Monday, April 08, 2013

The Cure is Worse Than the Disease

The latest course from Prager University tackles a question not asked often enough about an important period in American economic history:

When you think of the Great Depression, do you also think of President Franklin Roosevelt rescuing the American economy from the abyss? Conventional wisdom holds that FDR's New Deal regulations, such as wage and price controls, helped to end the Depression. But did they? Did FDR really end the Depression?

What if FDR's policies actually extended the Depression by several years, keeping millions of Americans in poverty longer than if the free market had been able to operate as it had in previous economic crashes?

In our latest five-minute video, "Did FDR End or Extend the Depression?" UCLA economist Lee Ohanian explains how FDR's big government policies made the Depression worse, not better. Professor Ohanian's short but informative history lesson will make you sound like an economist the next time you're in a discussion about this crucial era of American history. And if enough people watch it, skepticism about the New Deal could even find its way to high school and college econ classes.

The answer isn't only important in setting the historical record straight. It has great relevance today as Americans continue to look for answers for how we can best get the economy back on its feet. We should at least know what doesn't work.