Sunday, March 8, 2009

Was the New Deal a Success?

Unemployment was 3.14 percent in 1929. In 1939, it still stood at more than 17 percent. On that basis, you could conclude that the New Deal was not successful. But as all things in life, it's not that simple.

It has been pointed out by some that unemployment during that decade (around 1936) actually dipped below 15 percent. This is because the "official" statistics -- based on the U.S. Bureau of Labor -- did not count work-relief programs. From what I've seen, if the commentator is a conservative, the "official" statistics will be used. Liberal commentators tend to use the figures which include the work-relief, or the lower unemployment percentage.

Whether unemployment is 18 percent or 15 percent is a moot point. In either case, a lot of the labor force was unemployed. At the peak of the depression, the unemployment rate was around 25 percent, and then FDR pushed through his New Deal programs.

So one could conclude that the New Deal helped. Somewhat. But unemployment was still high.

Currently, unemployment is at 8.1 percent. So that doesn't sound too bad. Yet, if you take the number of unemployed who are no longer in the job market because they have not been able to find suitable work, the number is higher.

So the facts are murky, because the government doesn't count the unemployed as it did 80 years ago, so it's difficult to make a rational decision about what is going on. Kind of like comparing apples to oranges. But when you take these into consideration, the New Deal was only able to lower an astronomical unemployment rate from about 25 percent to a range of 15 percent to 18 percent.

To me, the only choice left is whether you want government to provide jobs, or you want the private sector to provide jobs.

We're now at a point where the government will be providing most the new employment, instead of the private sector. Big government is not going to get us back to the boom days of the 1920s, 1960s, 1980s, etc. During these periods, government got out of the way, lowered tax rates, and helped the private sector create jobs.

This is what I'd prefer. What about you?

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