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How effective was the New Deal?

Posted: 2017-04-06 05:39pm
by FaxModem1
One of the key things I've heard talked about the New Deal is that it helped build up the US's infrastructure, as well as giving people jobs, income, and a sense of pride. But, another thing I've heard about the New Deal is that it was only a temporary boost, and that once the construction and infrastructure jobs were gone, the US would have fallen back into hard times if not for World War II's huge boost to the US economy and building up of everything while also destroying every other competitor economically.

So, how effective was the New Deal for the US? Was it only a way to buy time, or was it a permanent gain? How effective was it?

Discuss.

Re: How effective was the New Deal?

Posted: 2017-05-19 02:01am
by Guardsman Bass
Overall, I'd say that a lot of it was good but inadequate. The best parts of the New Deal* in stimulating the economy were the Civilian Conservation Corps, the Works Progress Administration, and the Public Works Administration, but they were never run at a size large enough to really shrink unemployment enough and produce enough aggregate demand to get the US economy back to pre-Depression unemployment and GDP size levels. FDR also tended to get cautious from time to time and drastically scale back federal spending while hiking taxes (like in 1937/38).

The other stuff was a more mixed bag. Reforming the banks was good, passing the FLSA and NLRA were good in the long term but not necessarily good in terms of economic recovery at the moment, the AAA saved farmers but also created a vast screwed up system of subsidies that has mostly worked to the benefit of agro-business, and NIRA was a disaster that caused US industrial production (which had grown by 58% in relative percentage in the three months prior to its passage) to then decline by about 19% afterwards.

* I'm focusing exclusively on the New Deal here. The FDR administration's most effective policy in helping the US economy to grow until World War 2 might have been devaluing the currency and expanding the money supply by (sort of) going off of the Gold Standard.

Re: How effective was the New Deal?

Posted: 2017-05-21 07:21pm
by Sea Skimmer
It certainly took the edge off in terms of preserving the balance of society, as an economic recovery the effect was limited, and many projects like the whole TVA simply had no realistic basis for producing quick results. But then all that surge of production in WW2 would have been significantly harder had that power not existed; the US was still hard up enough for electrical power in the war that several major dams were built during the war. One of them in something silly like 13 months for a 250 MW installation.

Re: How effective was the New Deal?

Posted: 2017-05-22 12:46am
by Simon_Jester
The "preserving the balance of society" part is arguably very important. A society where the economy is stagnant but people are basically content to just keep working until somehow everyone muddles through and things start growing again... That is a much better place to be than in a society where the economy is stagnant and the general public is starting to turn to feuding revolutionary groups and violent political movements in hopes of resolving the problem.

The New Deal was American mainstream government signaling that they had an answer to the Great Depression, that radical changes like a communist revolution or the Business Plot were not required. This did a lot for American political stability.

Re: How effective was the New Deal?

Posted: 2017-05-24 08:30am
by cadbrowser
I wonder then, if World War II hadn't happened; would The New Deal been enough to continue to grow and stimulate the economy and keep the US as a World Power?

Re: How effective was the New Deal?

Posted: 2017-05-24 08:43am
by Broomstick
I thought the US wasn't a world power until after WWII...?

Re: How effective was the New Deal?

Posted: 2017-05-24 11:26am
by Elheru Aran
Broomstick wrote:I thought the US wasn't a world power until after WWII...?


Remember that the US was big enough in WWI to basically turn around the entire tide of the war once they entered. I'd say that qualifies as 'world power' on its own.

They also kicked the ass of Spain-- admittedly it wasn't much of a fight, but nonetheless it was still a young nation vanquishing quite thoroughly a powerful colonial empire-- during the Spanish-American War and formed their own colonial empire in the process.

Plus, they were definitely influential on their side of the planet, even somewhat before the SAW. Madison Doctrine and all that.

So... at least a 'hemisphere power'? :P

Re: How effective was the New Deal?

Posted: 2017-05-24 11:31am
by houser2112
Elheru Aran wrote:Plus, they were definitely influential on their side of the planet, even somewhat before the SAW. Madison Doctrine and all that.

So... at least a 'hemisphere power'? :P

I think you mean Monroe Doctrine?

Re: How effective was the New Deal?

Posted: 2017-05-24 11:34am
by Elheru Aran
houser2112 wrote:
Elheru Aran wrote:Plus, they were definitely influential on their side of the planet, even somewhat before the SAW. Madison Doctrine and all that.

So... at least a 'hemisphere power'? :P

I think you mean Monroe Doctrine?


Quite right. I knew it was a name starting with M, and wasn't McKinley, so...

Re: How effective was the New Deal?

Posted: 2017-05-24 08:13pm
by Gandalf
Broomstick wrote:I thought the US wasn't a world power until after WWII...?


It actually became a great power towards the end of the nineteenth century, as they had the world's most productive economy, and then defeated Spain in the Spanish-American War. It's a fascinating and terrible period of history.

Re: How effective was the New Deal?

Posted: 2017-05-27 03:10am
by Guardsman Bass
cadbrowser wrote:I wonder then, if World War II hadn't happened; would The New Deal been enough to continue to grow and stimulate the economy and keep the US as a World Power?


Probably not, but the US would have eventually recovered albeit at a slower pace. That's what happened in the wake of the "Long Depression" in the 1870s after the Panic of 1873, and after the Panic of 1893.