The New Deal vs. the Kling Deal
By Bryan Caplan
I’m frankly puzzled by Arnold’s latest take on the New Deal. (That quote is from him, not DeLong as I initially guessed!) I think the New Deal was moderately fascist (i.e., Mussolini light, not Hitler light), but let’s leave that aside. Arnold has previously written that:
[I]f I could go back to 1933 and tell President Roosevelt what to do, I would say “yes” to deposit insurance, “yes” to going off the gold standard, and “no” to pretty much every other New Deal policy, including Social Security.
Let’s call these two recommendations the Kling Deal. Arnold, don’t you think that the Kling Deal would have been more than enough to prevent the rise of American fascism? If so, why are you so sympathetic toward your father’s judgment about the dire consequences of an America “without the New Deal”?
As best as I can tell, Arnold’s dad’s view makes sense only if the sole alternative to the New Deal was no policy change whatsoever. It wasn’t. Indeed, relative to the Kling Deal, the New Deal greatly increased the chance of fascism by slowing the return to full employment.