The New Deal is what got the U.S. out of the great Depression

I apologize for my conduct in the last round in speaking of topics mostly unrelated (more lasting effects and necessity than short term impact) to the economic effectiveness of the New Deal. As the original topic was programs from New Deal programs spanning 1933-1938, it wouldn't include war spending, but I could take a look of the effectiveness of that as well. I was originally looking forward to what arguments someone would offer in the defense of the New Deal, but here goes nothing. My argument is that private spending in the war effort was more effective than war spending, and that government spending crowded out private initiatives. The war, more than war spending, is what helped us most in the end. Any time you throw money at a problem it's likely to improve, so the question then becomes how much bang you get for your buck. It's not easy to predict the effectiveness of an ever changing market, but government spending can be tracked reliably with a spending multiplier, or how much the GDP increases for every dollar in government spending. Robert Barro pegs the multiplier for WWII at about 0.6 (1), meaning that we got 60 cents of GDP for every dollar we spent, a number that Paul Krugman actually puts lower at 0.5 (2). Krugman brings up an interesting point that rationing and price controls brought down the GDP, lowering the spending multiplier even further, though I'm not sure they would fall under government spending. Something else to consider is where the spending falls on the cycle of booms and busts- if the economy is worsening, then the spending multiplier is likely to be too low since the GDP was lowering anyway. The reverse was true for WWII, since the GDP was already gradually recovering as you can see by this graph: (The computer won't let me copy+paste images, so just go to the Wikipedia page for U.S. Great Depression). One interesting thing about the unemployment graph is that the unemployment rose very little after a huge scale back in government spending following WWII. "Between FY 1945 and FY 1947, federal government spending was cut by 61 percent. This was a 27-percentage-point drop from 41.9 percent of GDP to 14.7 percent of GDP. Yet the unemployment rate over that same time rose from 1.9 percent to only 3.6 percent. The postwar bust that so many Keynesians expected to happen never did."(1). If it can be argued that reducing government spending had little effect on employment, then it could also be argued that government spending was not the main cause of the wartime employment, but production spurred by private initiative. War has always led to an increase in the economy due to a sudden demand spike, a common goal for all to strive for, and adversity. These hard times lead to increased responsibility and hard work, just as good times lead to complacency. In the short term everyone suffers personal austerity, learning to make do with much less than before, and this can lead to long term improvement. There are multiple reasons that war helps the winner, but less to do with government spending than most would claim. Sources: 1. http://mercatus.org... 2. http://krugman.blogs.nytimes.com...