The New Deal Myth

Jay Wiley at American Thinker takes a look at the myth that Democrats still push that the New Deal somehow saved us from the Great Depression:

The New Deal was a menagerie of federal programs and bureaucracies based on the Keynesian economic theory that increased government spending would stimulate the economy. This theory necessitated more government intervention in and control over the American economy. This dovetailed nicely with the Left’s political agenda.

The prevailing historical narrative of the New Deal casts FDR as champion of economic justice through “bold” and “dynamic” government regulation of the economy. Of course, every good story needs a villain, and critics of the Keynesian approach were cast as greedy, self-interested capitalist thugs. FDR’s cosmopolitan, forward-looking approach was meant to draw a sharp contrast to the outdated and unjust laissez-faire economic model. This was progress.

[...]

The truth is that the experimentalism of the New Deal was an ineffective mess that further tangled the knot of the Great Depression.

After years of unprecedented economic intervention by Roosevelt, competition was stifled, investment plummeted, restrictive cartelization abounded, industrial production stagnated, and budget deficits skyrocketed. Wage controls and new union contracts limited the number of new workers private-sector employers could hire, leaving unemployment to hover around 20%.

Government being government, the New Deal was plagued by staggering inefficiency and red tape. Many New Deal programs were to be administered by local officials with agendas, constituencies, relationships, and governing philosophies of their own.

Roosevelt’s lack of imagination was also startling. He governed as though a new agency or bureaucracy were tantamount to a new solution. The federal government took on a new role in the 1930s as insurer against poverty, recession, and even human want itself — a sharp deviation from Jeffersonian principles of freedom from government. The result was an exponential growth of government, a restriction of economic freedom, and an economic downturn lasting far longer than usual.

And despite the fact that such a massive imposition of the government on the economy was such an abject an abysmal failure, the Democrats are hoping that if they try it again, it will work splendidly!

Read the whole thing.

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  1. #1 by Ramon Klein on Fri 20 Jan 2012 - 13:16

    jw and i was looking and couldnt find anything that actually answered my question

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