One of the things we’ve been thinking about at the Council is the meaning of the New Deal and its impact on the Great Depression. We also talked a lot about it in my course at NYU/Stern. I get the impression some colleagues believe that the professional consensus is that the New Deal worked, economically. At Newsweek Daniel Gross sounds pretty certain of himself when he mocks those who are skeptical about the New Deal. Daniel writes that I, “George Will, and assorted libertarians cling bitterly to the notion that the New Deal didn’t work, that FDR’s policies of regulatory reform and sharply increased government spending were an abject failure, that the economy didn’t turn around until the day Japanese bombers dropped their payloads on Pearl Harbor. They believe Keynesian-style stimulus didn’t work in the 1930s, so it won’t work now.”
Back in the 1990s the Journal of Economic History published analysis of a survey of economic historians on their opinions about various events in history. (I want to thank the Beacon and Marginal Revolution, who pointed this out to me). This survey was well before the current stimulus was a gleam in President-elect Obama’s eye, or the bailout a gleam in Secretary Paulson’s eye. The author, Robert Whaples, put forward the following proposition in an anonymous survey of randomly selected economic historians. Some were trained more as historians and some were economists.
“Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression.”
A full seventy-four percent of historians disagreed. That’s a high rate of New Deal supporters — but still leaves one in four on the other side, not supporting.
Economists had a different reply. Forty-nine percent of the economists agreed, or agreed with provisos, with the idea that the New Deal made the Depression worse. Fifty-one percent disagreed.
In other words, there’s a big debate over government’s role, and no consensus at all among those who emphasize numbers when they look at this period. The late Arthur Schlesinger (historian, not economist) wrote, quoting someone else, that history is an argument without end, and concluded “that is why we love it so.” That is why most of us love it so, too.
Robert Whaples, the author of that original paper, emailed today with an update. Whaples wrote that in 2007 he did do a random sample of history department members, which is different from economic historians. To this group, Whaples put forward the following statement:
“Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression.”
Here are their responses in percentage terms:
1 (strongly disagree) 35
2 (disagree) 49
3 (neutral) 5
4 (agree) 5
5 (strongly agree) 5
To me this Whaples work suggests that the farther away from econ you get, the lefter you get when it comes to your New Deal take.
What about that the question of whether the war ended the Great Depression? Dan in Newsweek seems to think that’s a nondebatable. But it is debatable. Even members of the new administration provide evidence for that. Check out Christina Romer’s paper which emphasizes monetary policy as the conclusion to the Depression (NBER). Hunting around I see that Tyler Cowen has written about Dr Romer.
