the reason why the new deal has become a myth is not so much because of its economic success as its political success. Although redistributive, protectionist and government led policies are often not successful economically, they are quite popular politically: they often have immediate results. They not only have a clear subject of action, but also their policies often point to some centralized, direct, hierarchical or industrial beneficiaries, who can immediately become the political allies of these policies.

“the difference between a good economist and a bad economist is that the latter only looks at the local and direct effects of economic policy, while the former calculates its overall and long-term effects”. Today, when we face the economic crisis and review Roosevelt’s new deal, especially when the financial crisis has greatly strengthened the regulatory thinking and left-wing thoughts, we should perhaps revisit this sentence

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. It is said that this financial crisis is the most serious since the great depression. Since it is the most serious since the great depression, when seeking solutions, People will naturally think of the wisdom of history: How did the great depression, the “greater crisis”, be solved?

? Roosevelt’s new deal. This is what American history textbooks tell American primary and secondary school students, and it is also what Chinese history textbooks tell Chinese primary and secondary school students. There is a kind of knowledge whose inheritance is so institutionalized and long-term that it has become a myth. The sign is that people no longer ask why: I think so because my teacher told me to think so; My teacher thinks so because his teacher told him to think so.

but there are always a small group of anti bone people in this society who make a question mark about everything. On the issue of Roosevelt’s new deal, there are many such “revisionists”. For example, a man named Jim Powell wrote a book “Roosevelt’s fault: how Roosevelt and his new deal prolonged the Great Depression”, which can be seen from the title of the book. Friedman and Buchanan, Nobel Laureates in economics, praised the book. Another example is Henry Hazlitt, an economic columnist in the Roosevelt era, who insisted on criticizing the new deal all his life. His gist is summarized in the book “a lesson in economics”, which has been popular since the 1950s. The historian John Flynn’s “Roosevelt myth” describes Roosevelt’s side of restricting freedom and undermining constitutionalism, aiming to “restore Roosevelt to a normal person”. Another historian, Robert Higgs, also expressed his dissatisfaction with the Roosevelt Administration’s massive expansion and restriction of economic freedom in his book crisis and Leviathan. The discordant voices of

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have lasted for a long time. One important reason is that there are loopholes in the statement that “Roosevelt’s new deal defeated the Great Depression”. An important sign of the great depression was the high unemployment rate, but Roosevelt’s new deal had little effect in this regard. The unemployment rate in the United States was 15.9% in 1931 (about 3% before the great depression) and remained at 17.2% in 1939. Another important sign of the great depression is the contraction of private investment rate, and the recovery of private investment during the New Deal period is also very limited: private investment accounted for 16% of GDP in 1929 and 14% in 1941. In terms of per capita GDP, the per capita GDP of the United States in 1939 is still lower than that in 1929.

Jim Powell and others accused the new deal of prolonging the depression because of a series of “anti market and anti private investment” policies. For example, the highest tax rate in the United States was 24% in 1929 and 79% in 1935. As we all know, the high-income class is the core source of private investment. When three-quarters of your income will be taken away by the government, it is not difficult to explain the low investment rate of the whole society. In fact, there was a cooling back in the slow economic recovery in 1938, which was called “Roosevelt depression” in history, which can be said to be the answer of the investment class to the tax reform from 1935 to 1937.

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, like the landmark “work project management bureau” in the new deal, although it provides a large number of government jobs (it is said to have created 5 million jobs), the money comes from taxes after all. It could have been used for private investment and may even create more jobs. The labor protection bill in the new deal is not undisputed. After the power of organized trade unions was strengthened, workers’ wages increased significantly – which seems to be a good thing, but employers “voted with their feet” by reducing employment, resulting in high unemployment.

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and so on. The trade protectionism policy, price control policy and bank splitting policy in the new deal have been questioned by revisionists. They believe that the great depression was originally just a trough in the economic cycle. Many troughs in the U.S. economic cycle – such as the economic depressions of 1894 and 1921 – can be self repaired through the regulation ability of the market. The reason why the Great Depression lingered for more than a decade is precisely because the government is helping. Higgs believes that after the mid-1940s, the cancellation of radical measures of the new deal, the substantial reduction of government budget and the revival of private investment brought the golden age of the United States after the war. Ironically, in 1946, the year after Roosevelt’s death, private capital investment in the United States increased for the first time in 18 years.

of course, these revisionists are not necessarily right. An obvious fact is that many achievements of the post-war new deal have been preserved, but the economy is still developing at a high speed. This shows that there are at least some reasonable elements in Roosevelt’s new deal, so the problem may not be to judge whether Roosevelt’s new deal is right or wrong, but to judge which policies are effective and which are ineffective.

in fact, Roosevelt’s new deal became a myth not so much because of its economic success as its political success. Although redistributive, protectionist and government led policies are often not successful economically, they are quite popular politically: they often have immediate results. They not only have a clear subject of action, but also their policies often point to some centralized, direct, hierarchical or industrial beneficiaries, who can immediately become the political allies of these policies. In contrast, in the market-oriented free economy, not only the actors are scattered, but also the beneficiaries are often