The Frontier Centre for Public Policy today released a study which notes both the correct and incorrect actions taken in the 1930s in the United States under Franklin D. Roosevelt. The study, America (and Canada) Doesn’t Need Another New Deal, notes how government actions in the 1930s both helped some families, but in other cases, also hindered economic recovery and in fact deepened the 1930s depression.
Rohit Gupta, a former policy advisor in the Office of the Prime Minister and research associate with the Bank of Canada, and now the principal of a public policy firm, notes that many politicians today seem too intent on replicating FDRs 1930s approach. If so, he points out they should avoid the worst errors committed by Roosevelt and the American Congress during the Great Depression.
For example, Gupta notes that while unemployment benefits and public pensions were positive policy choices in the 1930s, those positives were overwhelmed by anti-business policies the ultimately exacerbated the economic downturn. For example:
Many of Roosevelt’s policies worsened the Depression and contributed to a “double-dip depression.” The unemployment rate, which fell gradually from 1934 through 1937 and reached a low of 14.3 per cent, increased again to 19 per cent by 1938. By the end of the decade, even Roosevelt’s own Treasury Secretary Henry Morgenthau Jr. began to have his doubts about FDR’s economic policies. The study quotes Morgenthau Jr. who wrote in his diary:
“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.”
Gupta points that policy makers should learn the lessons of the 1930s and be careful not to enact anti-competition and anti-business measures: “Stimulus measures must not be used to implement the types of questionable New Deal planned-economy equivalents in today’s world.”
The Frontier Centre for Public Policy study, America (and Canada) Doesn’t Need Another New Deal, can be found at fcpp.org
For more information, contact the study author at: