Top Three Myths about the Great Depression and the New Deal 

Another expert again?

Somehow I doubt you would be asking for citations if this was Paul Krugman preaching that the great mistake of the depression was that we didn't spend enough. Look, the increase in debt during the Hoover administration, the unemployment rate throughout the depression, the economic situation in the UK(and the rest of the world for that matter) vs. the United States, these things are not state secrets. They're pretty easy to find on this thing called the internet. Use it.

It’s not a conspiracy theory! Hoover wanted to help. FDR just took those same ideas and said, “I did this, not mister do nothing over here.” Franklin played as a politican, a good one that like to lie

Sure, unemployment went down, but so did the quality of living as well as exploding US debt. US economy did not start booming until post WWII, when the US government drastically cut spending.

Money is useless if you don't have produces to buy. Lack of real wealth production, which are products usable by the consumers would just mean inflated prices of existing products. Low employment rate does not necessarily mean a healthy economy.

***** Did that number include women?

LiouTao How could said that b cutting spending stimulate economic grow tat is a BIG LIE

Have a look at the data. Yes, unemployment was still bad in 1936 in England. But it was falling quickly and steadily, unlike in America, where it went even higher and came down slower, and even jumped up again around 1936: www.economicshelp.org/blog/wp-content/uploads/2012/10/1918-38-unemployment-rate.png

SaulOhio Just looking at that graph still proves that this man is a liar, he said, "Britain's economic depression was over by 1933 and enjoyed rapid economic growth from 1931 onward". Even this rather sketchy looking graph proves him wrong as unemployment remains high all the way to 1937. Also Britain, while it didn't have a new Deal did have very interventionist policies and a very dubious way of counting the unemployed (The millions of homeless tramps were not counted as unemployed). By the mid thirties Germany was rearming at an alarming rate and so do did Britain and France. This government spending helped push the countries out of depression. Also of course the depression was worse in America, thats where it started, obviously its going to be worse there. Finally as proof the New deal was working as you said unemployment was coming down till 1936 it spiked again, well why was that? It was because the government ended subsidies to farms and the WPA during this time and so unemployment immediately jumped up again...

War spending does NOT cause real economic growth. Real growth means an increase in the economy's ability to serve the needs of consumers. If millions of workers are building bombs, tanks and guns, they aren't making automobiles, growing food, building homes, or any good things that people actually want. Lee Ohanian would disagree with you on that recovery till 1936. FDR and the Lessons of the Depression online.wsj.com/news/articles/SB10001424052748703461504575443402028756986 "The economy did not tank in 1937 because government spending declined. Increases in tax rates, particularly capital income tax rates, and the expansion of unions, were most likely responsible. Unfortunately, these same factors pose a similar threat today. Here are the facts: Real government spending, measured in 1937 dollars, declined by less than 0.7% of GDP between 1936 and 1937, and then rebounded in 1938. It is implausible that such a small and temporary decline reduced real GDP by nearly 3.5% in 1938 or reduced industrial production by about one-third. Enlarge Image Associated Press But in 1936, the Roosevelt administration pushed through a tax on corporate profits that were not distributed to shareholders. The sliding scale tax began at 7% if a company retained 1% of its net income, and went to 27% if a company retained 70% of net income. This tax significantly raised the cost of investment, as most investment is financed with a corporation's own retained earnings. The tax rate on dividends also rose to 15.98% in 1932 from 10.14% in 1929, and then doubled again by 1936. Research conducted last year by Ellen McGratten of the Federal Reserve Bank of Minneapolis suggests that these increases in capital income taxation can account for much of the 26% decline in business fixed investment that occurred in 1937-1938."

SaulOhio Im afraid thats simply not true, war spending has been used, and still is used as a major spur to economic growth in the US for the last 70 years; thats why military spending in the US is still so high despite the cold war being over for 20 years… I think you'll find that the problem during the great depression, as it is now during the great Recession, is not that taxes were/are too high or that (I can't actually believe you said this but) that Unions are too powerful (Union's by the way are one of the few democratic and wage protecting institutions in the economy) but that the demand for goods collapsed. I.e the US was producing far more than it had need for and so millions were left unemployed. Now the war effort put these people to work, just because a factory isnt producing cars doesn't mean its not paying its thousands of workers a wage. A wage they then spent on consumer products like cars, food, houses etc Also people seem to not understand that an Army needs more than tanks and guns to survive. The army needed everything from shoes, containers, buttons, tons of food, machine parts, ships, cars, cigarets, paper, basically everything and so the economy boomed selling it to them. Also think of all the soldiers employed by the war effort spending their wages on consumer products… We can argue back and forth over what caused the relapse in unemployment in 1936-37, as economists have done for years but the fact remains what got the US and the rest of the world out of the great Depression was not a lowering of taxes, or union busting or whatever. It was a huge public works program i.e WW2 Capitalism was disproved on the fields of Flanders when it became obvious that a economy run with at least some state guidance would create a far more powerful country than any capitalist one pushing and pulling in all directions. The British and Americans learnt this early in the war and immediately began creating a state run war economy; after the war they realised it would be stupid to go back to the stagnation and poverty of the 30s so they didn't. And so the golden age of the western economies began, wages rose for everyone during the 50-60 unlike now were they been stagnating since the 70s after all the union busting and deregulation. Taxes were very high during the 50s-60s yet the economies of the west boomed, and yes I know most US competitors were destroyed by the war but so was their ability to buy US goods but the economy still boomed. Military spending has been used as a control factor in the economy for a very long time, it acts as a way for the govt to spend billions in the economy without anyone questioning it or calling it "corporate welfare". Think of all he amazing technological innovations that have come out of the public sector, not the private in the last century, that have revolutionised the world and made trillions of dollars for the world economy. Think computers, lasers, the internet and all the trillions its generated, rockets and space flight and the technology that has come from that, satellites, jet panes, heavy machinery, robotics, high tech medical equipment, mobile phones, fibre optics, the list goes on and on… All these were developed with public money under the military system and not by some fedora wearing private entrepreneur with but a buck to his name and an idea, as the myth goes. It can be difficult to accept the huge role the state plays in the economy but the fact is that its there, and its from there that almost all the major technological wonders of our age have come from. Its whats called an unpleasant fact...

Odysseus Ulysses Yes, governments have USED the excuse that war spending is good for the economy, but that doesn't mean its true. Medieval kings used the excuse of the divine right of kings. Does that mean its true? The government spending didn't cause the engineers and scientists that created those new inventions to simply pop into existence. If they had been left in the private sector, their intelligence and creativity could have gone DIRECTLY to producing goods and services that people actually need, instead of first diverting that creativity and intelligence to finding bigger and better ways to kill people. We would be better off. Certainly Thomas Edison didn't need that government war spending to motivate or enable him and the people working with him at Menlo Park to invent a huge array of new products. Bill Gates and Steve Jobs weren't producing goods for the military. The military spending SLOWS DOWN the process by first using that creative energy to produce new ways of killing, THEN it gets applied to consumer goods. Better to do it more directly, bypassing the killing inventions.

+John Wayne No, having other people around you be poorer does not make you wealthier. You are in the same place on an absolute, or probably worse, as you will have fewer prosperous people around you to trade with. That is the "zero sum" fallacy talking.

Well not as bad lol.

Justin Colletti It was sarcastic but many believe it.

Public education: why teach when you can indoctrinate.

I disagree that the New Deal helped pave the way for the 50's and 60's. By then, most of the New Deal had been repealed or abandoned. There is nothing about it that promotes economic growth.

1: Jobs producing war supplies and lowering unemployment by shipping people overseas to kill and get killed is not economically healthy. What is needed is to create jobs serving people's needs for things liek food, clothign and selter. 2: Innovations can occur in peacetime, too. Thomas Edison created all of his inventions during peacetime for civilian consumers. Diverting innovation to war production only adds another step tot he process of bringing innovations to the consumers, slowing the process. 3: Government providing money for people to get educations does not provide more people with educations. It only gives the education to different people than those who would have gotten it otherwise, and drives up the price. The same number of teachers with the same number of students were teaching discharged soldiers instead of someone else. Those someone else's lost their education oportunities. The current inflation of college tuition started with WII and the GI bill. You should read Henry Hazlitt's "Economics in One Lesson" to get a better handle on these kinds of economic fallacies. Government usually just moves resources from one place to another, and thenclaims creadit for creating them. Instead, it actually just provides benefits to some people at other people's expense.