The New Deal and Unemployment

Apparently, columnists at the Wall Street Journal believe that the policies of the New Deal did not diminish the nation's unemployment rate as much as it should have -- in fact, perhaps not at all!

This reality shows most clearly in the data -- everyone's data. During the Depression the federal government did not survey unemployment routinely as it does today. But a young economist named Stanley Lebergott helped the Bureau of Labor Statistics in Washington compile systematic unemployment data for that key period. He counted up what he called "regular work" such as a job as a school teacher or a job in the private sector. He intentionally did not include temporary jobs in emergency programs -- because to count a short-term, make-work project as a real job was to mask the anxiety of one who really didn't have regular work with long-term prospects.

Sure, well I suppose if you exclude from the employment rate those people who were, you know, employed by New Deal policies, the statistics would look a lot weaker. Here's Andrew Leonard on the issue:

Of course, some would argue that "masking the anxiety" of workers who did not know how they were going to feed their children or put a roof over their heads is precisely the job of government in times of great economic turmoil. And that, really, is where the whole project of New Deal revisionism breaks down.

The bottom line conservative position on the New Deal is that, theoretically speaking, the economy would have returned to "normal" more quickly if FDR had refrained from interfering with the workings of the free market through his vast array of interventionist programs. Sadly for them, we never got a chance to find out, because the situation in 1933, when Roosevelt took office, demanded government action. Twenty-five percent of the nation was unemployed. Human suffering was immense. If the market had been left to work its problems out all by itself, further suffering in the near term would have been unimaginable. And not just unimaginable -- but also politically unacceptable.

If the New Deal actually extended the Great Depression, we might wonder, why was Roosevelt reelected three times? One explanation would be that the general public is an idiot, and I must confess, I've leaned toward that point of view myself after viewing the aftermath of Election Day in the U.S. on a number of occasions over the last three decades. But another explanation could be that a majority of voters experienced material improvements in the quality of their lives as a result of New Deal programs. This is a point of enduring frustration to conservatives, and they've expended vast effort over the years in their attempt to rewrite history and convince us that what our grandparents knew was wrong -- to the point that they've even tried to tell us that the people who built the fantastic Art Deco structures at the high school my daughter is currently attending were "unemployed."

Via Mark Thoma.