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The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Boston Globe Engaging in Revisionist New Deal History

Posted by iusbvision on February 18, 2009

We have said it time and time again, there are books out on this subject, there are all sorts of studies. The New Deal was an abject failure. The unemploymet rate during the New Deal never dropped below 20% . How can anyone call that a success?

I know how, just lie about it…enter the Boston Globe (which of course is owned by the NYT):

The New Deal and right-wing revisionism
By Scott Lehigh, Globe Columnist | February 18, 2009

ONE OF THE most diverting aspects of the debate over President Obama’s stimulus plan has been the concerted conservative attack on the New Deal.

One might have thought that voters of that day had pretty much settled the question of whether the New Deal worked by enthusiastically reelecting FDR, and not once but three times. But since right-wing revisionism is really an arrow aimed at the current stimulus plan, the effort to discredit the New Deal is worth examining.

The argument that the New Deal failed is easy to make.

You start with unemployment figures that exclude those who labored in work-relief programs like the WPA or its various cousins. Yes, that’s passing strange, given the many worthwhile tasks those public employees accomplished, but sophistry has its demands.

Next you present a misleading juxtaposition of that exclusionary unemployment data, noting that the 19 percent joblessness rate in 1938 wasn’t all that much better than the 25 percent of 1933, FDR’s first year in office.

Then you add the well-worn 1939 quote from Henry MorgenthauJr., FDR’s treasury secretary, that government spending hadn’t produced a recovery, and, for professorial effect, perhaps even toss in George Santayana’s observation about those who cannot learn from history.

Presto: You’ve got yourself a paint-by-numbers conservative polemic.

But what do unemployment figures from the era actually show? The best regarded data excluding public-works employees traces a steady decline in joblessness through the first five years of the New Deal, from 25 percent when FDR took office to 14.3 percent in 1937. Then, however, joblessness rose, hitting 19.1 percent in 1938 before dropping back to 14.6 percent in 1940 and 9.9 percent in 1941.

Include work-relief employees, and unemployment declined more steeply, falling to 9.2 percent in 1937. It then rose to 12.5 percent in 1938 before dropping back to 6 percent in 1941.

Given that pattern, comparing 1938 with 1932 to argue that the New Deal didn’t work is akin to claiming that the economy scarcely recovered under Ronald Reagan because unemployment, which hit 9.7 percent in 1982, was at 7.5 percent in 1992 under George H.W. Bush. It ignores the larger drop in joblessness in between.

The Boston Globe offers NO sources for these numbers. There are books, studies and public records on this so what do they say?

newdealunemployment

The source for those numbers is the US Dept. of Commerce.

Not good enough for you?  Try this letter from Roosevelt’s Treasury Secretary from 1934-1945.

morganthau-tsec-1934-1945Henry Morganthau, in a letter to Congressional Democrats in May 1939:

“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. 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 … I say after eight years of this Administration we have just as much unemployment as when we started … And an enormous debt to boot!”*

* Burton Folsom, Jr., New Deal or Raw Deal? (New York: Simon & Schuster, 2008), p. 2.

If that isn’t good enough how about this: Five Myths about the Great Depression” from the Wall Street Journal.

Washington Post:

“I say after eight years of this administration we have just as much unemployment as when we started,” lamented Henry Morgenthau, FDR’s Treasury secretary. Unemployment declined when America began selling materials to nations engaged in a war America would soon join.

In “The Forgotten Man: A New History of the Great Depression,” Amity Shlaes of the Council on Foreign Relations and Bloomberg News argues that government policies, beyond the Federal Reserve‘s tight money, deepened and prolonged the Depression. The policies included encouraging strong unions and higher wages than lagging productivity justified, on the theory that workers’ spending would be stimulative. Instead, corporate profits — prerequisites for job-creating investments — were excessively drained into labor expenses that left many workers priced out of the market.

In a 2004 paper, Harold L. Cole of the University of California at Los Angeles and Lee E. Ohanian of UCLA and the Federal Reserve Bank of Minneapolis argued that the Depression would have ended in 1936, rather than in 1943, were it not for policies that magnified the power of labor and encouraged the cartelization of industries. These policies expressed the New Deal premise that the Depression was caused by excessive competition that first reduced prices and wages and then reduced employment and consumer demand. In a forthcoming paper, Ohanian argues that “much of the depth of the Depression” is explained by Hoover’s policy — a precursor of the New Deal mentality — of pressuring businesses to keep nominal wages fixed.

Furthermore, Hoover’s 1932 increase in the top income tax rate, from 25 percent to 63 percent, was unhelpful. And FDR’s hyperkinetic New Deal created uncertainties that paralyzed private-sector decision making. Which sounds familiar.

4 Responses to “Boston Globe Engaging in Revisionist New Deal History”

  1. centurean2 said

    You will find that the new deal originated with Keynes The Fabian Communist Keynes!
    Across the Western world Fabains rule the roost.
    The British Primeminister’s From way back were Fabians including Blair and Brown.
    Brown has 300 within his own party cabinet and Westminster.
    The CFR=Fabianism.
    Kevin Rudd Australian PM also a Fabian.
    Conspiracy?
    There is more than evidence that this is factual.

  2. […] February 18, 2009 · No Comments Boston Globe Engaging in Revisionist New Deal History […]

  3. […] The exact same thing happend under the “new deal” where much of the spending went to swing districts to buy votes. Massive amounts of money spent and non-farm unemployment never dropped below 20% during the New Deal. […]

  4. […] Link 1 … Link 2 … Link 3 … Link 4 … Link 5 … Link 6 Share this:FacebookTwitterEmailLike this:LikeBe the first to like this. Tags: depression, fdr, new deal, recovery, unaffiliated, unaffiliated party From: Economy, Government ← IF YOU CAN’T BEAT EM… No comments yet […]

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