On Thursday expect to hear new calls for massive government employment programs -- calls for a repeat of the WPA. The initial WPA budget was nearly 7% of GDP (that would be about a trillion dollars in today's economy) and employed 3 million people at its peak in 1938. Surely such massive hiring and spending must have reduced unemployment significantly at by 1938? Well, uh. no. The Roosevelt administration was unable to repeal a basic fact of economics. Every dollar that the government spends must first be extracted from the private sector. So when the government spends a trillion dollars on Jobs, there is a trillion dollars less for the private sector to spend. The so-called Stimulus of two years ago couldn't repeal the laws of economics. But, what the heck. Let's give it another shot. What do we have to lose -- except another trillion dollars.
Unemployment
1932 23.6%
1934 21.7%
1936 16.9%
1938 19.0%
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