Home Depression Letter: Could the New Deal have deepened the Depression?

Letter: Could the New Deal have deepened the Depression?

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I read with interest your article “Johnson seeks to channel FDR in push for UK revival” (July 2). Hopefully Boris Johnson referred to Franklin D. Roosevelt’s New Deal policy only metaphorically as research by Harold Cole and Lee Ohanian demonstrates that providing cartel rights to US firms in exchange for higher wages for workers deepened the crisis rather than leading to economic recovery.

Economic recovery was curbed as the New Deal allowed these cartels to put through rampant price increases where lower prices would have provided economic relief. The policy stifled labour competition, where more competition was a recipe for recovery.

Jan Bouwens
Amsterdam Business School
Amsterdam, The Netherlands

https://www.ft.com/content/7846d2e3-abbe-4a4f-9bb3-31dc7c74f6ef

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