Price Fishback Breaks Down Great Depression Myths on Econ Nerds

Price Fishback, Regents Professor and APS Professor of Economics, was recently featured on the Econ Nerds podcast, where he discussed some of the most common misconceptions about the Great Depression and the New Deal.

During the podcast, Fishback explained that President Hoover had expanded government spending a great deal more than people have recognized.  The fiscal deficits under his administration were similar in size to those run under the New Deal. Although John Maynard Keynes developed his theories about government budget deficits as a stimulus to the economy, Franklin Roosevelt and the New Deal Congress did not run large enough deficits to fight the Depression the way Keynes suggested. He also emphasized that there were many different New Deal programs dealing with a broad range of problems. Public works and relief programs and the HOLC mortgage refinances were successful at combatting many problems, while the farm programs and the National Recovery Administration created as many or more problems that they solved. That many New Deal programs were aimed at providing relief and long-term reform—not necessarily short-term economic stimulus.

The conversation also touches on World War II. While often cited as the event that ended the Great Depression, Fishback points out that the economy had returned to its long term growth path before the U.S. entered the war.  The production of military goods was impressive during the War, but the American people faced substantial sacrifices because the U.S. stopped producing cars, tires, appliances, and rationed food. 

Listen to the full episode.