Economic-conservative Dopers in this forum often insist that FDR’s New Deal was not all it was cracked up to be, that it didn’t really end the Depression – WWII did that, etc. AFAIK, we’ve never had a thread specifically debating that. Was the New Deal a success or a failure? Regardless of whether it ended the Depression or not, it did give us a lot of things that a lot of Americans still seem to value, e.g., Social Security, the Securities and Exchange Commission, federal insurance of bank deposits, and labor legislation (the Wagner Act) guaranteeing the right to organize, and the modern “broker state.”
The first question would be, “Success or failure at what?” It demonstrably didn’t give every American two chickens in every pot, etc. It did, clearly, curb some of the excesses that gave rise to the Depression in the first place. It clearly combatted a feeling of despair, impotence, and rebellion that was present in 1931-32. It demonstrably had positive effects on the economy, though as some have noted these were arguably temporary rather than permanent fixes. It absolutely restored American spirit and confidence among the greater part of the people.
Ignoring the ongoing argument about Iraq, our incursion into Afghanistan did accomplish a number of important goals, most particularly eliminating the Taliban, and a refuge for Al Qaeda. It re-established a putatively democratic government in that country. It did not solve every problem of insurgency nor eliminate poverty in that country. Was it a “success”? And by whose terms?
The main success of the New Deal was improving morale as far as I can tell. In 1932 things were at a low point in my part of the country and weren’t much better elsewhere, and maybe worse in some parts.
The New Deal gave people the idea that someone was trying to do something.
I believe that the Great Depression was ended for the US by WWII. That shouldn’t give laissez faire proponents much comfort though. The economy was under tight government control during the whole war and yet all sectors grew by leaps and bounds, expecially wages for the average person.
From an economic standpoint it makes no difference whether all of the economic activity was for war production or for making hoola hoops. The thing the war did was make it politically possible to raise taxes, borrow and spend a lot of money on making things.
I agree. The New Deal didn’t end the Depression. In fact, the recession worsened during 1937-1938. But at least Roosevelt gave gave the idea that somebody was trying to help, which Hoover never did.
In addition to success being measured against something, it must be balanced against what is lost. The New Deal is a trade-off of security against freedom. As the Sedition Act and Prohibition before it and peacetime military and the Patriot Act after it, the New Deal curtailed individual freedom for the “greater good.”
If your family was starving in 1932, the releif was well worth the loss of freedom. If you were operating a profitable business, the security was unnecessary but the freedoms missed.
From 1933 the government had been running at a deficit on purpose. So they already had the political power to borrow and spend a lot of money but it didn’t really end the depression.
Sure. That would explain the political will to make the trade off. More people needed the relief than wanted the freedoms. The situation was extreme and the changes were equal to the task. We make these trade-offs all the time. It is the whole foundation of government.
The money spent on New Deal projects was pocket change compared to the money spent on WWII. The result was some inflation, controlled by price and wage controls, and a lot more money circulating. There was no possible political support for spending the kind of money spent in WWII absent the war.
Actually the New Deal, by today’s standards of government program spending, was pretty conservative. And it turned out to be largely ineffecting in stimulating the economy.
The New Deal did little to actually combat the depression. But then I think when you have an all-encompassing depression like we were experiencing there really is not a lot that can truly be done. So complete was the economic downturn that even more Herculean efforts than the New Deal would have been akin to a child trying to wrestle a raging bull.
In the short-term, the only thing the New Deal accomplished was a degree of relief for some people (however government wasn’t prepared to deal with such a huge economic collapse, and probably still is not today; many people did not feel the relief of the New Deal, most people who were living in abject poverty prior to the New Deal programs going through congress were still living in abject poverty afterwards) and especially for those people who were directly provided jobs via New Deal machinations (the TVA, for example.)
In the long term though, the New Deal has had profound effects on our country. In many ways, the New Deal is why we will probably never again have a repeat of 1929 and the Depression that followed. The SEC regulates the market because of the New Deal, FDIC helps insure private citizens so that while they could still lose a great deal of money in a bank collapse they will not lose anything and are guaranteed a handsome sum ($100,000) which would be enough in most cases to keep a family going.
The Social Security Act was also a major part of the New Deal, and an act that taken as a whole I agree with. Much of the Social Security Administration’s duties are caring for the handicapped and disabled and that is something I think is, in general, a good thing. However I do think that the old age pension aspects of the SSA have grown and manifested in ways Roosevelt probably never intended. The benefit for the retired/old-aged was IMO there to help support the elderly who were on fixed incomes and protect them from the sort of bad things that could happen to them during unfavorable periods in the economic cycle. The idea that social security should be a wholistic form of retirement income is one that I think is a bad one, because it’s just not feasible and the government is ultimately a poor choice to manage such a monster.
I think it’s hard to say if the New Deal was a success or failure. It didn’t do much to stop the depression, so in that regards I’d say it was a failure. But it helped build a social safety net and created regulations to stop a repeat of the Great Depression, and this has worked well enough since then that that aspect can only be called a resounding success. I’ve taken many economics courses in my life and read a good deal on the issue as well and honestly I don’t know of any current serious people in the field who actually feel the New Deal ended the Great Depression.
To me the biggest success was to prevent people in despair from considering solutions like communism and fascism in America.
*Legislation was ordered for every kind of emergency: re-establishing farm credit to stop the wholesale robbery of foreclosures, financing big public projects, establishing the National Recovery Act, raising the minimum wage, spreading out jobs by shortening working hours, and encouraging the organization of labour unions. This was going to far; this was socialism, the opposition shouted. whether it was or not, it saved capitalism from complete collapse. It also inaugurated some of the finest reforms in the history of the United States. It was inspiring to see how quickly the American citizen reacted to constructive government. *
Viewed in a long-term perspective, the New Deal was a large overall benefit to the American economy. During the late 1800’s and the first third of the 1900’s, it was expected that every recession would carry unemployment up to at least twenty percent. Since the New Deal, unemployment has never topped nine percent. The regulations on stock trading, banking and general business practice prevent stupidity from growing too widespread. A mutual fund company, for instance, cannot simply sink all its investments into extremely high-risk stocks and bonds. While the economy still cycles through peaks and troughs, the troughs are no longer as devastating as they once were.
New Deal was internal US response to the Great Depression, which was a worldwide phenomenon, affecting practically every country in the world. As such, New Deal shares a very unsavory company, coinciding with ascendancy of Nazi party in Germany, GULag slave labor camps in USSR, emergence of chauvinistic militarism in Japan etc. All were responses to the worlwide dire economic crisis.
Therefore, New Deal was only temporary medicine. The whole world had to change and WWII accomplished that.
Fixing economy in US only was impossible. The whole world neede to change; the global change was required. Considering the malignant offshoots of the Great Depression in USSR, Germany, Japan, Italy, Spain etc., the change was going to take extremely violent shape.
US, Britain and France persevered through Great Depression with relative dignity. One might read “The Grapes of Wrath” and get, well, Greatly Depressed, but just look what was going on in some other countries through the 1930-s.
The depression may have been far reaching, but not everywhere was hit as hard. It is argued by some that there were, in fact, several simultaneous and not necessarily related depressions occuring rather than just one. I have also seen references that stated that Britain had a mild boom during part of this time.
The Soviet Union’s issues were not necessarily related to the depression at all - the forced industrialization, ending of the NEP/destruction of the Kulaks, military purges, as well as the background political repression to help Stalin sleep at night. The economic issues of the nascent communist state had nothing to do with the troubles of the flagship capitalist state. (Just because in the long run the communist command economy cannot compete with a market economy does not mean that at every instant in time things are as bad or worse for the average citizen of the former than for the latter.)
Does anyone know how the depression affected Japan? Is it generally agreed that the sole or principal reason for the rise of militarism was economic related?
I don’t know that it was the sole or principal reason for the rise of militarism, but it was certainly a significant one as it undermined the credibility of the party cabinets and their policies with the general public. It also gave more credibility to the military’s arguments regarding Japan’s need for autarky. It’s worth noting that Japan was not affected by the stock market crash itself as much as it’s export-based economy was hurt by the appearance of tariffs such as the Smoot-Hawley Tariff in the US.
This logic doesn’t apply during worldwide epidemics, whether physical or economic. Nobody would consider avian flu in Russia and US as two separate independent events. Everybody instinctively understands that one sick chicken in Siberia is affecting the whole world. So why do we refuse to recognize a worldwide economic malaise, when all the evidence points to it?
I think it’s wrong to look at any developed country exclusively ever since at least WW1. They all went into WW1, they all experienced relative economic boom in 1920-s, they all had subsequent dire economic crisis in 1930-s. They all attempted solution of command economy and Gov’t intervention.
Sure, every country has its own specific issues. For example in US, the popular support for FDR was based not only on his vague promises of ‘New Deal’ but also his promises to end the Prohibition, which was uniquely American issue.
In USSR there were lunatic policies of forced industrialization of manufacturing and agriculture under Communist dictatura, combined with vicious power struggles in the Kremlin. Likewise, Germany, Japan, Italy etc. also had their own unique issues.
However in the background of all this events of 1930-s stands the worldwide Great Depression.
In US there were Hoovervilles, in USSR - GULag slave labor camps (which also doubled as extermination camps for ‘class enemies’). This is intended not to draw a parallel, but to demonstrate a distinction.
As long as limited capitalistic NEP policies were bringing in revenues, Soviet Communists were happy to use them. The problem was, in 1930-s capitalistic methods seem to have stopped working all over the world. The whole world adopted Socialist solutions of massive Gov’t intervention into economy. So Soviet Gov’t was also forced to use Socialist methods. What happened demonstrated clearly that Russia was absolutely not ready for Socialism, just as Marx said. Instead of benefiting and assuming leadership during worldwide swing to the Left, USSR entered into the period of terror and oppression possibly unseen in History.
Soviet apologists always like to isolate the events of 1930-s. They would say that USSR had its problems, but so did the US, just look at the Great Depression. The truth is the Great Depression affected the whole world in 1930-s, but US responded to it much better then USSR.