Quote:
Originally Posted by drcampbell
While the New Deal worked - that's simply a historical fact...
|
That the economy recovered is a historical fact. That this was due to the New Deal is a matter of opinion.
Up to 1938, the government dumping borrowed dollars into the economy did drive up the GDP just as stimulus spending has boosted our most recent GDP figures.
Outside of a purely historical debate, the more important question is, will New Deal policies work in general in creating
long term economic health?
The best example of these policies is of course the original New Deal during the 30's. As late as May of 1939 when Treasury Secretary Henry Morgenthau gave his "it does not work" quote to the US Congress,
the success of the New Deal was very much subject to debate. FDR's secretary of the Treasury stated flatly that it had not worked.
Most fans of the New Deal acknowledge that the best effects of the New Deal took place down the road and point to the robust and sustained period of great prosperity for the US during the 40's, 50's and 60's.
Of course the first half of the 40's were during the WW2 years when the federal government spending dominated the GDP. Do we want this now? I say no, but wow, if a few years of it could guarantee decades of prosperity, it's something to consider.
The good news is that after the war, government spending quickly decreased, but the economy did great! A victory for the New Deal?
Again, this is subject to debate. I believe that you give credit to the New Deal for the prosperity this nation experienced during the post war years.
The problem with this view is it dismisses the incredible competitive edge our nation had worldwide because the rest of the industrialized world was in shambles!
Here are some post war pictures of:
Germany.
Japan.
England.
Soviet Union.
That was our competition!
The rest of the industrialized world had been bombed to rubble. Power plants, refineries, factories, roads, railroads, shipping, businesses, homes, etc. Much of it was reduced to piles of debris.
Their economies and capabilities were set back decades.
Yet the US was untouched by the war. The US helped many nations rebuild and in a few, directed the rebuilding! You think this may have helped our industry and exports?
This advantage lasted for many years as our competition rebuilt from scratch.
If today's Stimulus Package was accompanied by the utter destruction of all industry in China, Japan, Germany, Korea, etc, then sure enough, our economy would take off like a rocket.
Short of that, we do not have a good example where such large government spending and control has worked before.
Some point to the New Deal as a valid example that it will work.
I think that it will not.
I think that the recent boost to the GDP numbers are, like those during the 30's, temporary and not sustainable.
Again, time will tell. We'll see if today's New Deal leads to decades of prosperity like the original New Deal.
