Our current financial crisis and recent drop in stock prices have left many Americans fearful that we are on the verge of the next Great Depression. Fortunately, the stock market crash of 1929 was not what made the Great Depression so great. It was President Franklin Delano Roosevelt’s New Deal that was primarily responsible. What’s important now is that we learn from Roosevelt’s mistakes so as to avoid repeating them.

Though Roosevelt is often given credit for ending or helping to end the Great Depression, it is his New Deal policies that prolonged it. Every other recession or depression in American history has ended in a fraction of the time that it took to end the Great Depression.

Roosevelt subscribed to the Keynesian economic philosophy that increased government spending could jump-start the economy. The basic idea is that if the government gives money to the people they will want to spend it, which will increase the demand for various goods and services, and therefore create jobs for people to produce those goods and services. This philosophy is still being used today and was the basic idea behind the stimulus package earlier this year.

Roosevelt’s response to this was to create a number of government programs designed to get more money to the people. For example, the Works Progress Administration and Civilian Conservation Corps were programs that hired people to do various jobs consisting of anything from road construction to planting trees to building parks. Unfortunately, the Great Depression was not brought on by a lack of an adequate park system. There were much more immediate needs that people were lacking. Roosevelt, however, didn’t seem to understand this. Although he did give money to the people, he gave it to them for producing things that weren’t in demand. The end result of this is that even if people had money, there wasn’t enough to buy with it because millions of people had been doing things like building parks instead of, for example, growing food.

Food was one of the primary needs of people during the Great Depression. The Agricultural Adjustment Act, which Roosevelt enacted in 1933, was designed to help farmers by raising food prices. This was accomplished by mandating how much farmers could grow, destroying existing crops, and slaughtering millions of animals which decreased the supply of food, thus raising the price. It did nothing to help the rest of the country, however, that was suffering from a food shortage and inflated food prices. Maybe they should have tried to eat one of Roosevelt’s WPA parks instead.

In addition, Roosevelt needed money to pay for all of his social programs. This burden was, of course, passed on to taxpayers. According to historian Jim Powell, Roosevelt increased income taxes, corporate taxes, excise taxes, estate taxes, and gift taxes as well as introducing the undistributed profits tax, the liquor tax and the social security payroll tax. In fact, when he was done, the highest income tax bracket was at 91 percent. In the end, people didn’t have that much money left over to spend. These increased taxes also reduced the amount of money that people could make by working, and as a result, decreased their incentive to work in the first place.

Unemployment was a major problem during the Great Depression. Unemployment was generally greater than 10 percent and at one point reached 25 percent. One of the reasons for this was increased payroll taxes such as the Social Security tax, which was started during the Great Depression. A large part of the burden of these payroll taxes was passed on to the consumer in the form of higher prices. As James Emery, who was a representative of the National Association of Manufacturers at the time said, “General recovery depends on our ability to enlarge our production, to employ more people, and to cut down and not raise up the price of goods. Every time we increase the price of goods in a diminishing market, we are diminishing the possibility of employing other men, because we are making it more difficult, not less, to sell goods. Until we can market goods, we cannot employ more men.”

Roosevelt’s National Labor Relations Act also contributed greatly to unemployment by vastly expanding the power of unions. The NLRA said that, “it shall be an unfair labor practice for an employer… to interfere with, restrain, or coerce employees in the exercise of [unionization] … to dominate or interfere with the formation or administration of any labor organization … to encourage or discourage membership in any labor organization … to discharge or otherwise discriminate against an employee because he has filed charges or given testimony under this Act… to refuse to bargain collectively with the representatives of his employees.”

This made it possible for labor unions to keep wages high and keep employment rolls low. As economists Thomas E. Hall and J. David Ferguson say, “By encouraging unionization, the [NLRA] raised the number of insiders — those with jobs — who had the incentive and ability to exclude the outsiders — those without jobs. Once high wages have been negotiated, employers are less likely to hire outsiders, and thus the insiders could protect their own interests.”

Roosevelt’s lack of faith in the free market led him to attempt to reform the current system when in fact it was the free market that would have allowed us to exit the Great Depression much sooner. Even John Maynard Keynes, the founder of Keynesian economics, said of Roosevelt’s New Deal, “… Even wise and necessary reform may, in some respects, impede and complicate recovery. For it will upset the confidence of the business world and weaken their existing motives to action …. I am not clear, looking back over the last nine months, that the order of urgency between measures of recovery and measures of reform has been duly observed, or that the latter has not sometimes been mistaken for the former.”

It is very important that we keep a close eye on our current president as well as both of our presidential candidates to make sure that they don’t intend to repeat the mistakes of the past.

— Blake Hasenmiller is a senior in industrial engineering and economics from DeWitt