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  • New Data, Same Result: New Deal Never Solved Unemployment


    Committed to the belief that bigger government is always better, Media Matters and Campaign for America’s Future are pushing back data showing that the New Deal never solved unemployment. Cutting through their rhetoric, both leftist organizations make the same narrow objection: that the data we use does not count make work government programs like the Civil Conservation Corps as employed.

    Now we will always maintain that not counting government work programs as employment is the more accurate measure. It is the way the government counted the numbers back then, it is the way the government counts the numbers today, and as George Mason University economist Alex Tabarrok blogs, “If we counted people on work relief as employed then eliminating unemployment would be very easy — just require everyone on any kind of unemployment relief to lick stamps.”

    But for the sake of argument, lets cede the point that anyone receiving government employment assistance is ‘employed’. Does that end up changing the the impact of New Deal spending on unemployment? No. As the chart above shows, even when using the numbers preferred by the leftist proponents of big government, the story is still the same: Unemployment never made it near the 1970-2008 5.5% normal unemployment rate until well after the U.S. entered World War II.

    Posted in Ongoing Priorities [slideshow_deploy]

    19 Responses to New Data, Same Result: New Deal Never Solved Unemployment

    1. Ozzy6900 says:

      The Left still doesn't realize that the Government cannot create jobs, the Government does not produce anything therefore the Government cannot be profitable.

      When using programs like the WPA, you are using tax dollars to pay workers thereby building the deficit and in today's tax structure, rendering the worker's time as moot. The worker has to pay taxes on the money he earns from the tax base therefore he is charging himself for his own pay! Confusing? Sure it is!

    2. Richard, Chicago says:

      Conservatives probably ought to take a pass on this fight. An unbiased poll of economists would show clear support for a substantial bailout, and even conservative economists are equivocal and not opposed to a jobs program. In populist America, save your powder for a fight worth fighting.

    3. Pingback: New Deal Was a Raw Deal for America - Bluey’s blog - RedState

    4. CathNealon richmond says:

      Unemployment's the name of the game and a trillion won't fix it–as more and more people lose their jobs in the next couple of years the United States will undergo a transformation economically yes but more importantly ideologically which will throw us into darkness for many years. But we will endure and finally prevail.

    5. Stephen Randoll, Flo says:

      Mr. Carroll,

      Your article misses the point. Among historians, there is no doubt at all that the New Deal did not solve the Great Depression or the problem of high unemployment in the 1930s. World War II did that. The point is, it was the high government spending on the war that brought down unemployment. The US government spent approximately $30 billion on the New Deal, and unemployment declined, but not to pre-Depression levels. The US government spent approximately $300 billion on the war, and the economy returned to full employment, as shown in your chart. The fiscal stimulus of the New Deal brought down unemployment, as your chart shows, but not to the normal unemployment rate. The fiscal stimulus of WW II spending did achieve that result, proving Keynes right that fiscal stimulus could bring down unemployment and restore prosperity. Had we spent on the New Deal what we spent on WW II, we could have ended the Depression without a war.

      Stephen Randoll

    6. Pingback: ChooseTheHero.com » Blog Archive » New Deal Was a Raw Deal for America

    7. MBSS says:

      conservatives are idiots. of course gov't creates jobs. what do you think being a soldier is about? what was WWII other than massive gov't spending and job creation in the business of death?

      i really do hate you inane fools. you are wrong about everything .

    8. Galileo says:

      Stephen Randoll, like most tax and spenders, misses the point about what happens within society during an all out war.

      There is genuine unity of purpose and widespread willingness to share real sacrifice precisely because of the generally perceived validity and immediacy of the threat, and the recognition that everyone is sacrificing. So taxation levels that normally would be a deterrent to work and investment, lose that effect. Everyone is willing to contribute what they can.

      The change was produced not by what the government spent but by the willingness of everyone to contribute however they could, without concern for the impediments put in their way by FDR.

      In the current environment, and the Great Depression, anyone with real productive abilities knows that the big government spending policies mean that at some point those who are productive have to turn the majority of their effort over to the government (whether through taxation or debasement of the currency), so the government can give that to someone else – oh, and so the politicians and bureaucrats involved can sustain their own lavish lifestyle and reckless policies.

      Consequently there is no unity of purpose, no willingness to sacrifice since there is no shared sacrifice. Rather it is to be the productive who sacrifice in order to benefit the bludgers. No thanks.

      Depressions do not end until there is a substantial rise in production – not a rise in spending or a rise in employment, per se. It is production that makes the difference.

      This Obama depression will not end until there is either a massive war (we hope not) or a change in government to one that lowers the burden on producers from both taxation and regulation.

    9. Pingback: New Deal Was a Raw Deal for America - Bluey’s blog - RedState

    10. Mladen, Helsinki says:

      Both graphs follow same pattern which is not surprise. Both graphs also show that unemployment raised dramatically during most of Hoover's presidency. Finally, graphs show that unemployment fell significantly during Roosevelt's presidency, looking as a whole or looking each term separately.

      Now, it is hard to say could drop in unemployment been quicker. However, I believe during that period was large migration of population from rural areas to towns. Finding new employment for those people certainly took some time.

    11. Glen Raiburn, Sherma says:

      I only have a masters in engineering, but can not understand why the people can fall for this scam.

      I thought it was up to the business to sink or swim. I have to. I remember the great dep. as it is called, but believe me it was not great to be in it and if we don't stop this spending we will be worse off than the thirties, because lots of folks had farms to raise food on and most of the land is gone today.

    12. duelles, santa fe, n says:

      Dear Stephen Randoll: FDR ran the gov't spending from 3%

      gdp to 10% GDP. We are now over 20% GDP gov't spending.

      In 1948 there were 27% of workers employed by Federal, State and Local gov't. We now have over 43% of workers employed by gov't.

      Percentage-wise how high should the gov't spending and employment go? You my friend are a fool to have been fooled by Keynsian BS. The money spent or borrowed must come from somewhere. Where? Look at Edward Heath's England and that Keynsian experiment gone bad. Look at Zimbabwe today, 230 million % inflation. Look instead to Elizabeth I and her treatment of not raising taxes, and providing a haven for the a great economy to grow.

      Money only comes from the private sector. It is not unlimited when the pubic sector ends up being bigger and consuming the golden goose. Yes, you are a fool.

      At 50.1% the gov't worker- types will simply vote themselves the economy that will crush real wealth production. You are indeed a fool.

    13. duelles, santa fe, n says:

      /helsinki/ Hoover began many of FDR's programs. In addition Hoover TRIPLED income tax top rates to 63%, while FDR only pushed them to 79%. This is a killer of jobs – proven!

      I am a carpenter. I create opportunity for myself and must change with the economy or money others have available to spend on my craft. I must offer a benefit beyond what they can receive elsewhere.

      And I must live on less than I earn so that I can save money. I will swim, because I now can live on 3% of my wealth forever. It was not hard.

      And MBBS: As a USAF officer, the opportunity to serve my country was an honor. Yet It was a job that was only paid for by productive private sector jobs that payed taxes. It was a drain on the system. Period.

      I am right about more than you.

    14. Mike, Hickory, North says:

      I don't enjoy having to sound like "a broken record", but, yet again, how many times must it be said that, to Socialists/government elitists, the facts don't count, only their Socialist/government elitist agenda counts?

    15. Terry K. says:

      I'm confused. When I wrote about Heritage's chart in a letter to the Washington Examiner, the paper gave Heritage's William Beach a chance to respond; he said that "Heritage cites widely accepted census data from the Bureau of Labor Statistics" — even though the chart doesn't use the numbers compiled by BLS.

      But this post calls the BLS stats "the numbers preferred by the leftist proponents of big government." Since there's no evidence that BLS stats at the time counted those in government work programs as "employed," why use the markedly higher census numbers? And why are some folks at Heritage pretending the BLS and census numbers are the same thing?

    16. John, SImi Valley says:

      Besides the obvious bias in the article about "leftists" using the data, the reality is simple. The data, such as it was collected at the time, shows something near 25-27% unemplyment in 1933. Within 4 years, unemployment was down to about 12% because of the government priming the economy. In 1937 FDR cut back on spending and the numbers surged back into the 20% range. No amount of rerwriting of history will obscure those facts. Government spending provides cash flow, allows banks to continue functioning, gave millions of people jobs who otherwise would not have had it. Unemplyoment stayed at around 14% even during the war and did not decrease untill after the war when the peacetime economy and manufacturing resumed. To suggest that the government does not make jobs is simpy ludicrous . Try telling that to the weapons manufacturers, Halliburton, Blackwater, all the people working on national infrastructure, medical research, the space industry, not to mention all the people who invented the Internet using government funds. Read some history people. Heritage is a lie factory that Big Brother would be proud of.

    17. John, SImi Valley says:

      The Obama depression? Are you serious? It began under Bush because the banking industry had been deregulated and they refused to put any brakes on the economy. Yes, NAFTA was passed by Clinton but the underlying economic theories are from the Chicago School under Milton Friedman which have since been totally discredited. When these polices were implemented in Chile under Pinochet, the nation fell apart and had to be rescued by Keynesian economics. ALL nations that have strong ecomies have them as a direct result of government subsidies and monetary policy, including the US. American industries became strong in the 19 century specifically because of government intervention and protection, not because of some illusory greatness in American freedom.

    18. John says:

      What an idiot!! Which ignoramus posted the above graph? Can't you see that unemployment started falling after the New Deal got implemented in 1933????? What (negative) role did the rejection of the New Deal by a conservative Supreme Court have on its effectivenbess going into 1937? Of course the mothers of all government spending (World War II and the Cold War) both served to help drive down unemployment and energize the U..S. economy!

    19. John says:

      Ozzy6900 free market capitalism inflicts its own demise via growing income inequality which is the crux of growing debt within the system!

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