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December 27, 2008 08:16 PM

Is Fox News accurate in saying FDR made The Great Depression worse?

On Fox News, Monica Crowley states "historians pretty much agree" that FDR made the Great Depression worst. Fox News anchor Greg Jarrett defends Crowley's accusation by telling the audience that it is "In the books", this after the David Sirota said the accusation was absurd.

You can watch the exchange at the in the clip below, its quite unbelievable for somebody who grew up thinking that "The New Deal" actually saved America from the depression and that FDR was the most popular president for doing so.
http://www.youtube.com/watch?v=I0djHDlpIls


The TV clip below you can watch the exchange at 4:26
http://www.huffingtonpost.com/david-sirota/fox-news-historians-prett_b_153482.html
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December 28, 2008 10:20 AM
To say that historians generally agree may be an overstatement. In any case, what matters is not what is generally agreed, but what is correct. Popularity does not make an argument right. There are sound economic arguments showing that New Deal policies lengthened the Great Depression.

Some ways the New Deal made the Great Depression worse include:
- raising the cost to employ workers, increasing unemployment;
- creating 'make-work' government jobs, displacing productive private sector jobs;
- paying farmers to cut production, reducing the number of jobs available;
- destroying farm produce, cutting the amount of goods available for consumption;

This was on top of the disastrous policies of President Hoover including tariff and income tax increases.

For an excellent introduction to the subject see these books:
1) The Politically Incorrect Guide to American History by Thomas Woods
http://www.mises.org/store/Politically-Incorrect-Guide-to-American-History-The-P247.aspx

2) How Capitalism Saved America by Thomas DiLorenzo
http://www.mises.org/store/How-Capitalism-Saved-America-P260.aspx

3) America's Great Depression by Murray N. Rothbard
http://mises.org/rothbard/agd/contents.asp

Or these audio lectures:
1) The Politically Incorrect Guide to American History by Thomas Woods
http://mises.org/media.aspx?action=category&ID=93

2) Liberty and American Civilization by Thomas DiLorenzo
http://mises.org/media.aspx?action=category&ID=88
Source(s):
The Politically Incorrect Guide to American History by Thomas Woods



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December 29, 2008 06:35 AM
I was going to write a long reply to this, but Danny Haynes did a good job.

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December 27, 2008 10:38 PM
Most detailed analysis concludes that the New Deal included a number of stupid things that hurt, and a number of things that were good.

It has been claimed that some of his policies caused the depression to last longer than it would have otherwise - here's a recent example:

http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

Wikipedia links to another article that notes that the majority of economists do not agree with this perspective:

"The economy eventually recovered from the low point of the winter of 1932-33, with sustained improvement until 1937, when the Recession of 1937 brought back 1934 levels of unemployment.There is a broad consensus among scholars that the New Deal policies did not lengthen and deepen the depression; only 5% of professional historians and 27% of professional economists believe it served to lengthen and deepen the Great Depression." [1]."

Here is the article this quote is from:
http://eh.net/lists/archives/eh.res/feb-1997/0010.php


The bottom line is that people far more knowledgeable than you or I disagree on this subject matter as a whole.

A number of the policies were downright idiotic - one example was that they saw that when gold got more expensive, the economy tended to be stronger... so they bought up a lot of gold in order to increase the scarcity of it. Sure, it may have driven the price of gold up, but it didn't do anything for the economy. There are a number of other plans that were implemented that definitely were bad ideas - regulating prices on some items to remain high, for instance. As for good, Social Security has come from it, which has supported the livelihoods of millions upon millions of people with little to no other income, the FDIC was another major winning policy.

It is indeed common agreement, however, that World War II helped pull us out of the depression. The massive amount of labor required to build things as the military expanded were the primary driving factors in the economic growth coming out of the depression... but it is worth noting that there had been an uptick in the economy somewhat before the US entered the war.

There was also a period during the depression where things got a bit better:
http://en.wikipedia.org/wiki/File:Gdp20-40.jpg


http://en.wikipedia.org/wiki/File:US_Employment_Graph_-_1920_to_1940.svg

After rock bottom was hit, note that GDP was growing at a good clip. There was another major recession in the latter part of the depression, which, again, people can argue about all day long, but then the war came along and we were out of it.

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December 27, 2008 10:37 PM
Here's a site with a chart that has information on GDP at the bottom of the page:
http://www.economics-charts.com/gdp/gdp-1929-2004.html

You'll note that there were some major increases in GDP during the depression - it's not like there wasn't growth, it's that the hole was very deep.

I can't conclude that FDR's policies helped or hurt the depression overall, but my educated guess is that given the amount of knowledge we had at the time, I couldn't hold some of his stupid policies against him. It's not like he ever claimed everything he would do would work. One of his campaign promises against Hoover was that instead of doing nothing, he'd try a lot of stuff, and what worked he'd keep doing, and what didn't, he'd stop.

Today, the field of economics is far more refined, and such decisions are made in a far more educated manner.

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December 29, 2008 09:49 PM
It's definitely not agreed upon. Many (most) give him credit for taking us out of it. He oversaw the boom in the economy that took us out of the great depression. He was the one that invested in the war industry that not only created jobs, but created so many jobs that there was a shortage of workers.

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