The article is very limited as a history of the Great Depression—it says very little about why the economy got worse and better and does not include key words like “deflation”, “gold standard”, “Federal Reserve”, or “monetary”.
Still, if Hoover’s policies weren’t all that different from Roosevelt’s, and most of Roosevelt’s didn’t make all that much difference, that’s quite different from the usual account.
Also, is it true, as claimed in the article, that WW2 got the US out of the Great Depression? This has never seemed plausible to me (get richer by doing a huge amount of non-productive work?), and wars don’t usually seem to be great for the economy.
The article is overstating the similarities between Roosevelt’s policies and Hoover’s. The Wikipedia article which I linked covers it pretty well. Some of the main components of Roosevelt’s policies were:
Ending the gold standard
Regulating the banking/finance industry, including creating the FDIC (which put an end to bank runs) and the SEC
Creating a safety net (e.g., Social Security and the precursor to food stamps)
Expanding & creating more public works / job creation programs (Hoover had some, FDR employed as much as 7% of the workforce)
Labor market regulations, including prohibiting child labor, creating a minimum wage, and establishing a 44-hour workweek
You could divide the consequences of policies into three categories: getting the country out of the Depression (improving the economy, or making it worse), getting the country through the Depression (coping with the bad economy), and making lasting changes to the government and society. Most of these policies did more for the latter two.
For getting out of the Depression, the most important things the government could do were 1) monetary policy, and 2) increasing total government spending and debt. Getting off the gold standard was the key step for monetary policy (there were also various missteps by the Federal Reserve, including many in the late 1920s and one in 1937). Hoover increased total government spending and debt somewhat and then stopped; FDR kept them relatively flat until WW2 broke out and then increased them massively.
get richer by doing a huge amount of non-productive work?
Would it make a difference if the effects of the war was described as decreasing real wages (by freezing nominal wages in big inflation) and killing a bunch of men?
Also, is it true, as claimed in the article, that WW2 got the US out of the Great Depression? This has never seemed plausible to me (get richer by doing a huge amount of non-productive work?), and wars don’t usually seem to be great for the economy.
It’s sort-of plausible, because the GD was due to a severe shortfall in overall nominal expenditure wrt. the prevailing level of prices and wages. The original cause of this shortfall was a series of mistakes in monetary policy; however, increased deficit spending in WW2 could have made up for it.
Garbriel Kolko on the New Deal
If this is accurate, history is more complicated and less dramatic than usually thought, as is commonly the case.
The article is very limited as a history of the Great Depression—it says very little about why the economy got worse and better and does not include key words like “deflation”, “gold standard”, “Federal Reserve”, or “monetary”.
One of the first things that Roosevelt did as President was to take the US off the gold standard (to put a stop to the deflation), and that was probably the most important thing that a country could do to deal with the Depression. See, for example, this graph, this section of a Wikipedia article, or this (much longer) Economic History Association article.
Still, if Hoover’s policies weren’t all that different from Roosevelt’s, and most of Roosevelt’s didn’t make all that much difference, that’s quite different from the usual account.
Also, is it true, as claimed in the article, that WW2 got the US out of the Great Depression? This has never seemed plausible to me (get richer by doing a huge amount of non-productive work?), and wars don’t usually seem to be great for the economy.
The article is overstating the similarities between Roosevelt’s policies and Hoover’s. The Wikipedia article which I linked covers it pretty well. Some of the main components of Roosevelt’s policies were:
Ending the gold standard
Regulating the banking/finance industry, including creating the FDIC (which put an end to bank runs) and the SEC
Creating a safety net (e.g., Social Security and the precursor to food stamps)
Expanding & creating more public works / job creation programs (Hoover had some, FDR employed as much as 7% of the workforce)
Labor market regulations, including prohibiting child labor, creating a minimum wage, and establishing a 44-hour workweek
You could divide the consequences of policies into three categories: getting the country out of the Depression (improving the economy, or making it worse), getting the country through the Depression (coping with the bad economy), and making lasting changes to the government and society. Most of these policies did more for the latter two.
For getting out of the Depression, the most important things the government could do were 1) monetary policy, and 2) increasing total government spending and debt. Getting off the gold standard was the key step for monetary policy (there were also various missteps by the Federal Reserve, including many in the late 1920s and one in 1937). Hoover increased total government spending and debt somewhat and then stopped; FDR kept them relatively flat until WW2 broke out and then increased them massively.
Would it make a difference if the effects of the war was described as decreasing real wages (by freezing nominal wages in big inflation) and killing a bunch of men?
It’s sort-of plausible, because the GD was due to a severe shortfall in overall nominal expenditure wrt. the prevailing level of prices and wages. The original cause of this shortfall was a series of mistakes in monetary policy; however, increased deficit spending in WW2 could have made up for it.