The New Deal Worsened the Great Depression

First of all, let me start off by saying that it is my job to give evidence that the New Deal not only did not hurt the economy during the great depression, but also improved it. Therefore the burden of proof is in my court. There are two major things we must look at to determine whether the New deal worked. These two things are the GDP and the Unemployment rate. We must also assume that these factors were not affected by the advent of World War Two. Therefore, to prevent any accusation of pre-war industrialization, any upturn in the economy must have happened before September 1939. The first economic factor we must look at is the GDP. When the first new deal was signed in 1933, GDP was 56.4, the lowest it had been in recent US history. In 1939 it was 92.2. This is a significant upward change, which can be mostly, if not entirely, explained by FDR’s New Deal. Have it be noted that there was a small mini recession in 1938 that caused the GDP to drop from 91.9 (1937) to 86.1. 1 The second economic component during the great depression we have considered is the unemployment rate. There were two major indexes done on the unemployment in reference to those years. They are the Lebergott index and the Darby index. For the need to be conservative in my estimates I will be using the Lebergott index instead of the Darby, since the Lebergott did not count WPA workers as employed and Darby did. Therefore the first index had a higher average unemployment rate by about 5%. In 1933, which had the highest percentage of non employed people during the century, there was a 24.9% unemployment rate. This decreased to 17.2 by 1939. As an alternate reference Darby had estimated an unemployment rate of 20.6 in 1933, which was down 2.3 percent from the year 1932. In 1939 the unemployment rate was 11.3. As with the GDP the economy suffered a double dip recession in 1938 causing the unemployment rate to rise from 14.3 to 19% in the Lebergott index and increase from 9.1 to 12.1 in Darby’s index. In both studies the Unemployment rate dropped between 1938 and 1939. 2 Of course, these are not the only two factors that can determine economic success. Some of these factors include the stock market value (~100 in 1933 and ~130-150 in 1939, with the same dip in 1938)3, monetary value (38.8 in 1933 and 41.6 in 1939)4, Working wages while employed (1,165 in 1933 and 1,403 in 1939)5 wage with deduction for unemployment (565 in 1933 and 760 in 1939) 6, and the CPI (12.9 in 1933 and 14 in 1939)7. Now, I could go on and on with statistics proving that the policies of Roosevelt helped the economy, but that would be eventually redundant. The question is why were Roosevelt’s policies useful? Probably, the most effective of his polices was the creation of programs such as the WPA and the CCC. These employed thousands of workers each month when the economy was rough. These programs in and of themselves were fairly useless as jobs.8 However, they gave workers experience to get hired, and money when they were not being hired. Even these programs, however, were not enough to help the economy slowly recover the way it did. It was only the collection of all of FDR’s policies that was responsible for this. I want to finish this part of the round by saying that the New Deal was not perfect. There were programs that failed, and there were programs that worsened the economy. Also, the war had the greatest effect on the economy. However, to say that the new deal had NO effect or that it deteriorated the economy is, in my opinion, just ignorant of history. I would also like to thank jimtimmy for allowing me to debate him, and I hope that the debate goes well. Sources: 1 http://www.economics-charts.com... 2http://fraser.stlouisfed.org...; (page 3) 3 http://www.online-stock-trading-guide.com... (Graph # 3) 4 http://mykindred.com... (2010 reference year) 5 http://www.econlib.org... (column 2) 6 http://www.econlib.org... (column 3) 7 http://inflationdata.com... 8http://www.u-s-history.com...