Hence the passion about the efficacy of the New Deal. If, as Shlaes and the other revisionists argue, the New Deal didn’t help end the Great Depression, then why do the time warp? Indeed, if the New Deal didn’t end the Great Depression, then why believe in big-government liberalism in the first place? After all, the New Deal is the creation myth of liberalism for a reason (the actual creation comes a bit earlier). FDR gathered the smartest statists in the country, and then he–and the voters–gave his Brain Trust unprecedented power to do whatever was required to crush the Great Depression. If it was all just a big, Oz-like light show with FDR behind the curtain fumbling at the controls, then the claims of liberalism itself are deeply suspect.
In fairness to Sirota, DeLong, and Gross, their argument is more empirical. They rebut the charge that the New Deal “prolonged” the Great Depression by pointing to FDR’s efforts to stabilize the banking system. And they’re right to make that argument. Many of those efforts did help end the Depression, as even Milton Friedman and Federal Reserve chairman Ben Bernanke have argued. But some of those efforts didn’t help. For example, it’s doubtful Gross et al. would defend FDR’s embarrassingly erratic and ultimately destructive behavior during the ill-fated London Economic Conference in 1933. Few would dispute that his decision to blow up the conference as a sop to protectionist Democrats helped prolong the Great Depression, at home and abroad. More generally, the apologists protest too much. Plenty of “normal” and sane people believe the New Deal prolonged the Great Depression. In 1995 a survey by Robert Whaples, published in the Journal of Economic History, showed that half of economists and one-third of historians agreed somewhat or entirely with the proposition that the New Deal prolonged the Great Depression.
A second point made by James Galbraith, Paul Krugman, and others is to dispute the assertion that employment didn’t improve much during the New Deal. One part of this debate hinges on what years you choose as bookends. Another depends on what you mean by “employment.” Amity Shlaes, using the widely adopted Lebergott–Bureau of Labor Statistics data series, does not include “make work” government jobs. The progressive economists say those jobs should count. In many respects that is a philosophical debate about the proper role of government. Certainly FDR eventually believed that everyone had a fundamental right to a job, and that there was nothing wrong with the government’s creating–and the taxpayer’s paying for–a job for anybody who needed one. No doubt many progressives today see little wrong with making government the employer of last resort, but this is a thorny proposition to put before voters. Barack Obama seems to understand this. In a recent video address–delivered from the “Office of the President-Elect”–Obama promised to create 3 million new jobs, “more than 80 percent of them in the private sector.” (That, by the way, is up to 600,000 new government jobs.) Well, if there’s nothing wrong with government jobs, why stop there?
Both these defenses are representative of the general approach of New Deal apologists: Whenever challenged, they simply change the terms of the argument. While it’s certainly true that there is no consensus that the New Deal prolonged the Great Depression, there is a sweeping consensus that the New Deal didn’t end it. The vast majority of historians and economists–including Paul Krugman–will concede that the Great Depression didn’t end until either World War II or the post-war economic boom (that’s a whole other argument). In other words, only after FDR himself admitted he was no longer going to play the role of “Dr. New Deal” and instead became “Dr. Win-the-War” was there any real chance of ending the Great Depression. If a golfer can’t hit the ball to save his life with a five-iron, but smacks the dickens out of it with a seven-iron, it’s hard to see how his improved score demonstrates the effectiveness of five-irons.
Ultimately, the question of whether the New Deal prolonged the Great Depression depends almost entirely on what you mean by “the New Deal.” When Social Security was in Republican crosshairs, liberals insisted that it was at the heart of the New Deal. Well, whatever Social Security’s merits, it had nothing to do with ending the Great Depression. When partisan divisions prove inconvenient to liberals, they lament the absence of the unity and common purpose we allegedly enjoyed during the New Deal (though the 1930s were actually a chaotic and deeply divided time). When certain favored industries suffer from international competition, the New Dealers’ supposed genius at economic planning is invoked; the problem there is that much of their effort on this front was a disaster. The Agricultural Adjustment Administration and National Recovery Administration, for example, were economic and moral disgraces. One would think–or at least hope–that today’s progressives don’t believe small businessmen should be prosecuted or jailed for trying to under-price their big-name competitors, or schoolchildren should be forced to conduct militaristic pageants in support of the government’s agenda.