Wednesday, January 4, 2012
Uncommon Knowledge: The Great Depression with Amity Shlaes: How we got out of it
The "Great Depression" of the 1930s is a classical argument between Progressives and Socialists or Progressive Socialists. As I would call them vs Conservatives and Libertarians or perhaps even Liberals. On what caused the "Great Depression" and how we got out of it and why it lasted so long. The classic progressive argument is that the FDR New Deal of the 1930s is what got us out of the "Great Depression". The problem with that argument and I'm making this as a Liberal Democrat just to put my cards on the table. Is that as late of 1940 basically the start or very close to the start of one of the largest Baby Booms in America. depending on how you define the Baby Boom Generation, we were still dealing with the "Great Depression". We still had 14-15% Official Unemployment, we officially started growing the economy again in around 1934-35 and then went back into recession in 1936. We get into World War II in 1941-42 and we put a lot of people back to work for the military, at home and abroad. By sending so many people abroad to fight in World War II, we created more jobs at home. Because more jobs opened up at home, because we had less workers at home to fill those jobs. I'm not saying that the New Deal was inconsequential, because it did create some brand new Entitlement Programs. That 75 plus years later we have to figure how to reform and pay for in the future. And on the positive side it did create a floor for people to count on when they were out of work.
The Legacy of the New Deal is not that it ended the "Great Depression", no government on its own is capable of doing that on its own. The "Great Depression" is exactly that, our economy collapsed so great to the point. That it took us about ten years to get passed it. But it did give people who needed it a floor of income that they can count on. When they were out of work, pre 1933 we basically had no Public Safety Net in America. People in need were almost completely dependent on getting themselves back on their feet. Their families and friends helping them out or Private Charity. With Social Security, Unemployment and Welfare Insurance we no longer have that. Thats the benefit of the New Deal and it did some people back to work. With substantial Infrastructure Investment just not to the point that it got us out of the "Great Depression". World War II where we spent a hell of a lot more money as a country then we spent on the New Deal. And went into debt to pay for it, did a lot of the work to get us out of the "Great Depression".
The New Deal helped in the short term but 75 plus years later we are still trying to figure out how to pay for them. And even if we want the Federal Government running all of these Social Insurance Programs. Or do we want some decentralization of them and even Private Competition for them. Progressive Socialists still haven't accomplished what they've always wanted, which was to transform. America into a Socialist Democracy and make us like Europe.