Word: http://jessemerle.net/2009/01/24/did-fdrs-new-deal-worsen-the-great-depression/

GOP: "Facts! We don't need no stinking facts. The New Deal failed."

...measure that doesn't count jobs created by government relief programs.

I have always thought to include government relief jobs was a crock in the first place.
If these taxpayer dependent jobs were equivalent, the answer would be simple.....just grow government until you have the needed number of jobs.

Well, kiddies, it doesn't work that way. Government creates and produces nothing, it just shuffles around assets by taxing and spending. Governement jobs should never be used as a measure of the health of the nation.

Being a Republican has, for the past 8 years, been one long exercise in lying to oneself. Never have I seen such brazen self-delusion and rank sell-out of the supposed "values" that many Republicans claimed to have when they were obsessively defending Bush and the Bush administration. The dishonesty people had to themselves was stunning. I have no idea why they would stop now.

It's like these guys take pride in being ignorant.

@El Viajero
Government creates and produces nothing

That is clearly hyperbole. Government does produce. The Post office produces, Government produces roads, some education, some inventions, basic research, courts, police etc. We would always like Government to produce more efficiently but that is true of private industry also and yes IMO private industry is generally more efficient than government.

As far as the new deal goes, it is not as clear as some of you say. IMO some parts of the new deal worked other parts did not. (BTW some parts like FDIC were initiated by republicans.) Some of what Hoover started and was continued by FDR contributed to high unemployment numbers. In the great depression above 10% unemployment lasted even longer the 1873 depression. That is troublesome, further the New Deal institutions still exists today and we are falling into a recession now also the 1970’s and early 1980’s were not so great.

To counter my own argument above that unemployment remained above 10%, I have a suspicion that the unemployment numbers post FICA where artificially high because after FICA it paid to work but not report income.

I think that it would a good thing during this recession eliminate all taxes including SS and Medicare on income below 25 or 30k/year. We can make some of it up by eliminating the SS tax cap.

Government produces roads, some education, some inventions, basic research, courts, police etc.

At the expense of taxpayers....and when government money stops......the jobs stop.

Private sector jobs do not require government to ultimately pay the bill. The jobs do not go away when the government stops paying.

Exactly how are these two equivalent? And if you wish to argue that they are...why not just have the government expand and solve the jobs crisis?

Private sector jobs do not require government to ultimately pay the bill.

It would be awfully hard for me to get to work without the infrastructure in place that allows me to get there. In the DC area, a huge infrastructure failure (water line burst) made it impossible for many people to get to work.

The question is whether you want people have an easier time of getting to their jobs or pursuing their business ventures or a harder time of it. The question is whether we're the richest country in the world with top-notch infrastructure, or whether we're an impoverished 2nd-world country where we tolerate failures because, "well, that's just the way things go." What I'm hearing from Republicans is a lot of "we're a poor country that is incapable of doing anything because everyone here is stupid." Which is, strangely, quite different than the sort of propaganda you normally hear from them.

The question is whether you want people have an easier time of getting to their jobs or pursuing their business ventures or a harder time of it.

No, the question is what is the most efficient method of stimulating the economy.

While your arguements may be fine for a spending bill, they are not for a stimulus bill.

The sad fact for liberals is small business is the job-creation engine of the US. This is the hated group that are just "lucky" and don't deserve any consideration.

Any inititative that doesn't focus on small business will be sadly lacking in results. Ask yourself if you have ever been hired by a poor person....

"At the expense of taxpayers....and when government money stops......the jobs stop."

El V just made the startling discovery that people have to pay for things in order to have jobs exist. Well done.

ElV, stimulus bills work best when they boost spending. We're facing a credit crisis and collapsing demand. Please spare us your ignorant ideas that this isn't "really" a "stimulus bill." It is. We're either going to improve infrastructure, or we're going to let you wallow in your crumbling infrastructure while you call it paradise. Screw that, I'm not going to tolerate any crap from the republicans who want to do nothing and rejoice in suffering for the sake of spiting Democrats. We're going to drag you kicking and screaming into modernity whether you like it or not, regardless of how poor and useless you regard America and its people to be. We're NOT going to allow the lieks of ytou to interfere with Americans' jobs and their business ventures by forcing them to tolerate crumbling conditions-- not now in a moment of crisis, you whiny little git.

What we're seeing from you and the Republicans is a desire to use this crisis and as excuse to strip America for parts, like the useless locusts you are. Instead we're going to boost the economy and give everyone who lives in America better lives and better conditions helping them get to their jobs and help their new ventures. So spare us your right-wing talking points wrapped in dishonest sanctimony. It's amazing how Republicans simply find a newfound love for the third world when they're face with a Democrat who's trying to fix things in a moment of crisis.

Ezra and Ezra trolls,

There is a growing and not insignificant class of economists that agree with Shales even if not for the same reasons. It is hard to see how specific New Deal policies aided economic recovery and there is quite a lot of work on it.

I often find that the left is more hostile to acknowledging reasonable disagreement on a topic than the right, and this comes from a lefty.

Ignoring your opponents' best arguments doesn't contribute to your power in the end.

Small business creates 80% of the new jobs.

Say it ain't so.

How can any reasonable person ignore small business when the goal is stimulating the economy and job creation?

Hey, Selfreferencing:

Got any links to go with that ad hominem attack? And the mere fact that the number of economists agreeing with Shlaes (you'll get more points if you can spell her name right, unless you're referring to the staggering work of economic analysis produces by the Washington Post's TV critic) doesn't mean squat--it's the quality of the analysis that's important, and if you're referring to Tyler Cowen or those two clots out in California, the quality just isn't there, IMHO.

So exactly what are these "best arguments"--you ought to be able to provide links, even if you can't actually explain them yourself.

Waiter? Can we have a better class of critique around here?

Whoops--that should have been "...critic)is increasing..."

You know, the book would be right...if it talked about black people. The New Deal was a pretty raw deal for black people in the South.

But then, that would open up a can of worms for Republicans...

A shoddy book, but there are better arguments:

http://www.minneapolisfed.org/research/wp/wp597.pdf

Tyro there were roads before governments started building and maintaining them.

Tyro there were roads before governments started building and maintaining them.

No, those are called "trails" or "paths".

Asher-

Not really--Cole and Ohanian in the paper you link to were looking at the cartelization effects of the New Deal, which were swept aside by the Schechter decision in 1934.
This is irrelevant to the stimulus spending that nearly every contemporary commenter on this blog and elsewhere means when they reference the New Deal.

And, this:

http://www.econbrowser.com/archives/2008/10/back_to_the_gre.html

BTW some parts like FDIC were initiated by republicans.

Ah yes, the noted Republicans Carter Glass and Henry B. Steagall.

How is mass transit more 21st century than road & highways?

No other transportation is more 21st century than a Prius. Electronics could make future cars safer, far more road space efficient and fuel efficient and they take you closer to where you want to go when you want to go.

BTW estimates show that in the USA mass transit spends more fuel per passenger mile than do private vehicles.

Asher: A shoddy book, but there are better arguments

The paper you cite deals with the New Deal "cartelization" (in other words, the NRA). It does not, nor does it pretend to, deal with any of the other, more significant, aspects of the New Deal.

The NRA was a bad idea? What a shocker. Please find me an economist who thinks otherwise. FDR himself said he was hunting in the dark. Fortunately we have the benefit of hindsight. Stimulus, yes. Cartelization? No. Nobody is calling for it, so don't bother looking for blue eagles.

cletus: El V just made the startling discovery that people have to pay for things in order to have jobs exist.

Cletus, be a little encouraging, that's a serious insight for a Republican. Next thing you know he'll realize that tax cuts don't pay for themselves.

George A. Akerlof and Robert J. Shiller in the preface of their forthcoming book, Animal Spirits

Keynes' followers rooted out almost all of the animal spirits...that lay at the heart of his explanation for the Great Depression...They...minimized the intellectual distance between The General Theory and the standard classical economics of the day.

Economic historian Robert Higgs concludes that in the United States, "Taken together, the many menacing New Deal measures, especially those from 1935 onward, gave businesspeople and investors good reason to fear that the market economy might not survive in anything like its traditional form and that even more drastic developments, perhaps even some kind of collectivist dictatorship, could not be ruled out entirely." Such worries drove business investment to very low levels and brought corporate plans for expansion to a standstill.

George A. Akerlof and Robert J. Shiller are not considered libertarian economists.

Regarding Shiller, he's calling for a LARGE stimulus package.

And, again, the quote just above goes to the cartelization and business restrictions of the New Deal, not the simulus spending!

Waiter! Check, please!

vorkosigan1,

Since no one is calling for a new NRA, it's obvious that the loyal opposition is indulging in its favorite sport - attacking strawmen.

I'd say let them have their fun, except some uninformed souls seem to mistake what they say for serious arguments.

OK so we are emphatically sure that the new deal ended the great depression. So are we just as sure that Warren G. Harding’s deal did not end the the depression of 1920-1921?

A little self-doubt might be a good thing here.

If we are going discus this at all we must fist decide what is included in the new deal and what is not surely Amity Shales is referring to more that fiscal stimulus.

@alex

I should not speak for others, but I think that they are referring also to encouraging unions and to changing rules and regulations. Changing too many rules can make investing look scarier. While I have no problem with unions this is probably not the best time to encourage them to push for higher wages (although perhaps this would be a good time for them to push for fewer hours with less pay and more hiring). Maybe we should have regulated more in the passed 15 years but maybe now is not the time. Maybe in the 1990s we should have encouraged unions but maybe not right now. Maybe in the 1990s we should have done single payer but today do we need fewer employed in insurance and medicine?

I think that they are referring also to encouraging unions and to changing rules and regulations. Changing too many rules can make investing look scarier.

Agreed, but that's not what the stimulus bill is about. Understanding the historical lessons of the Great Depression is important, but the anti-stimulus argument that flows from this book is "some things about the New Deal were bad, therefore anything that resembles any part of the New Deal is bad". Not exactly the most insightful argument.

I'd feel a lot better if I thought Congressional Republicans were cynically using Shlaes to lie to us rather than reading it in order to lie to themselves.

Ezra: How can you tell the difference? Depending on the Republican in question, I suspect there's a lot of both in evidence. Someone like Mike Pence strikes me as a true believer, so he's lying to himself (to the point of conviction). Mitch McConnell, on the other hand...

Small business is the job-creation engine.

Save business and save the economy.

El Viajero I think that a good way to save small businesses and increase jobs is to eliminate the FICA and matching FICA. 7.5% payroll savings could save some businesses and 7.5% more in employee’s pay checks could help demand. The money could be made up latter through the income tax or some other way.

"the many menacing New Deal measures . . . gave businesspeople and investors good reason to fear that the market economy might not survive . . . and that even more drastic developments, perhaps even some kind of collectivist dictatorship, could not be ruled out entirely."

Would these be the same "businesspeople" who tried to organise a coup against FDR in 1933?

http://en.wikipedia.org/wiki/Business_Plot

Their aim? A fascist dictatorship, as per Italy and Germany. Both of which were happily supported by the capitalist class.

I guess that many business people were opposed to democratic government intervention in favour of working people rather than, say, dictatorial government intervention against working people...

El Viajero I think that a good way to save small businesses and increase jobs is to eliminate the FICA and matching FICA.

Actually, that's a great idea. It would lower business' costs and the variable costs of hiring employees and would also be "progressive" so it's easier to sell to liberals.