Monday, February 10, 2014

New Deal

During the New Deal, the FDR administration committed many economic sins. This included paying farmers to destroy millions of acres of crops and millions of farm animals in order to boost food prices, at a time when people could barely afford to feed their families. Additionally,

-New Deal policies forced wages above market levels, leading to large unemployment numbers, especially among unskilled black laborers. 

-The National Industrial Recovery Act made it illegal to increase output or to cut prices in nearly every conceivable business enterprise. According to Historian Jim Powell, "a forty-nine year old immigrant dry cleaner was jailed for charging 35 cents instead of 40 cents for to press a pair of pants" [1]

-The second Glass-Steagall Act was a banking regulation passed during the New Deal which separated commercial and investment banking. However, banks which acted as both commercial and investment banks were far less likely to go bankrupt than banks which only had one function.

-According to Historian Jim Powell, "FDR didn't do anything about a major cause of 90% of the bank failures, namely, state and federal unit banking laws [which restricted nationwide branch banking]...Canada, which permitted nationwide branch banking, didn't have a single bank failure during the Great Depression." [1]

-"FDR tripled taxes from $1.6 billion in 1933 to $5.3 billion in 1940... Federal taxes as a percent of GNP jumped from 3.5% in 1933 to 6.9% in 1940." [1]

These are just some of the things the FDR administration did during the Great Depression that were just plain idiotic. However, people who know nothing of the New Deal keep repeating the nonsensical claim that "FDR saved the country from the Great Depression".


[1] Jim Powell, "FDR's Folly", Chp 1.

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