Obama and FDR's "New Deal" lead/led to Depression

The Media and some pundits are throwing around this
New Deal as if it is a Good Thing.

Franklin D. Roosevelt was elected to 4 terms and some say that his actions extended a Recession into a Depression by 7 years.

Wikipedia, FDR's New Deal

Obama isn't in office yet, but comparisons are already being made:

Obama's "New Deal"

I am still reeducating myself on FDR's actions during the "Great Depression", but this part of an article made me shudder:

What made FDR a great president was his charisma, compassion and wartime leadership. At a time of unprecedented austerity and grey-faced politicians, we could all do with a bit of his élan.
But we could do without his policies — unless we want our recession to last an extra seven years.

UK Daily Mail (Source)

FDR had the [fortunate?] situation of an impending World War to help stimulate the US economy at the time, and barely got it done. What will help Obama stimulate our failing economy?

What should I think the next time I hear a news source talk about how great "Obama's New Deal" is?

[edit on 26-11-2008 by CreeWolf]

I can only make this comment: Cry wolf long enough and when the SHTF no one will listen to you....

Best regards.

Loke.

I don't know where you're coming from.

I think Obama will have a positive effect on the economy just because he's President. I think that since he's popular more people will have faith in the stock market and will buy more stocks because they're more comfortable with him as President than with Bush. Just my thoughts... I'm not flaming Bush but I just think that just because Obama is President that just by him being President that he will help things get better.

People are not going to buy more stocks because they are confortable with Obama. What kind of reality are some of you living in? Just by saying the glass is half full doesn't mean it is.

Originally posted by Frankidealist35
I think Obama will have a positive effect on the economy just because he's President.

What?

I know he's going to be President now, and it isn't helping me any. I'm not going to start spending more just because almighty Obama has been elected.

I think that since he's popular more people will have faith in the stock market

Your justification is ludicrous.

How is his popularity going to give people more money to invest in the markets?

How is his popularity going to give people faith in the markets when the markets keep going down anyway?

and will buy more stocks because they're more comfortable with him as President than with Bush.

Not even close.

People will be selling more stocks to avoid taking huge losses via Obama's proposed increases in the capital gains tax. They sure as hell won't be buying.

I just think that just because Obama is President that just by him being President that he will help things get better.

That's kind of sweet.

It's kind of sad too though.

reply to post by nyk537


People are rational beings, however, their rationalizations often tend to originate out of inconclusive fears. For the same seemingly arbitrary reasons people pull out their investments on the whims of the market, they will just as quickly decide to return to investment. As long as there is something out of whack, people will act funny. A return to normalcy will only occur when the integrity of the market and its regulators is restored. This can be as easy as Obama enacting a new piece of what appears to be progressive legislation. If it's actually worth something, then we know we're going somewhere.

Sorry, but Rush Limbaugh beat you to the punch on this weeks ago. Why does everyone try to rewrite history now that it is convenient?

Go anywhere before Obama got elected and the bailouts occurred and all you will see is the success of FDR's New Deal. Of course once somebody starts making decisions and doing something, all of the naysayers and pseudo-know-it-alls start coming out of the woodworks.

[edit on 4-12-2008 by Irish M1ck]

Besides, it's not a good blamestorm unless you bring Bill Clinton into the mix.
I read an editorial piece a month or so ago that lays all the blame of the current financial mess on the Clinton Administration of oh so many years ago. Now that's some top-notch blaming!

Originally posted by CreeWolf
Franklin D. Roosevelt was elected to 4 terms and some say that his actions extended a Recession into a Depression by 7 years.

Some say that huh? Well, the Great Depression happened in 1929 and the New Deal was in 1933 to 1936.... How does that cause and effect thing work again?

Obama isn't in office yet, but comparisons are already being made:

I don't doubt it. We have recently learned that the current "recession" started a year ago and it's already being blamed on Obama, even though he hasn't taken office yet!

What will help Obama stimulate our failing economy?

Energy independence for one. Roads, railroads, mass transit, jobs that cannot be sent overseas, low mileage cars...

Originally posted by Irish M1ck
Go anywhere before Obama got elected and the bailouts occurred and all you will see is the success of FDR's New Deal. Of course once somebody starts making decisions and doing something, all of the naysayers and pseudo-know-it-alls start coming out of the woodworks.

[edit on 4-12-2008 by Irish M1ck]

Hmmm...ok - would going back to 2004 be good enough?

Maybe a study from 04 by some UCLA economists?

FDR's policies prlonged Depression by 7 years, UCLA economists calculate

In that study they said..

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

Looks like they may have even looked into the future a bit in that 04 study..

"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."

Heh - I like that, "unless lawmakers gum up a recovery with ill-conceived stimulus polices". I guess we don't have to worry about that..

People liked FDR even though the econmy was very bad. His policies made it seem like the governement was actually doing something. Problem was the "something" actually hurt until WW2 came along.

reply to post by Nohup


They'll be blaming him into the next Century.


Rush Limbaugh and his followers (because Rush says so - trust me, they didn't believe it until Rush said it) state that it was WWII that brought us out of the GD. However, I think this economic evaluation sums it up nicely:

Great Depression

The number of unemployed workers declined by 7,050,000 between 1940 and 1943, but the number in military service rose by 8,590,000. The reduction in unemployment can be explained by the draft, not by the economic recovery. The rise in real GNP presents similar problems. Most estimates show declines in real consumption spending, which means that consumers were worse off during the war. Business investment fell during the war. Government spending on the war effort exceeded the expansion in real GNP.

Perhaps the New Deal was not 100% responsible for the upturn in the economy, but it certainly didn't help. More likely than not, it did help end the downward spiral.

NY Times opinion

Roosevelt instituted a disastrous legacy of agricultural subsidies and sought to cartelize industry, backed by force of law. Neither policy helped the economy recover.

He also took steps to strengthen unions and to keep real wages high. This helped workers who had jobs, but made it much harder for the unemployed to get back to work. One result was unemployment rates that remained high throughout the New Deal period.

I agree with that 100%, however I think unions are critical and often taken for granted. They are the reasons work conditions improved - and that's that.

Government spending went up considerably, but taxes rose, too. Under President Herbert Hoover and continuing with Roosevelt, the federal government increased income taxes, excise taxes, inheritance taxes, corporate income taxes, holding company taxes and “excess profits” taxes.

When all of these tax increases are taken into account, New Deal fiscal policy didn’t do much to promote recovery. Today, a tax cut for the middle class is a good idea — and the case for repealing the Bush tax cuts for higher-income earners is weaker than it may have seemed a year or two ago.

Time to start the trickle-up effect!

World War II did help the American economy, but the gains came in the early stages, when America was still just selling war-related goods to Europe and was not yet a combatant.

While overall economic output was rising, and the military draft lowered unemployment, the war years were generally not prosperous ones. As for today, we shouldn’t think that fighting a war is the way to restore economic health.

Sure, we could institute a draft right now and unemployment would go down. However, I don't see how that helps anything. Instead of being out of work, they are dead. And production wouldn't go up... we'd just outsource the work.

The good New Deal policies, like constructing a basic social safety net, made sense on their own terms and would have been desirable in the boom years of the 1920s as well. The bad policies made things worse. Today, that means we should restrict extraordinary measures to the financial sector as much as possible and resist the temptation to “do something” for its own sake.

Summation that does a good job pointing out the New Deal was neither a savior nor a damnation of the US economy. Instead of looking at everything in Limbaugh's black and white vision, perhaps it is better suited to examine history as it happened - not as we'd like it to have happened.

[edit on 4-12-2008 by Irish M1ck]

Originally posted by CreeWolf
The Media and some pundits are throwing around this
New Deal as if it is a Good Thing.

Franklin D. Roosevelt was elected to 4 terms and some say that his actions extended a Recession into a Depression by 7 years.

Wikipedia, FDR's New Deal

Obama isn't in office yet, but comparisons are already being made:

Obama's "New Deal"

I am still reeducating myself on FDR's actions during the "Great Depression", but this part of an article made me shudder:

What made FDR a great president was his charisma, compassion and wartime leadership. At a time of unprecedented austerity and grey-faced politicians, we could all do with a bit of his élan.
But we could do without his policies — unless we want our recession to last an extra seven years.

UK Daily Mail (Source)

FDR had the [fortunate?] situation of an impending World War to help stimulate the US economy at the time, and barely got it done. What will help Obama stimulate our failing economy?

What should I think the next time I hear a news source talk about how great "Obama's New Deal" is?

[edit on 26-11-2008 by CreeWolf]

Good question, Creewolf, and the answer is that you should at least try to accept what needs to happen rather than hold on to failed systems. Remember that the way Roosevelt administered his series of "New Deal" programs was intended to do the exact same thing that Obama is expected to do, and that is the following:

1. Reform the practices of the Banking and Financial sectors.
2. Provide relief for the homeless and jobless of the country.
3. Provide short-term recovery solutions for all industries (This will come in the form of the Auto bail-out because the supply lines encompass a large percentage of domestic jobs)
4. Obama will need to either reform or reassign duties of the FDIC, SEC, and FHA. These are New Deal programs that we need to strengthen in order to avoid this happening again.

It is a sad realization to come to, that we are dealing with the same problems we had in the 1930s.

As for the WWII fishing us out of the barrel, first realize that there is another war brewing on the horizon, first of all.

Secondly, the US won WWII despite the depression, the depression didn't end because of WWII. In fact, the only reason that the US managed to pull that one out is the massive reforms made to our system allowed for mass production of war materiel. Industry in America had a sonic boom under Roosevelt. The sheer number of tanks, planes, rifles, and other various necessary things for fighting a war were produced right here in America by companies who later went on to economic domination, in fact, we were warned by Dwight D. Eisenhower that the greatest threat to our country was in fact the continued domination of these groups in the form of the Military Industrial complex, because it was just too damned strong, and he was right. The CIA is basically untouchable and the US has more military hardware than any other country in the world.

I would say you give Obama a full term to clean up a bit. You know when you fill congressional, senatorial, and presidential offices with elephants they leave alot of # around for people to find.

It's not to say that a stimulus or "New New Deal" or whatever you want to call it can't work.

It may be able to. The key is not to mess it.

Right now Obama isn't even in yet and the current admin is the one doing all the stimulating. It honestly doesn't seem to be helping much yet. Either way, Obama hasn't had a chance to have any effect for good or ill yet.

As with most things history related the key is to learn from what actually happened. Look at what worked (and what didn't ) and why. Look at the current situation for things that are similar. Try to apply things that worked that are applicable and avoid those that did not.

The idea that the New Deal extended the Depression is revisionist history designed to discredit certain economic philosophies (namely, Keynes'). The numbers say it all -



The small drop from 1937-1938 was caused by FDR's decision (under pressure from Congress and some in his cabinet) to cut government spending in an attempt to balance the budget; this DID cause an extension of the Depression.

Obviously World War II is what truly ended the Depression and launched the superpower status of America, but WWII economics were essentially the New Deal on steroids - GI Bills, price controls, government-mandated manufacturing, and a number of other aspects that today would probably be deemed "socialism."

I don't remember who said this first, but FDR had to bring the United States to closest it had ever been to socialism in order to save capitalism.

Originally posted by evanmontegarde
I don't remember who said this first, but FDR had to bring the United States to closest it had ever been to socialism in order to save capitalism.

That statement right there makes me a little nervous. If Obama tries to move us out of our Recession/Depression the same way, will we come back from Socialism in these times without a similar war?

reply to post by CreeWolf


You can have a Capitalist and Socialist society at the same time... you do realize that right? Our society already utilizing some socialist methods.

reply to post by Irish M1ck

Yeah, I see your point. I can't fart sideways nowadays without the government being involved somehow. These bailouts of the banks and the auto industry should NOT be happening if we wish to keep what little "Capitalism" in our system remains. As far as I'm concerned, there should be Wall Street executives bailing themselves out of a window whereas instead, they are throwing themselves million-dollar parties in celebration of raping the American people!

I see where we are going and I'm not liking it.

[edit on 15-12-2008 by CreeWolf]

Was a longer depression necessarily a bad thing for the long term? Although human suffering and desperation is essentially a bad thing, could it all have been totally avoided? Would we have come out the same had there not been an additional seven years of poor policy? We're only looking at the length of the Depression period itself as an indicator of the President's success. What about the programs he developed? Did they contribute positively after the Depression ended? Did they provide any benefit we wouldn't otherwise have?

[edit on 18-12-2008 by cognoscente]