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Thursday, January 8, 2009
Heritage Foundation Chart Misleads on New Deal Unemployment
Topic: Washington Examiner

A "charticle" on the editorial page of the Jan. 7 Washington Examiner (scanned below) is a graph of unemployment rates during the Great Depression -- as supplied by the conservative Heritage Foundation -- in an apparent attempt to forward the right-wing meme that the New Deal did nothing to stop the Depression. But the chart is highly misleading.

First, the numbers priovided, described as "percentage of jobless nonfarm workers," are skewed. As Media Matters points out, government labor statistics from the 1930s did not count those as employed through government work programs as actually being employed. But the numbers here -- which puts "unemployment" above 20 percent from 1931 through 1940 -- are much higher than even those government numbers, not to mention those of other Heritage writers. While the chart pegs unemployment in 1940 at around 21 percent, a Dec. 16 piece by Heritage senior research fellow Ronald Utt states that in 1940, "America's unemployment rate stood at 14.6 percent."

Second, while the chart lists events that have nothing to do with the unemployment rate -- "court packing"? -- it fails to note why unemployment increased in 1938, one even cited by folks like those at the Examiner as evidence that the New Deal failed. In fact, as Nobel-winning economist Paul Krugman notes, in 1937 "the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections. ... F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy."

UPDATE: The Heritage blog has posted the chart.

Posted by Terry K. at 12:05 AM EST
Updated: Thursday, January 8, 2009 11:34 PM EST

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