Debunking a Popular Myth: The New Deal Fallacy

I called into NPR today to challenge Robert McElvaine, a history professor from Mississippi, in regards to the New Deal. My call begins at the 14 minute mark.

There is a common misconception that the New Deal simply wasn’t enough to end the Great Depression and the massive influx of deficit spending during World War 2 was what lifted the United States from the downturn. Common sense would dictate that building tanks, bombs and airplanes which have no productive use outside of war does not contribute to a nation’s wealth. There is a valid argument that the war indirectly benefited the United States – ending the conflict with Japan and the conflicts within Europe, destroying other countries’ infrastructure thereby opening the door for U.S. exports, etc. However, this still does not actually address whether huge amounts of deficit spending itself aided the economy. The answer is it did not.

Unfortunately, I was not able to make this comment on air, as time is obviously limited. I did address two other areas I took exception to in his interview:

My comment is, is that a lot of historians actually cite Hoover as the foundation for many of Roosevelt’s policies, like the idea that Hoover didn’t try to combat the Depression with big spending is not historically accurate. Moreover, there are a lot of economists that say, including from UCLA, that have said that Roosevelt actually prolonged the Depression with his – by completely decimating [business] confidence with all of these new regulations like, one book I would cite is “New Deal or Raw Deal?,” which is really good in describing how he essentially destroyed the economy with all of the spending.

He first addressed my point about Hoover, which is important considering the commonly employed argument that Hoover did nothing to counter the crisis in turn allowing the economy to descend into a Depression. McElvaine actually conceded this point – partially. But it is a historical fact, and the reality is Hoover’s interventions not the lack thereof are what actually exacerbated the negative economic conditions. 

On the second point, that FDR prolonged the Depression, he largely ignored my question. I pointed to two sources: UCLA and “New Deal or Raw Deal?”.

One commenter on the online story made a great point: There is often a lack of debate when it comes to NPR. These ideas are often left unchallenged.

if npr hopes to dodge the liberal bias tag, you’re going to have to do a better job of discussing economic issues on this show. this is just the latest in a line of economic themed discussions featuring an obvious partisan democrat shill. thanks to caller, tyler, i will be seeking out ‘new deal or raw deal?’ for the opposite perspective, i’ll look elsewhere than mcelvaine’s book. “Basically, the number of jobs created during the Bush administration added up to about zero.” really? next time, have a counterpoint guest so these sorts of nonsense statements don’t get a free pass. here’s a guest recommendation:
http://seekingalpha.com/instablog/448400-charles-payne/194313-bringing-billions-home-will-help-no-joke-by-charles-payne

Hopefully more people will start thinking critically like the individual above and not blindly accept “traditional” history.

The full article, including his response, can be found here.

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  1. Zack F

    Tyler, you did a great job calling in and countering the partisan Democratic hack they brought in to act as the economic expert. It’s sad that so many liberals are brainwashed by NPR with this nonsense. They don’t dare to bring on an Austrian economist like Thomas Woods.

    • Thank you. I was upset, like I said, with the lack of a dissenting voice in the discussion. However, this is fairly typical on NPR. Don’t get me wrong, I absolutely love NPR, but I just wish they would have more variety in the type of guests. Also, I’m glad you brought up Thomas Woods. He is one of my favorite libertarian intellectuals. If you haven’t already, you should read “Meltdown.”

      I noticed you’re from U-Mich. I actually applied there and was considering attending for a while. How do you like it there?

  2. Zack F

    Tyler,
    I’m a big NPR consumer as well; I just wish that they were more balanced and weren’t receiving public funds.

    I have read Meltdown. Check out the Peter Schiff show if you want a dose of entertaining libertarian oriented radio.

    Which program are you considering for Umich? It’s got its pros and cons. Some elements of a giant diploma mill, and some areas where it really shines (the business school).

    • I applied for U-Mich, but after the deadline they sent me an email and said I didn’t send them all of the necessary paperwork. That’s another story altogether. I had wanted to study political science there, because I had heard they were one of the top in the country. In the end, I ended up at Western Kentucky University (which is actually in Rand Paul’s hometown). I’m going to be on their forensics team and study International Affairs.

  3. According to Pulitizer Prize winner – Danny L. McDaniel – World War II did lift the U.S. out of the Great Depression. First, this event in American history shooped-up excess workers and put them in uniform or back into industry. This put money in their pockets that they could only spend in a commodity rationed economy. McDaniel would also agree that the U.S. was successful in destroying most of the civilized world all the while it remained unharmed and intact and victorious at the end of the war, which lead directly to the Marshall Plan that cemented America’s economic supermacy for another 35 to 40 years. No the New Deal didn’t lift the United States out of the Great Depression. But many of the programs had the same effect that the Head Start program has on education: It most benefical affects would be felt decades later. His thesis is that most people are to short sighted or historical illerate to see past event in the light of the present. He would also say that nations. like most people, muddle through life with brief periods of excitement. In today’s America there is more muddling than excitement. In either case, the economic history of a country is a cultural event.




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  • The Law, Frederic Bastiat

    Life, faculties, production — in other words, individuality, liberty, property — this is man. And in spite of the cunning of artful political leaders, these three gifts from God precede all human legislation, and are superior to it. Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.

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