Fox News: "Historians Pretty Much Agree" That FDR Prolonged the Great Depression

If the right wants to try to stop a serious economic recovery package by trying to vilify one of the most popular policy programs in American history, then I'll say what George Bush once said: Bring it on.
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I appeared on Fox News yesterday to discuss both the Blagojevich flap and the imminent economic recovery package from the Obama administration. You can watch the clip here. As you'll see, on that latter issue, Fox News is starting its campaign to stop Obama's big spending plan by stating - as assumed fact - that "historians pretty much agree" that Franklin Roosevelt prolonged the Great Depression, and that therefore, Obama shouldn't try another New Deal.

When I say Fox News' assertion about historians is patently false, they literally laugh at me as if I've said something so clearly untrue, something Americans supposedly assume is so obviously stupid, that it's worthy of ridicule.

The Depression issue was brought up by conservative pundit Monica Crowley - not surprising since this is the conservative talking point du jour ever since the "center-right nation" meme started looking idiotic and ever since fringe-right-wing bloviator Amity Shlaes published her since-discredited book claiming FDR essentially created the Great Depression. Crowley supported her the "FDR ruined the country" meme with the very authoritative-sounding statement that "based on all kinds of studies and academic work done on the great depression" she knows that the New Deal's "massive government intervention prolonged the Great Depression."

Of course, she doesn't offer up a single study or "academic work" as any kind of proof, and yet, when I say her assertion is absurd, Fox News anchor Greg Jarrett starts laughing at me - as if my assertion that FDR's New Deal helped end the Great Depression is so fantastical as to prompt guffawing. Jarrett proceeds to state that historians "pretty much agree" that FDR prolonged the Great Depression, and resorts to insisting that he knows that's true because "it's in the books" - whatever the hell that means. Indeed, Fox wants us to believe that what was only very recently the deranged propaganda of a handful of conservative political pundits is now such a consensus opinion among historians that to say otherwise is to evoke laughter.

Now, it's true - back in 2004, two UCLA professors published a little-noticed report claiming the New Deal's government intervention prolonged the Great Depression. But that assertion has been subsequently eviscerated by, ya know, actual data.

For a start, New Deal intervention saved the banks. During Hoover's presidency, around 20 percent of American banks failed, and, without deposit insurance, one collapse prompted another as savers pulled their money out of the shaky system. When Roosevelt came into office, he ordered the banks closed and audited. A week later, authorities began reopening banks, and deposits returned to vaults.

Congress also established the Federal Deposit Insurance Corporation, which, as economists Milton Friedman and Anna Jacobson Schwartz wrote, was "the structural change most conducive to monetary stability since ... the Civil War." After the creation of the FDIC, bank failures almost entirely disappeared. New Dealers also recapitalized banks by buying about a billion dollars of preferred stock...

The most important thing to know about Roosevelt's economics is that, despite claims to the contrary, the economy recovered during the New Deal. During Roosevelt's first two terms, the U.S. economy grew at average annual growth rates of 9 percent to 10 percent, with the exception of the recession year of 1937-1938...

Excepting 1937-1938, unemployment fell each year of Roosevelt's first two terms. In part, the jobs came from Washington, which directly employed as many as 3.6 million people to build roads, bridges, ports, airports, stadiums, and schools -- as well as, of course, to paint murals and stage plays. But new jobs also came from the private sector, where manufacturing work increased apace.

This basic fact is clear -- unless you quote only the unemployment rate for the recession year 1938 and count government employees hired under the New Deal as unemployed, which conservative commenters have taken to doing.

So, as Rauchway says, the hard data about bank closures, job creation and overall economic growth rates proves the regulations and spending of the New Deal helped end the Great Depression. In fact, Rauchway notes that the data actually suggests that the major, data-driven criticism of the New Deal is that it didn't spend enough money fast enough.

But, OK - let's say you want to cherry pick the unemployment numbers like a right-wing pundit. Let's say that, as Rauchway notes, you are a conservative dittohead totally comfortable dishonestly "quot[ing] only the unemployment rate for the recession year 1938 and count[ing] government employees hired under the New Deal as unemployed." Shouldn't you be blaming conservative ideology, and not New Deal-ism, for those numbers? After all, as Paul Krugman recently explained to a stunningly ignorant George Will on ABC News, 1937-1938 was the period Roosevelt dialed back the New Deal in the name of conservative demands that he stop spending:

By 1937 things were a lot better than they were in 1933. Then [FDR] was persuaded to balance the budget or try to and he raised taxes and cut spending and the economy went back down again and then it took an enormous public works program known as World War II to bring the economy out of the depression.

So with all of that data, let's go back to Fox News' main assertion: Is it really true that "historians pretty much agree" that the New Deal's government intervention prolonged the Great Depression? Of course not, as New York Times economics writer Daniel Gross says:

It was only with the passage of New Deal efforts--the SEC, the FDIC, the FSLIC--that the mechanisms of private capital began to kick back into gear. Don't take it from me. Take it from Federal Reserve Chairman Ben Bernanke, who wrote the following in Essays on the Great Depression: "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."...

The argument that the New Deal's efforts "perhaps had prolonged, the Depression," is a canard. One would be very hard-pressed to find a serious professional historian--I mean a serious historian, not a think-tank wanker, not an economist, not a journalist--who believes that the New Deal prolonged the Depression. (emphasis added)

In other words, it's the opposite of what Fox News says. "Historians pretty much agree" on one thing when it comes to Roosevelt: The New Deal helped end the Great Depression. But I would go even further than that, and agree with economist Brad DeLong who said that whether you are a historian or not - to argue what Jarrett and Crowley argued yesterday is to publicly declare oneself as divorced from the facts as the most ridiculed conspiracy theorists. As DeLong says, "A normal person would not argue that the New Deal prolonged the Great Depression."

But, then, these are not "normal people" - those making these arguments are right-wing automatons whose claim that we shouldn't look at actual data, we should simply accept the truth of their claims because they insist "it's in the books!" or they've supposedly seen "all kinds of studies and academic work" that proves their hysteria true.

Of course, the good news is what I said on Fox News before they cut me off: While the right's historical revisionism is dishonest, it's doing progressives a big favor.

If the right wants to try to stop a serious economic recovery package and financial regulations by trying to vilify one of the most popular presidents and popular policy programs in American history, then I'll say what George Bush once said: Bring it on. Every high school civics class teaches the broad truth about Roosevelt, the New Deal and how it helped end the Great Depression, and if the conservative movement has gone so off the deep end that they want to make crazy-sounding arguments that even high schoolers know are silly, then the progressive movement is in an even better position than we may have thought.

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