More Hooverism

February 2, 2009

Just as Congress is gearing up to pass a much-needed stimulus package, anti-New Deal scholars seem to be coming out of the woodwork. Today it was economists Harold Cole and Lee Ohanian writing (where else?) on the editorial page of the Wall Street Journal:

“The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a ‘new’ New Deal to address the current crisis. But the facts do not support the perception that FDR’s policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

The goal of the New Deal was to get Americans back to work. But the New Deal didn’t restore employment. In fact, there was even less work on average during the New Deal than before FDR took office.”

Obviously there’s going to be a lot more of this as the recession wears on, and I’m not going to debate every right-wing economist or pundit who argues that Roosevelt was a failure. But I think this one is interesting because of the way it treats the data. Lee and Ohanian are able to argue that employment deteriorated over the course of Roosevelt’s first 2 terms because they exclude any jobs resulting from government programs such as the WPA or the CCC.

Salon’s Andrew Leonard take Lee and Ohanian to task on this point. Leonard cites Marshall Auerback’s “Time For A New ‘New Deal’” to provide some idea of what these programs accomplished and what sort of employment they represented:

“The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.”

And in less than 5 years, as a result of these policies and others, unemployment was more than halved.

None of this is to argue, btw, that all of Roosevelt’s policies were a roaring success. That’s simply not true. Most economists would argue that the Roosevelt administration didn’t spend enough, and in the late 1930s tried to balance the budget, which led to a renewed economic downturn. Also, Roosevelt foolishly raised taxes. However, stimulus spending in and of itself was NOT a problem, and it did NOT worsen the Great Depression. No mainstream economist would make such an argument, and even a casual glance at a mainstream economics textbook would yield arguments to the contrary.

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