UCLA on FDR, stimulus packages in 2004
posted at 8:04 am on March 15, 2009 by Ed Morrissey
Hot Air reader Manuel K forwards a 2004 study from UCLA, written as the post-9/11 recovery had gotten into full swing, about the failure of another recovery plan. Two economists at the unversity reviewed FDR’s efforts and their effects, and come to a much different conclusion about the New Deal than our current administration holds. In fact, they have reached a clear conclusion on stimulus packages such as those proposed by Barack Obama:
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
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.
“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”
Update: Here’s the money quote:
“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”
Yes, which we have discovered repeatedly since; the 1970s practically gives a how-to on that lesson. So why do politicians intervene? Two reasons. They have to answer to constituents who collectively understand economics very poorly. That pushes politicians to think that, in Mel Brooks’ immortal words, they have to do something “to save their phony-baloney jobs”.