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This Election year and the uncertainty of the economy has got me to thinking about FDR's new deal. I really dont know much about it. How much did it help us get out of the depression and what were its lasting effects? Would we have been better off not letting Government get involved in the welfare system that so prominatly marks the last few decades? In other words was it the right thing to do at the time?
Very controversial. I have read it two ways, 1. the New Deal ended the Depression and 2. WWII pulled us out of the double disasters of the Depression and the New Deal. From what I know, I would say it is a combination of the two. It helped that prior to lend-lease all our arms sales were on a cash and carry basis only.
The New Deal was something never tried before so I give FDR a pass for not really knowing what else to do. Keynesian economics (spend during recession, save during better times) was the prevailing economic theory then, and politically it was expedient since it kept mobs from ruling the streets. Yet there are many flaws with Keynesian economics. You can read about John Maynard Keynes here: http://en.wikipedia.org/wiki/John_Maynard_KeynesThe New Deal didn't end the Depression, it probably did more to lengthen it, but as I said above, it had not been tried before, and the socio-political situation demanded something be done with government intervention. Besides, FDR was elected with a mandate to try something, but he abused that mandate to think he could slip some very dubious legislation in to grab more power for the executive branch. Bush has and is still doing very much the same thing now with the crises he inherited.
The New Deal didn't end the Depression, it probably did more to lengthen it
Interesting take. What makes you think it may have lengthened it?
New Deal legislation artificially stimulated the economy with public works projects paid for from tax reserves. Not much was done in the way of helping private businesses remain solvent. The war provided that stimulus.
The problem with the New Deal is, as Don says, it was financed out of public funds. If the economy is in the dumps where do the funds come from? One thing the government can do is simply print more money. The government did this in the 30's and it aggravated inflation, which the war eventually put a halt to.I said ealier it is a combination of the two. the New deal obviously gave people jobs but at the expense of long term growth. The war ended this menace by creating jobs and also all the foriegn capital that came to America during and before our involvement helped to recapitalize American businesses in ways the the federal government simply could not through conventional budgetary means.
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