How the New Deal Prolonged and Deepened the Great Depression:

Economists Harold Cole and Lee Ohanian have written an interesting Wall Street Journal op ed summarizing their important research showing that the New Deal prolonged and deepend the Great Depression of the 1930s:

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that FDR's policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office....

Why wasn't the Depression followed by a vigorous recovery, like every other cycle? It should have been. The economic fundamentals that drive all expansions were very favorable during the New Deal...

So what stopped a blockbuster recovery from ever starting? The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net through Social Security and unemployment benefits, and by stabilizing the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.

As they say, read the whole thing.

I previously blogged about this issue in this post. Unfortunately, many today are bent on repeating some of the mistakes of the 1930s.

UPDATE: For those interested, here is an ungated link to Cole and Ohanian's well-known 2004 Journal of Political Economy article that provides evidence showing that the New Deal prolonged the Depression by some 6-7 years.