You think the people who built the aurora bridge weren’t working? They were unemployed? That number has created as a tool by rightwing propagandists to try to rewrite history.

In 1938 the unemployment rate was 19.1%, i.e. almost one out of five workers was unemployed, this is from the official Bureau of Census/Bureau of Labor Statistics data series for the 1930s. You can find the series in Historical Statistics of the United States here (big PDF) or a graph from Rauchway here. Rauchway knows this but wants to measure unemployment using an alternative series which shows a lower unemployment rate in 1938 (12.5%).

Andrew,

When you take away dramatic changes to the value of the US dollar (measure in gold), you will see that we have been in almost continual recession since 2000. All hard, unleveraged assets have gained paper, leveraged assets (houses are very leveraged) since then. Many will argue that Bush and Greenspan’s foolish efforts to “save” the market from recession caused and or exacerbated the problems we face today. Flushing billions down the Iraq drain did not help either.

Why do you think the New Deal program began in 1933? Most of FDR’s policies were the continuation of things Hoover started:

In June 1929, the Agricultural Marketing Act was passed, establishing the Federal Farm Board (FFB).

The new scheme was, in essence, the old “Jardine Plan.” The Federal Farm Board was furnished with $500 million by the Treasury and was authorized to make all-purpose loans, up to a 20-year period, to farm cooperatives at low interest rates.
[...]
On October 26, shortly after the stock market crash, the FFB announced that it would lend $150 million to wheat coops, at up to 100 percent of the market price, to try to hold up prices by keeping wheat off the market.
[...]
In the spring of 1930, Hoover acquired from Congress an added $100 million to continue the FFB’s lending and purchasing policies. But the farmers found themselves with increased surpluses, and with prices still failing.
[...]
On June 30, 1930, the GSC had accumulated over 65 million bushels of wheat held off the market. Discouraged, it did little until late 1930, and then, on November 15, the GSC was authorized to purchase as much wheat as necessary to stop any further decline in wheat prices. Bravely, the GSC bought 200 million more bushels by mid-1931, but all to no avail. The forces of world supply and demand could not be flouted so easily. Wheat prices continued to fall, and wheat production continued to rise. Finally, the FFB decided to dump wheat stocks abroad, and the result was a drastic fall in market prices. By the end of the Hoover administration, combined cotton and wheat losses by the FFB totaled over $300 million, in addition to 85 million bushels of wheat given gratis to the Red Cross.
[...]
the FFB tried to exhort the cotton farmers, too, to reduce acreage. Chairman Stone, of the FFB, urged the governors of the cotton states to “immediately mobilize every interested and available agency . . . to induce immediate plowing under of every third row of cotton now growing.” This action stirred up a host of indignant opposition, the New York Times calling it “one of the maddest things that ever came from an official body.

There are lots more example of this sort of New Deal activity documented in Rothbard’s America’s Great Depression. It all sounds eerily similar to the brain-dead actions of Bernanke, Paulson, and Bush.

What I would like to see is more of the stimulus dollar buying up bonds for shovel-ready projects. Both the Woodinville turn of the BNSF and the California HSR project are held up right now because the bond market is bad. Transferring the BNSF property to King County for a trail, and starting the California HSR, are both things we should be doing right now.

No doubt that World War II caused suffering across the globe, but the majority of that suffering had little to do with the US governments spending, the War had gone on for years before the US got involved. The destruction doesn’t have anything to do with the US economy, though. Very little in the US was destroyed, and the US economy would have recovered all the same if we had built the same warships and bombs and fighter planes and never used them.

There’s two problems with comparing 1920 and 1929. First, the new deal started in 1933, and then again in 1935. So whatever made the recession worse obviously had nothing to do with the new deal.

Second, how deeply a recession begins does not give much indication into the underlying problems causing the recession. In 2001 we had a very deep recession that was very brief. It was caused by some guys blowing up a few buildings. These guys blowing up buildings with airplanes was not a structural problem with the economy.

This current recession started in December of 2007 and was very shallow at first, but the underlying problem wasn’t that some buildings blew up, it was that our financial system was significantly overinvesting in questionable assets, that our engines of production were significantly over creating the wrong products (housing developments, SUVs and luxury purses) and that worker wages weren’t going up but prices were. So while it began very shallow, the problems were deep.

The deepness is a total red herring.

People can attain wealth by murdering one another and destroying their property? Brain-dead logic if you ask me.

The New Deal solved nothing. Unemployment skyrocketed from under 5% in 1929 to sustained 15-25% unemployment for an entire decade. Why didn’t unemployment remain at these levels during the far more severe 1920 recession?

The 1920-21 recession saw CPI decline more steeply than at any time during the 1929-1930s. The 1920-21 recession also saw base money contract by double digits.

Yet the far milder beginning to the 1929-1930s recession is what became the Great Depression.

Reichert voted no. Typical. Run left, govern right.

IF you actually believe there’s no evidence of successful fiscal stimulus ending a downturn, answer this: What ended the great depression?

The answer has to be either a) the new deal or b) the second world war. Both were “large fiscal policy initiatives”. In the case of the 2nd world war, very large.

What we are seeing happen right now is that Congress sees this crisis as an opportunity to enact a whole variety of programs that they’ve wanted to pass for years [...] Just as the Patriot Act was a bunch of laws waiting for a political “crisis,” so is much of the stimulus package a bunch of programs waiting for an economic “crisis.” The current crisis is just a convenient excuse.

What is on the table in Washington today simply has nothing to do with any serious economic thinking, as Pete’s post below suggests. This is why people like Krugman and DeLong have to accuse their opponents of acting in bad faith: there is precious little economic evidence for the benefits of large fiscal policy initiatives. What these are really about is enacting programs and policies that people like them have wanted for years on their own supposed merits, independent of any “stimulus.” The crisis is just the reason to carpe diem.