UCLA: FDR's policies prolonged Great Depression by seven years

[Chris_]

After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

[NHSparky]

An uber-liberal school like UCLA concluded this?  Oh, this will not do at all...double-plus ungood.

[formerlurker]

Racists!

[NHSparky]

This is something that has been known but not dared expressed for decades.  Just read, "FDR'S Folly" if you don't believe me.

[Chris_]

Sadly this won't be enough of a "told ya so" to the DUmmy's... or would it be DUmmies?

[Celtic Rose]

You have to wonder about the implications this may have for our current recession in light of all the  "economic assistance" that has been flowing from the government to prop up troubled industries...

I still firmly believe that if all the foreclosed homes were released to the market at a fair market value relative to the supply, the housing market would recover much more quickly. 

[Ptarmigan]

The only reason the Depression ended was World War II. The unemployment rate dropped only because of government war effort. Once the war ended, unemployment shot up again.