Comment of the Week, 2003-09-03
By Arnold Kling
Regarding the New Deal, Boonton wrote,
how much of the New Deal has survived? While national economic planning seems to have finally been discredited…the bulk of the New Deal remains firmly established not only in the US but in most successful, Democratic, nations.
I have also seen it argued that economic shocks after the New Deal have been less dramatic and shorter lived than before. My instincts tell me its probably healthier for the economy to grow at a steady pace than go thru a series of dramatic booms and busts.
It would be interesting to go through the history of New Deal programs and determine which ones are generally considered long-term successes (deposit insurance comes to mind), which ones have been expanded (Social Security), which ones are viewed to have caused harm (National Recovery Act), and so forth.
Turning Boonton’s question around, one might ask how much of the increase in government spending and regulation might have occurred even without the precedent of the New Deal. It was not just the Great Depression that led many intellectuals to see capitalism as a failure and socialism as a success. In 1957, the Soviet launch of Sputnik convinced large numbers of people that Communism was superior to capitalism in some respects. As Boonton points out, as late as 1990, Japanese industrial policy was being touted as a model. Even today, there are those who argue that America’s health care system is inferior to the socialized systems of Canada and western Europe.
To continue the discussion, return to the original thread.