The Economic Consequences of Populism
11th December 2024
These days, politicians routinely invoke the New Deal as a model of inspiration, without delving into the evidence of its effect. They do so even though the New Deal never, not even eight years in, met Roosevelt’s primary goal to “put America back to work.”
In reality, recovery’s absence in the 1930s is not so mysterious. Natural disasters contributed to the plight of the farms. The drought of the 1930s was unusually severe. The summers were unusually hot. While the “mighty wind” of the Dust Bowl resulted from a man-made eco-disaster: the overplowing of tens of thousands of acres.
The absence of a general recovery also can be explained. Recoveries, after all, are like people. They make choices. In each year of the 1930s, the recovery surveyed the economic landscape — and opted to stay away a while longer. Simple facts go a good way towards explaining why each year—and for slightly different reasons — the recovery absented itself. The same facts reveal the dangers of faith — not religious faith, but the political kind.