![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
The New Deal
Feb. 9th, 2009 07:38 pmOver on Transterrestrial Musings, I've ran across a group of New Deal Denialists. These folks come in two flavors, strong and weak. The strong flavor argue that FDR's New Deal actually prolonged the Great Depression, while the weak flavor say that it merely didn't help.
The New Deal Denialists may be right. Economics, like evolution, is not easily proved, because we can’t run controlled experiments. So maybe the New Deal didn’t help the Depression. However, World War II did help.
Economically, WWII for the US looked like the New Deal on steroids. During the war, we had de facto nationalization of practically the whole economy, massive deficit spending, and a 94% top marginal income tax rate. Clearly unsustainable for a long duration, but effective at boosting the economy.
So if a big action produces a big result, why wouldn’t a smaller action produce a smaller result in the same direction? Anybody who argues that the New Deal didn't help resolve the Great Depression needs to explain the economic results of WWII.
The New Deal Denialists may be right. Economics, like evolution, is not easily proved, because we can’t run controlled experiments. So maybe the New Deal didn’t help the Depression. However, World War II did help.
Economically, WWII for the US looked like the New Deal on steroids. During the war, we had de facto nationalization of practically the whole economy, massive deficit spending, and a 94% top marginal income tax rate. Clearly unsustainable for a long duration, but effective at boosting the economy.
So if a big action produces a big result, why wouldn’t a smaller action produce a smaller result in the same direction? Anybody who argues that the New Deal didn't help resolve the Great Depression needs to explain the economic results of WWII.