Wednesday, January 07, 2009

FDR, the New Deal, and Unemployment Rates

There is this conservative writer named Amity Shlaes who authored a book called The Forgotten Man about FDR and the Great Depression. She has become the latest conservative expert on the Great Depression. Her book is an attempt to argue that Roosevelt's policies actually made unemployment worse, not better, and that it was WWII that ended the Great Depression, not governmental action. One of her outlets is the Washington Post, who is publishing her articles apparently as a conservative counter-weight to arguments being made for more aggressive public works spending.
Shlaes by the way, is a Ivy League graduate who majored in English, not economics or history. This is from the Wikipedia entry about her:

Shlaes graduated from Jonathan Edwards College, Yale University magna cum laude[1] with a bachelor’s degree in English in 1982.[2]

As David Sirota points out in an excellent column about Shlaes, the New Deal and unemployment, her analysis of unemployment data has been discredited by a University of California historian. Sirota goes on to point out that under the New Deal, America experienced the second greatest drop in the percentage of unemployed recorded from 1932 through 2008. (Sirota is considering the New Deal as having ended in 1941, the year that WWII started.) The only greater drop occurred during the period of 1940 through 1944.

Why is any of this important? Because right now the Congress is considering how to stimulate the economy. Conservatives and Republicans argue that government projects won't work in reducing unemployment. They will be citing Shlaes's book in support of these arguments. Sirota's column is one small way to argue back.

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