Big Deal

A lot of people seem to be comparing the current economic downturn to the Great Depression of the 1930s. The analogy is not yet accurate and I sincerely hope that it never becomes accurate. Most worryingly, they seem to think that the New Deal rescued the USA from recession and that we therefore need a “new New Deal” to save us now. This is worrying because it was the New Deal that caused much of the economic misery of the 1930s. Far from ending the recession, it initiated and prolonged it. In 1939, Henry Morganthau, FDR’s Treasury Secretary, said the following to Congressional Democrats:

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!

Last November, Andrew Wilson attempted to pre-empt this misplaced nostalgia for FDR with his article Five Myths About the Great Depression. It didn’t work though: everyone’s back to Keynesian nonsense. Oh, well, at least itinerant spoon carving is a recession-proof industry…

Published in: on March 2, 2009 at 2:42 pm  Leave a Comment  

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