With unemployment at 50-year lows, manufacturing jobs coming back, inflation falling, wages rising, and infrastructure revitalization finally underway, it’s hard to buy into the gloom some people feel. Or pretend to feel lest they give the President and his party credit for helping not pull us out of the terrible economic mess they inherited (as Obama pulled us out of the financial crisis he inherited).
I’m not one who thinks recession looms. I think the progress will keep rolling along — unless the new Republican House or the heavily right-wing Court find ways to slam on the brakes.
Which brings me to the analysis Jim Burt found for us (that I’ve trimmed a bit):
Did Franklin Roosevelt end the Great Depression or did he extend it?
by Paul Donnelly
. . . Hoover presided over the Great Depression — the economy shrank:
FDR took office in March, 1933 — and promptly turned the US economy around.
So it’s simple: FDR ended the Great Depression in his first term.
Period. . . .
UNEMPLOYMENT . . . at the end of his first term was under 15% [down from 25%].
FDR’s first four years in office saw the largest growth in any single term of any President . . . The New Deal had indisputably worked.
Then partisan Republicans on the Supreme Court threw out two pillars of the New Deal that had restored the nation to growth: farm and factory policy.
Economic growth was cut by more than half, from +13% in 1936 to +5% in 1937.
Then in 1938 the Supremes’ attack on the New Deal actually shrank the economy by – 3.44%.
Many folks confuse 1938 with 1932; they’re not the same.
FOUR solid years of economic growth after 1932 indicate that the sudden reversals through 1938 were all on the partisan Republicans of the Lochner Court — Justices who believed that the Constitution protected sending 6-year-olds down to work in coal mines, but prohibited minimum wage laws.
. . . FDR couldn’t have cared less how many Justices were on the Court — there had been more and sometimes fewer. What he cared about is that the New Deal worked and the Court stopped it. So as is a theme, FDR overwhelmed the Supreme obstacles: one anti-New Deal Justice (Devanter) retired, and two more flip-flopped (notably Owen Roberts) — voting the rest of their careers FOR the same policies they had voted AGAINST in 1936 and 1937.
So FDR went back to what had been working — and, guess what? It kept working — the US economy grew by:
+8.07% in 1939, and
+8.77% in 1940.
Both those years are long before the big defense increases of “the arsenal of democracy” . . .
And unemployment? Roosevelt got it under 10% in 1941 — BEFORE Pearl Harbor.
So, yeah: it wasn’t World War Two; it was the New Deal that ended the Great Depression.
Finally — the New Deal really paid off after WW2. It wasn’t just the emergency measures that took the -13% of Hoover’s 1932 economy and turned it into the +11% of FDR’s launch of the New Deal in 1934 (a 24% upswing in 3 years), it also created a solid and lasting foundation for a healthy economy that hadn’t existed before, plus inventing the tools to avoid boom and bust.
Rural electrification (which was done under FDR’s direction by Leland Olds, over the opposition of Republicans AND public utilities) created a huge demand for electric stoves, refrigerators, washers and driers — durable goods — which were made in American factories, shipped on American railroads and trucks on American rails and American roads. (All heavily unionized industries, btw.)
The secondary mortgage market created by FDR, juiced by government incentives provided by the VA and FHA, generated the 30 year fixed rate mortgage (which did not exist before the New Deal) that pretty much created the American middle class, in itself formed by the education made possible by the GI bill.
Have I mentioned that we should depoliticize the Court? That’s what FDR tried to do.
And not try to balance the budget?
Rather, we should aim to grow our National Debt more slowly than the economy as a whole most years and thereby shrink it. This is what we did with great success from 1945 to 1980 as described again yesterday.
To fight inflation, we shouldn’t be tamping down demand so much as increasing supply. E.g., automating millions of jobs that can now be automated to free up talent and energy to fill the ones that can’t.
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