David Stockman On The New Deal Myths Of Recovery

Tyler Durden's picture

In chapter 8 of David Stockman's new book The Great Deformation, the power-that-be-turned-anti-establishment-reality-seeker explains his perspective on the myths of the New Deal Recovery: "The new deal was a political gong show, not a golden era of enlightened economic policy. It shattered the foundation of sound money and inaugurated a régime of capricious fiscal and regulatory activism that inexorably fueled the growth of state power and the crony capitalism which thrives on it. But it did not end the Great Depression or save capitalism from the alleged shortcomings which led to the crash. In fact, the New Deal introduced a severe dose of economic nationalism and autarky at a time when the only hope for speedy recovery was a reopening of world trade and reestablishment of a stable international monetary régime.... in reality, the notion that the New Deal had pioneered a road map to recovery by means of countercyclical fiscal policy is mostly a postwar academic legend."




David Stockman Book - Chapter 8


(h/t The Circle Bastiat blog)

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knukles's picture

Ah, from whence the fiction of the Keynesian "multiplier" was conjured.

economics9698's picture

The average unemployment rate in the 1930s was 17.2%.  FDR got it down to 12.9% in 36 but it jumped to 16.9% the next year after his idiotic union legislation which raised union wages.  The Fed doubled the reserve requirement also froom 36 to 37.

Stupid is as stupid does, 

People need to realize the elites never really want prosperity for the peasants, just power and their own prosperity.  FDR was no different, a rich pos who could care less about the long food lines or real economic prosperity.  All just a show for the ignorant masses who could never figure out the con game played on them.

Dr. Engali's picture

That's the beauty of the system. Throw the masses just enough to keep them from revolting, toss in a few distractions, some circuses, and try not to get too greedy. If greed becomes an issue throw a major war into he picture and kill off a few million serfs. Wash ,rinse, and repeat.

LetThemEatRand's picture

If Stockman wrote that, I'd applaud him.  But he didn't.  

holdbuysell's picture

Well, ok. I'll bite:

Then, who did?

LetThemEatRand's picture

Where do you see that paragraph in his book?  If I'm wrong and I missed it, I'll happily admit my mistake and applaud him.  P.S.  Economics9698 works for the taxpayer.   Ask him if you think I'm wrong.

holdbuysell's picture

I see. I haven't read the book yet, only read the pieces that have been provided via various sites.

Assuming that what you're describing is true, then you have a legitimate point: where did it come from?

LetThemEatRand's picture

So you were calling me out for missing a (non-existent) quote in a book you haven't read?   

holdbuysell's picture

I didn't call you out on any of this thread's posts. I was passing by and saw the thread. Was curious why you thought Stockman didn't write it.

RaceToTheBottom's picture

I didn't see quotes so I don't think it was represented as a Stockman quote.  I have the book in front of me.  What should I look to confirm?

LetThemEatRand's picture

This isn't rocket science guys.   I was saying that I would agree with what the poster said, but not what Stockman said.

kchrisc's picture

The Scribd window under the post shows the text as quoted.         hujel

BadPenguin's picture

It's the FIRST TWO paragraphs of the text in Chapter 8...



angel_of_joy's picture

Oh, the "state" apologist is at it again !

 What a bore... he sure sounds like a Krugman on a bad day...

Slightly Insane's picture

Don't forget the "brain washing" .... public school indoctrination of both teachers and students, and the propaganda delivered by the media and "junk radio".

fourchan's picture

but they are progressive lol, what idiots.  

Henry Hub's picture

Although FDR is reviled and hated by three or four generations of laissez-faire capitalists, he in effect, saved the capitalist system. At that time, unlike today, the country could have very easily gone Communist.

MeBizarro's picture

Communist?  Absolutely not.  Some sort of muscluarized American version of what the fascists did in Italy only with a few differences including more private ownership?  Absolutely. 

marathonman's picture

There were so many communists in the FDR administration that its amazing that it didn't happen.  The fascists in the end won the day.  USA! USA! USA!

Anusocracy's picture

"People need to realize the elites never really want prosperity for the peasants"

In an alpha-male social hierarchy, the lower males never do as well as the alphas. Government formalizes that into law and policy.

The alphas in government (inc. shadow) hate the possibility of lower males doing better than they do by using freedom and the free market.

LetThemEatRand's picture

Stockman has made some great observations as of late, but a lot of people literally would have starved but for the New Deal.  And the New Deal was a response to the Great Depression, so obviously there was some shit going on before he reacted with a popular program meant to feed people who were willing to work.  The program had serious flaws primarily because it did more than simply ensure that people did not starve (kind of like printing money and giving it to the banks to allow greater lending), but the economy was in the shitter before it ever came along.

Rustysilver's picture


Some of the FDR help to prepare for WW II. Civilian Conservation Corps (CCC) ran as para military organization.  Also, a lot of young guys were so malnourished  with recruitment for WW II that school lunch programs were introduced.

Debeachesand Jerseyshores's picture

Rusty Silver:School lunch programs were introduced during the Eisenhower Administration and greatly expanded under LBJ's Great Society.


In 1940,the Select Service Act,which passed the House by one vote,was the first peace time draft in American history.

Army doctors quickly notice that many of the draftees were malnourished by the ravages of the Great Depression.In order to combat that problem,a national program was undertaken to enrich bread with a full complement of vitamins to counteract the effects of a poor diet caused by the Great Depression.



malek's picture

You forgot to mention that it was still in the shitter after it came along.

LetThemEatRand's picture

I didn't forget to mention it -- I agree with Stockman that it did not solve the problem.  Ending the Fed was the right answer.

economics9698's picture

Hoover and FDR were the same on everything.  Both with the same results.

LetThemEatRand's picture

How goes the taxpayer funded salary hypocrite?

LetThemEatRand's picture

Economics 9698. I'm hearing crickets.  Care to respond?

Dr. Engali's picture

Good economic policies would have ended the depression allowing people to feed themselves. Hunger is a good motivator for work. Instead FDR's policies prolonged the depression and led to a major war..... Sounds eerily familiar to our current sitting FDR wannabe.

LetThemEatRand's picture

People were literally getting in their 1920's cars and driving across the country looking for work.  Cites in CA put up billboards telling people to go the fuck away.   Telling a starving man that he and his family need to die because feeding them may discourage good economic policy is fucked up.

FreeMktFisherMN's picture

Government is nothing but force; it confiscates resources and redistibutes them. I may have a moral obligation to help someone out in their time of need, but that doesn't give you the right to steal money from me and conduct the transaction. It's not charitable if it requires robbing Peter. Charity is of the heart; voluntary.

LetThemEatRand's picture

Think outside the Mises box for a moment.  Force does not require government.  Ask every tyrant, warlord, gangster, etc. who ever used it.   Think Capone was elected?  He would have loved your idealogy that would give him free reign.

FreeMktFisherMN's picture

False. The worst is when people think they are protected by bureaucrats, and think writing up legislation will somehow at the snap of a finger stop the problem. Black markets are always the result, and they became magnified with the recent financial crisis as the TBTF banks, spurred by knowing they would be bailed out since they are shareholders of the Fed as well knowing they could invent even more exotic derivatives beyond the scope of any bureaucrat, still accomplished precisely what the legislation was meant to prevent. 

The market offers the best protection. 

LetThemEatRand's picture

You just hit the nail on head where Mises was wrong.  Gangsters have existed long before the public tried to get together and outlaw them.  Consult a history book of your chosing.

Buckaroo Banzai's picture

Hobbes wrote a book about that. Doesn't have a fucking thing to do with Mises.

LetThemEatRand's picture

Another true believer.  Can't stand the heat?

Buckaroo Banzai's picture

Oh for fucks sake, your arguments stink. Government fucks up everything it touches, 10,000 years of empirical evidence has established this fact indisputably. Get over yourself.

Offthebeach's picture

He'd blame Joe The Plumber for Mesopotamian hydraulic dictatorships.

LetThemEatRand's picture

Ah yes, Joe the Plumber.  The sage of wisdom for the Rand crowd.   Because he's smart.

Anusocracy's picture

Rand's failure was having a blob of neurons that kept her from being an anarchist.

To a libertarian, the moral sphere of liberty triumphs the moral sphere of authority most of the time. That was Rand's position.

To an anarchist, liberty triumphs authority all the time.


OneTinSoldier66's picture

I'd much rather deal with some inconveniences of too much freedom/liberty than the inconveniences of too much Government. Mao, Stalin, Lenin, Caesar, come to mind right off the top of my head. I don't know if there are any examples of a people that have crushed themselves under a burden of too little taxation and government debt, and too much freedom and liberty.


If you want I suppose that we can pretend that a piece of paper called a 'constitution' can limit the size, power, and scope of Government. But that's all we'd be doing, pretending. Want to see John Boehner shed some tears again? Watch him if he gets a whiff that we might actually be starting to get free market forces that he has no power and control over, again.

FreeMktFisherMN's picture

In free market eras such as laissez faire Britain and the U.S industrial revolution times, people with bad reputations were ostracized, and there was real frontier justice. 

There are always going to be quacks and low lifes trying to trick people. The market place quickly exposes them, though. I never said anything about them being completely eradicated. In fact, it's when government gets involved in business that the rent-seeking and corruption amplifies. Just look at the state-owned enterprises in China. Government does not go out of business when it doesn't make a profit, unlike the private sector. In fact, government failure usually means it's going to get more funding. Just look at the spending on public education. Stossel does a magnificent job relaying this and other money holes on his programs.

LetThemEatRand's picture

I hand it to you for your absolute Faith.  Give some thought some time to why history is replete with tyrants and gangsters taking over societies, and completely absent of examples of your ideology working in practice.

FreeMktFisherMN's picture

Again, I'm just explaining how anarcho-capitalism would work. There's nothing 'radical' about advocating things being done on a voluntary basis. I have major convictions and morals, but don't believe in using force to tell others how to live. 

I never said there was any historical example of pure laissez faire. There is no utopia on this earth. I believe liberty is a blessing, but I don't worship it like an Ayn Rand. Mankind is inherently sinful and the only way to salvation is through the blood of Christ. 

akak's picture

LTER, you once again make the specious claim that simply because a perfect free-market libertarian society may have never existed, that it therefore cannot exist.  Moreover, you once again fail to recognize that there is and has been an entire spectrum, and degrees, of liberty throughout the broad span of human history, with the health and vitality of any given society having been generally if not absolutely directly proportional to the degree of freedom, and lack of coercion, within those societies.

Social intercourse and economics based on voluntary action have proven themselves innumerable times throughout history, but simply because one cannot point to a PERFECT such society, you dishonestly pretend that the effort to fight for freedom is worthless, and that coercion is the only practical basis for civilization.  Contemptible.

LetThemEatRand's picture

Quite the opposite.  I am arguing with black and white two dimensional thinkers.  I see colors and shades of gray.  I have said repeatedly here that I think our current system is out of control.

Offthebeach's picture

The system is in total control. Control is the system. More system, more control.
You, me, we're masses, resources, surplus labor, consumers, statistics, Muppets,

malek's picture

You call it black-and-white thinkers versus your shades of gray.

I call it folks with some principles versus your (selective!) moral relativism.

LetThemEatRand's picture

"Moral relativism" slam = code for "he doesn't just spout back shit he read as a Freshman in college."