Skip to comments.Burt and Anita Folsom in WSJ on 65th Anniv. of FDR's death: "Did FDR End the Great Depression?"
Posted on 04/11/2010 6:46:34 PM PDT by hillsdale1
'He got us out of the Great Depression." That's probably the most frequent comment made about President Franklin Roosevelt, who died 65 years ago today. Every Democratic president from Truman to Obama has believed it, and each has used FDR's New Deal as a model for expanding the government.
It's a myth. FDR did not get us out of the Great Depressionnot during the 1930s, and only in a limited sense during World War II.
(Excerpt) Read more at online.wsj.com ...
Perfect example of the BIG LIE.
He made a bad economy much worse by raising taxes and spending while taking over the banking industry. He was forced to lower taxes and regs due to the war. He needed industry to increase production so he eliminated his control and the depression ended soon after.
Congressboth chambers with Democratic majoritiesresponded by just saying "no." No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.
Instead, [the Democratic] Congress reduced taxes. Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.
Of course, this was the very beginning of exempting many Americans from paying any income tax and was a cornerstone of the entitlement problems yet to come. Everybody should have some skin in the game, no matter how small or poor you are.
Hitler and Tojo brought us out of the Great Depression. Not FDRs tax and spending commie ways...
Many people thought so.
I think even mainstream economists of the “neo-classical” school would admit today that FDR’s “New Deal” aggravated a recession that was ready to turn around by 1931 into a major economic depression with 25% unemployment for ten years.
Where mainstream and Austrians disagree is probably over the role of WWII in terms of its economic impact on the U.S. Mainstreamers claim that government spending on wartime materiel “primed the pump” of the economy and pulled us out the depression. Austrians look at it somewhat differently:
According to them, it might certainly be true that WWII solved much of the unemployment problem, for government simply drafted and removed 16 million working men from the U.S. and shipped them overseas to fight. Voila! No more unemployment problem back home.
Additionally (and something usually left out of analyses of that time) wages, which had been kept artificially high by FDR as part of a strong pro-labor and pro-union stance — were permitted to fall back to market levels. This allowed businesses to hire back more people with their available, smaller payrolls.
However, WWII was not a time of economic growth or prosperity for Americans. All essentials were rationed via little coupon books that entitled the holder to a certain amount of a good; no consumer automobiles were built for several years (so no one could buy a new car even if he could afford one), etc. Most importantly, government spending was at an all time high as a percentage of GDP. This is important for the analysis of that era. Lots of mainstream economists add in the value of the goods and services bought by the government as part of the “overall production” of that time, and add it into GDP; they then claim “look how many goods and services were created during the WWII era; the economy was really booming!” Nothing could be more untrue, and the practice of adding what government spent on goods and services into what the private sector produced is invalid. The prices government paid for war materiel were not real market prices arrived at through free bidding between buyers and sellers. They were artificially “set” prices, useful for bookkeeping only, but not for any real economic calculation of profit and loss.
Communist countries routinely do the same thing. E.g., since there were no markets for electricity production plants in the Soviet Union — government owned all production plants, so the government was essentially a monopolist — there was no way to establish what the economically correct price of electricity ought to be...there were no INPUT prices for the steel, wiring, wages, maintenance, etc., so there was no way to establish what a rational output price ought to be. The way the “Production Czars” would attempt to solve this problem was to look toward the west — usually the United States — and see how it was pricing its electricity.
Soviet era economists used to the same thing with many of their other goods too. The Soviet economy was notorious for completely miscoordinating production: it would produce mop heads but no handles; it would produce tires but no cars; fertilizer but no tractors, etc. This is the typical anarchy of production found in all economies that have no private property and thus no rational price system (because meaningful prices arise as a result of trading private property). What made the Soviet Union poor was not that it wasn’t producing lots of stuff; what made it poor was that it was producing all the WRONG stuff...things people actually did not need or want. Apparently, however, this did not stop clever Soviet economists from sticking prices on all the wrong stuff that people didn’t need or want — things that would have been written off as losses by private companies operating in a market economy based on private property — and adding those prices into its own GDP calculations. They would then advertise these inflated and meaningless numbers to western sources (the late Paul Samuelson was one, as was our own CIA) and these sources would cry “Look at how productive the Soviet Union is! Pretty soon, it will surpass the U.S. in productivity!” Samuelson actually said that around 1987. Two years later, the Soviet Union completely collapsed. But then, Samuelson was an MIT Keynesian, so we’re not surprised he made a fool of himself.
Communist China used to do the same thing. During Mao’s regime, the Chinese government purchased thousands of catalogues from Montgomery Ward...just to see how raw goods and tools were priced! They would then use these prices as a kind of benchmark for their prices. Did these catalogue prices reflect actual supply and demand conditions in China at the time? Of course not. But the production dictators believed that it was better than simply inventing a number out of thin air.
A similar argument can be made about spending by the U.S. government during WWII. The prices it paid for things were not arrived at through free competitive bidding, and so could not really reflect how valuable they really were in the market. For all we know, the things it bought might actually have represented economic losses to the companies producing them, had they been accounted for rationally in the private sector.
In sum, wars sometimes have to be fought; but war, per se, is never economically productive, and can never add to an economy’s GDP.
Though government had grown tremendously by the end of WWII, what pulled us out of the Great Depression was a return to a more or less free market system of unregulated wages, unregulated prices, and no more rationing. Under these conditions, the returning GIs were an economic boon, since each returning worker now added to overall productivity.
The overall greater productivity led to an era in the late 40s through the 50s of falling consumer prices (so that now everyone, even those of modest means, could afford cars and houses and radios and televisions and air conditioners and refrigerators and food, etc.), and this greater overall prosperity greatly expanded the middle class.
FDR took the U.S. into war with (a) Germany via the lend/lease program with Great Britain and (b) Japan by sea blockades cutting off Japan’s supply of imported oil. Japan was forced to attack the U.S.
WWII solved the Great Depression and thankfully the guy in the black robe with the scythe solved the problem of FDR! He should have arrived years earlier, we’d all be better off today.
Let's not forget He stole everyone's GOLD
FDR’s death brought us out of FDR’s Great Depression. Four more years of FDR would’ve seen Americans living in mud huts with a 15 watt lightbulb, turned on twice a week for an hour.
No my point is credit was given where credit was not due... And we have todays versions of them. Obama-Hitler, China-Tojo. Be afraid be very afraid.