March 26, 2008
It wasn't true then, it isn't true now
Contrary to what this article would have you believe, FDR and the New Deal did not resurrect the American economy. After initial reforms, unemployment did fall some in 1937, but never fell below a catastrophic 14.8%, and rose again to 19% until the draft kicked in, giving employment to millions of American men. The programs responsible for this entirely lackluster "recovery" tripled the national debt. Fortunately for everyone, Congress was able to repeal most of the relief programs in 1943. But it wasn't until after World War II and the deregulation it heralded that the American economy returned to a semblance of normalcy, and that only after half a decade of unlimited demand for war-driven manufacturing (and the national debt was more than the national GDP by then).
Suggesting that a few alphabet soup agencies are going to be able to prevent a recession or cure it is pie in the sky. Even the largest draft in American history--17 million men by 1945--wasn't able to absorb all of the unemployment, and the government had to heavily subsidize industry to produce war material to get the amounts it needed. In the 1930s, the government probably could get away with a borrowing spree, as it barely owed any money. And in the 1940s, borrowing seemed to be the only way of winning the war. But now the national debt is more than half the size of the national GDP (giving the government a 3:1 debt/income ratio). I think we're tapped out. I also think that massive borrowing, which didn't really work in the 1930s, will be even less effective now. Please don't listen to this guy.
