Colorado Media Matters (CMM) relies heavily on an economist to make the case that the New Deal helped the economy. Unfortunately for CMM’s case, that economist — Gene Smiley — is a well-known critic of the New Deal with a book out called Rethinking the Great Depression.
The main issue is that are two main sets of unemployment data for the Depression era. Colorado Media Matters plausibly argues that the lower figures, adjusted for federal make-work employment, should be used. (I discuss the issue at greater length in my previous post.) Beyond that, CMM fails to make its case and indeed undermines it.
Colorado Media Matters writes:
[F]ormer Wall Street Journal writer Amity Shlaes — whose 2007 book The Forgotten Man: A New History of the Great Depression (HarperCollins) conservative media figures have cited frequently to dismiss the New Deal’s effectiveness — acknowledged that her unemployment figures excluded “make-work jobs,” instead relying on data compiled for the Bureau of Labor Statistics (BLS) by economist Stanley Lebergott. In a November 29, 2008, Wall Street Journal op-ed, Shlaes wrote, “To be sure, Michael Darby of UCLA has argued that make-work jobs should be counted. Even so, his chart shows that from 1931 to 1940, New Deal joblessness ranges as high as 16% (1934) but never gets below 9 percent” [emphasis in original]. After World War II, BLS ceased counting those in work-relief programs as unemployed, as economist Gene Smiley noted in a 1983 Journal of Economic History article.
A 1993 Journal of Economic Perspectives paper by Robert A. Margo, drawing from Smiley’s article, presents a table comparing Lebergott’s and Darby’s unemployment figures…
Media Matters for America previously has documented other conservative media figures and outlets similarly cherry-picking unemployment figures to assert that the New Deal failed to reduce unemployment. Additionally, Colorado Media Matters has pointed out that Independence Institute President and KOA host Jon Caldara parroted other conservatives by claiming that the New Deal was a failure that “plunged us into misery.”
So, by CMM’s account, Smiley played a central role in bringing to light the adjusted figures. Yet as I’ve pointed out, the higher figures that Shlaes cites come from Out Of Work by Richard Veddar and Lowell Gallaway, who point out that Smiley endorses the use of the higher figures as well.
As for CMM’s case for the New Deal, it is flawed for reasons I discuss in my previous post. CMM argues that, because unemployment fell between Hoover and FDR, therefore FDR’s New Deal was responsible for the improvement. Colorado Media Matters thus commits an obvious logical fallacy. Critics of the New Deal argue that, even though unemployment fell relative to its high under Hoover, nevertheless the New Deal hampered economic recovery. Therefore, CMM’s criticisms of its opponents are groundless.
Media Matters for America quotes Smiley’s 1983 article as well.
So Smiley is a trusted economist, then, in the lights of CMM and its national counterpart. Perhaps Colorado Media Matters should therefore pay attention to Smiley’s critique of the New Deal.
I contacted Smiley to verify that he wrote the 1983 paper. Here’s what he had to say:
Yes, I wrote that article. I’m not exactly sure what you mean by “my take” on the different unemployment rate estimates but I can make a couple of comments. Darby’s contention is that if one is trying to understand the speed of the recovery one has to look at the truly unemployed; i.e., those who simply did not have jobs. In the search model he used that is crucial to the speed of the recovery. Thus, he excludes all those employed at federal projects designed to put people to work. Lebergott’s estimates (which were much earlier and the first real estimates of unemployment for the 1930s) are generally used to demonstrate the slowness of the recovery under the assumption that if the recovery had been faster private employment would have picked up more quickly and fewer would have been employed at government make-work jobs. Essentially Darby’s contention is that if one wants to examine how quickly the private economy was recovering one has to exclude all those employed at government make-work jobs because they were no longer part of the private economy. Darby makes the point that post-WW II unemployment estimates do exclude people employed at comparable government make-work projects. …
You should probably understand that I am a critic of the New Deal. I have argued extensively that the programs which are commonly accepted to be the New Deal were responsible for the slow recovery of economic activity after the end of the Great Depression in March 1933. I have examined this in my book, Rethinking the Great Depression. For the most part Amity Shlaes and I agree. I read her entire manuscript, The Forgotten Man, before it went to the publisher.
All the best,
I do appreciate the fact that Colorado Media Matters accuses its opponents of cherry picking the data. We do need our state jesters.