Monday, September 5, 2011
Don't Step On My Red Suede Shoes
This is a response I wrote to someone in my history class who claimed that FDR didn't help us out of the Depression and in fact hurt us. That is a fairly standard Right Wing Line, and it bothers me. Anyway, enjoy
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In 1932, the year before Roosevelt took office, the US GDP was 58.7 Billion Dollars(in current money, all these numbers are adjusted for inflation). In 1937, the first year of Roosevelt's second term, the GDP was 91.9 Billion Dollars. In 1941, the first year of Roosevelt's third term, the GDP was 126.7 Billion Dollars. That's growth, growth that corresponded to government spending.
The Hoover Administration spent an average of 12% of GDP during the depression, the Roosevelt Administration spent an average of 15.4% of GDP from '33-'39. Once World War II started the spending rose to 35.3% of GDP, and we all know how beneficial World War Two was for our economy.
You talked about false job creation, but if we look at the numbers that's not really the case. In 1932 the Unemployment rate was 24.1%. In 1937 it was 14.3%, that's a ten point drop which also coincided with increased spending. In '32 the government spent 8.7 Billion(again, adjusted figures) in '37 the government spent 12.8 billion.
Funnily enough, the only year of the Roosevelt Administration in which unemployment increased was from '37-'38(in which it rose from 14.3% to 19%). 1937 was the only year in which the government cut the amount of money it was spending(from 13.1 Billion to 12.8 Billion) the year following unemployment rose almost 5 points. In '38 the government increased spending(to 13.8 Billion) and the following year unemployment fell again(to 17.2%). '38 was also the only year during the Roosevelt administration that the GDP fell. In '39, after the spending increase of '38, it rose back up again.
So, really, FDR did help us out of the depression through spending. The growth in the GDP and the decline in unemployment directly corresponds to the amount of money spent. The one year he cut spending was followed by the only decline in GDP and increase of unemployment of his entire presidency.
(I then later wrote after he made a follow up statement that FDR was basically following Hoover's policies)
If we look at the numbers we can see that Hoover spent 9.4 billion in '29. In '30 he spent 10 billion. So far so good for your theory, but beginning in '31 Hoover began to spend less and less. '31 he spent 9.9 billion and in '32 he spent 8.7 billion. The biggest drop in GDP, funnily enough, was between '31 and '32. Roosevelt spent more and got bigger hikes in GDP.
To address your point about WWII, yes it did, of course, help us out of the depression. But in 1939, the year the war started in Europe, the GDP was 92.2 billion which was the highest it had been since '29. When the war ended the GDP was 223.1 which is over twice what it was in '29 so you are, to a certain extent, right. Without World War II the depression would have lasted longer but it was already ending when the war began because of FDR's policies.
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