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LinkedInEmployment data turn out to be the most controversial part of the New Deal discussion. Lee Ohanian testified before the Senate Banking Committee recently, laying out as clearly anyone why labor policy made the Great Depression worse in the 1930s.
by
Amity Shlaes
April 14, 2009
Employment data turn out to be the most controversial part of the New Deal discussion. Lee Ohanian testified before the Senate Banking Committee recently, laying out as clearly anyone why labor policy made the Great Depression worse in the 1930s.
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One thing that jumps out in the report is the claim that the new labor laws (Wagner Act, etc) of the mid-30s were primarily responsible for causing the “Second Phase” of the Great Depression in ’37/’38. He points out that successful unionization and subsequent blackmailing of major corporations caused an artificial spike in wages, resulting in depressed employment.
Whereas Krugman et al (pretty much all modern-day Keynesians) have been claiming that the downturn resulted from tightening fiscal policies by Roosevelt. I.e., that Roosevelt’s attempt to shrink the deficit and cut taxes broke the back of the imminent economic recovery.
Seems like Professor Ohanian’s got a pretty solid rebuttal in place. Wonder if it will get much play.
Heh. Just realized that’s exactly what you are saying in your post. I glanced at it briefly, and then dove into the PDF, quickly forgetting your original point.
Oh, well. In one ear, out the other. Glad to see this getting some play.
You can remove both of these, if you wish. I’m vain enough to not want to sound like a complete idiot!
You don’t post nearly often enough.