Thursday, April 8, 2010

FDR caused the Great Depression, how's that?

I was reading the blog the Griper Blade and the first comment repeated the new version of depression history that FDR caused the depression or at the very least prolonged it. Then I was watching the train wreck of a campaign rally with Hanity, Palin, and Bachmann and it was repeated again. As was the often linked everyone knows that we only recovered from the depression because of WWII. Gee, I don't know but when FDR took office the unemployment rate was nearly 25% and it went down from there. FDR saved this country from a potential revolution. In addition to the depression you had drought across the plains. The lack of jobs in the rural areas led to young, jobless, single men to go to the cities. This is bad at any time so FDR gave them jobs and dispersed them throughout the rural parts of the country. As for the causes of the depression many economists now say that an unregulated economy was a contributing factor especially the financial sector (hmm sounds familar). This is what characterized the boom and bust economies every 10 years leading up to the depression. From the time FDR regulated the financial markets to the Carter administration when regulations started to come off this country became the world's economic power.

Now the WWII myth. It is always told like the private sector fought that war and turned the economy around. I guess that is true when you consider that the entire economy was either directly or indirectly being supported and directed by the government. This was hardly capitalism with wage controls and rationing. Where WWII can take credit for pulling us out of the depression is after the war. We were the only industrialized country that was not completely devastated by the war. American industry was the driver during re-building. But what to do to get workers, wage controls were still on? For the first time benefits were offered to Joe worker, cars, housing allowances, and the all important employer based health care.

No, it was hardly FRD's depression and it wasn't really his recovery. But he did keep the country from total collapse and successfully got us into the war so that we could help destroy the world's economic engine leaving the rebuilding to the US.

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