.6 billion in 1932. That's a 63% increase in 4 years - yet the unemployment rate rose from 3.3% in 1929 to 23.6% in 1932.

FDR's New Deal raised spending from $4.6 billion in 1932 to $8.2 billion in 1936 - a 76% increase which is not that much different than the increase under Hoover.

Despite these massive increases, which basically tripled total federal spending from $3.3 billion in 1930 to $9.4 billion in 1940, the unemployment was still 14.6% on the eve of WWII.

I made a table to see if there's any correlation between spending and employment, and it's pretty plain that there isn't.

Federal spending data is from the GPO at:
(link...)

Unemployment stats are from the BLS at:
(link...)

Year Total Percent
Spending Change Unemployment
(millions) (spending) Rate
1928 $2,961 3.64% 3.3%
1929 $3,127 5.61% 3.3%
1930 $3,320 6.17% 8.9%
1931 $3,577 7.74% 15.9%
1932 $4,659 30.25% 23.6%
1933 $4,598 -1.31% 24.9%
1934 $6,541 42.26% 21.7%
1935 $6,412 -1.97% 20.1%
1936 $8,228 28.32% 17.0%
1937 $7,580 -7.88% 14.3%
1938 $6,840 -9.76% 19.0%
1939 $9,141 33.64% 17.2%
1940 $9,468 3.58% 14.6%

Can you see any link between changes in government spending and unemployment? I don't either - and that means Keynesian theory is bogus.

I'll turn your WWII argument around: If huge increases in government spending stimulate the economy, why are we booming right now after Bush's doubling of the national debt in just 8 years?

Bush was the biggest spender in US history, adding as much debt in 8 years as all the other presidents combined did in 212 years. Surely that should be enough to stimulate the economy if Keynesian economics actually worked. Why didn't it?

gk

effor's picture

Correction

Submitted by effor (not verified) on Sat, 2009/03/28 - 9:05pm.

The line towards the end should read:
I'll turn your WWII argument around: If huge increases in government spending stimulate the economy, why AREN'T we booming right now after Bush's doubling of the national debt in just 8 years?

rikki's picture

Bush was the biggest spender

Submitted by rikki on Sat, 2009/03/28 - 10:00pm.

Bush was the biggest spender in US history, adding as much debt in 8 years as all the other presidents combined did in 212 years. Surely that should be enough to stimulate the economy if Keynesian economics actually worked. Why didn't it?

Bush's spending did prop up the stock market, but it did little for the core economy. Not all spending is equal. Bush squandered; most Presidents invest. Reagan invested in missile defense. Obama is investing in energy efficiency.

The problem with Iraq and Afghanistan is not so much the choices to invade, but the cost. At home, Bush invested in a bunch of police-state crap that is mostly good for infringing on our liberties and boosting prison populations. His spending kept the defense industry flush and masked the general drop in employment and job security during his tenure. He also changed the employment definitions to massage the stats.

In short, government investment can boost the economy, but not all spending is investment.

gime_shltr's picture

Not unlike deficit spending

Submitted by gime_shltr on Sat, 2009/03/28 - 11:35pm.

What the right wing also fails to acknowledge for fear of truly being exposed is the deficit spending theory of Reagan's "trickle down economics". Sure there is the recession that follows massive deficit spending.

We saw Bush I take the hit for that. What was not expected by the right wingers was a guy by the name of Bill Clinton.

The eight years that Clinton was in office were the rebound years of the trickle down deficit spending years of Reagan.

Now Obama is sitting in Bush I's seat and will be stuck with the recession end of the stick.

This leaves his re-election, the election of 2012 as the mother load election.

Point being that either way you cut it, (New Deal/Trickle Down) it's federal spending and it works.


If I don't get some shelter
Oh yeah, I'm gonna fade away...


bill young's picture

Yes & No

Submitted by bill young on Sun, 2009/03/29 - 2:22pm.

I do not agree that WWII was part of the New Deal.

I would agree that WWII was in part an economic war based on the fact that if Germany & Japan had won we would not have had trading partners in Asia or Europe.

Eisenhower's campaign in '52 for the Republican nomination was about the New Deal.Ike wanted to continue FDR's New Deal but stop there.Ike's opponents for the nomination wanted to roll back the New Deal.

IMO the new conservative movement was about repealing the Great Society.Not repealing the New Deal.

I'm not sure of the answer so I ask the question.

Did Reagan ever talk of repealing the New Deal?

However,since '06,the right wing has been hell bent on attacking the New Deal not the Great Society as the root of all evil.

It's hard to argue one way or the other what the effect of WWII vs the New Deal was on economic conditions of the time.WWII happened & the country united in the great effort to defeat Germany & Japan.

I would argue that the New Deal in the '30s & the early '40s got this country moving out of the depths of the Great Depression.

The right on the radio can spout all the anti New Deal rhetoric they want.Those folks are just spoons stirring discontent to sell adds.

I never listen to right wing radio..or watch right wing TV.
So maybe I'm speaking out of school.

But I say let these right wing spoons stir on with their off the wall we dont like nuthin mossback chatter.

We Democrats got bigger fish to fry.

We got a country to save.

I support the President's efforts to do just that.

Get this country out of the econmic mess we find ourselves in.

gonzone's picture

Rewriting history

Submitted by gonzone on Sun, 2009/03/29 - 3:13pm.

Freaking delusional wingers are constantly trying to rewrite history to suit the agenda and talking points of the day. Nothing new here.

For example, remember Coulter's recent effort to rehabilitate McCarthy? Same old, same old. And then there's Saint Raygun, and now they have Dubya to do also!
"We create our own reality" - direct quote of GOP White House official under Dubya
"You have your facts, I have THE facts" - Rove on the sure-thing upcoming GOP victory for permanent majority in 2006

This could be an extremely long list. What's your favorite delusional GOPper quote?
"The arc of the moral universe is long, but it bends toward justice."

Anonymously Nine's picture

Much more politcally correct...

Submitted by Anonymously Nine (not verified) on Mon, 2009/03/30 - 12:59pm.

I see the experiment is a success. A much more moderate tone has been achieved.

sugarfatpie's picture

If the GOP wants to argue

Submitted by sugarfatpie on Tue, 2009/03/31 - 11:07am.

If the GOP wants to argue that WWII benefited the economy more than the New Deal then they are arguing for a more potent form a socialism than FDR ever created. The whole tripartite bargaining structure between industry, unions and the govt dates from WWII. This way of resolving labor/management disputes spread wealth more evenly, increased industrial efficiency, and laid the foundation for the decades of economic expansion that followed the war.

So if the GOP wants to play up WWII they are really playing up European style labor relations which place unions and management on a more equal footing. Something tells me Reagan would not approve.

-Sugarfatpie (AKA Alex Pulsipher)

"X-Rays are a hoax."-Lord Kelvin

DonWilliams's picture

New Deal stats & what they really show

Submitted by DonWilliams (not verified) on Tue, 2009/04/07 - 11:37am.

When I look at the stats, I see that unemployment declined steadily from 1933, Roosevelt's first year in office, through 1940, save for one year, 1938, a year in which Roosevelt CUT spending. When spending bounced up again dramatically the following year, unemployment declined again dramatically. This shows a positive correlation between New Deal spending and fuller employment. What could be more clear?

Thanks for a mostly civil debate,
Don

Year Total Percent
Spending Change Unemployment
(millions) (spending) Rate
1928 $2,961 3.64% 3.3%
1929 $3,127 5.61% 3.3%
1930 $3,320 6.17% 8.9%
1931 $3,577 7.74% 15.9%
1932 $4,659 30.25% 23.6%
1933 $4,598 -1.31% 24.9%
1934 $6,541 42.26% 21.7%
1935 $6,412 -1.97% 20.1%
1936 $8,228 28.32% 17.0%
1937 $7,580 -7.88% 14.3%
1938 $6,840 -9.76% 19.0%
1939 $9,141 33.64% 17.2%
1940 $9,468 3.58% 14.6%

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