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New Deal Effects

New Deal Effects

In a broad sense, the effects of New Deal on the United States can be broadly categorized into political effects and socioeconomic effects. Join us as we assess these effects of New Deal to see whether it was successful or not.
Abhijit Naik
".....use of the authority of government as an organized form of self-help for all classes and groups and sections of our country." - Franklin D. Roosevelt

Franklin D. Roosevelt's New Deal, in his own words, was all about helping the 'forgotten man at the bottom of the economic pyramid'. Post Great Depression, which had left the United States of America in a state of chaos, the U.S. economy was in a desperate need of relief from the impending crisis, recovery from the economic collapse and some socio-economic reforms to ensure that such economic depressions wouldn't occur in the future. These 3 Rs - relief, recovery and reforms, came in the form of the New Deal which was a series of economic programs introduced by the US administration under the leadership of FDR.

New Deal: An Overview

As we mentioned earlier, the 'New Deal' was a series of economic programs that was implemented in response to the crisis triggered by the Great Depression in the United States of America. The same was implemented during the first term of the 32nd President of the United States, Franklin D. Roosevelt, between 1933 and 1936. In a broad sense, the 3 Rs in the New Deal referred to relief for unemployed as well as those who were likely to lose their homes, economic recovery in agricultural sector as well as business, and socio-economic reforms - such as a stronger financial system, to prevent economic crisis of this magnitude in the future.

Effects on New Deal On the United States

Even though there is no questioning the efforts of President Franklin D. Roosevelt, one has to ponder on whether the New Deal was really of any help or did it cause more damage than help. Even today its success is a topic of raging debate, which has left the leading economists of the world divided into two groups - those who think it was successful and those who think it failed miserably (In fact, the second group even argues that the New Deal was responsible for aggravating the economic crisis in the United States.). By and large, these effects revolved around the changes it brought about on the political and socioeconomic front in the United States of America.

Political Effects
On the political front, it made Americans realize how the Federal government works and why its presence is important in smooth functioning of the nation as a whole. Before Great Depression, the Federal government was not of much importance for the citizens as Federal regulation of stock market or programs like social security and farm subsidy programs didn't exist back then. The introduction of such programs as a part of New Deal made people realize why Federal administration is important.

It also brought about a political realignment in the United States; wherein the Democratic Party - with its liberal ideas, got a majority in the House. (In fact, the Democrats ruled the White House for seven out of the nine presidential terms between 1933-1969). The Republican Party, on the other hand, was divided over the issue, with some Republicans opposing the entire New Deal as bad for business and growth, and some accepting it in part. These changes in the American politics brought to the surface the concept of New Deal Coalition which dominated the US elections until 1960s.

Socioeconomic Effects
On the socioeconomic front, one of the most prominent effect of this deal was the fact that Federal government was given more powers for regulating the economy, and this in turn allowed the government come up with policies for the welfare of nation as a whole. This deal came as a boon for American farmers in particular, with programs like the Farm Credit Administration and Agricultural Adjustment Act helping them resolve issues like overproduction, fall in market prices etc., with ease. The New Deal also marked the beginning of several social programs which were directed at the welfare of people and growing power of labor unions. Several agencies, including the Works Progress Administration (WPA) and Civilian Conservation Corps (CCC), provided employment to many people across the United States, and also contributed to public works during that period.

New Deal Policy Criticism

While all these New Deal effects were quite promising, the critics of this deal were least impressed by them. They argued that the implementation of this program was just an eyewash which never really got rid of issues like unemployment in the United States, but instead just made it appear as if these woes were long gone. Unemployment in the United States increased from 2.6 million in 1929 to 15 million in 1933. After the implementation of New Deal it did come down to 8.3 million in 1937, but only to increase to 10.5 million in 1938. Critics were of the opinion that all the policies which were introduced as a part of this deal were short term policies that were not of much use for the long term goals of the country.

While economists are divided over the success of New Deal, even those who defend the same are of the opinion that these programs were not perfect. That being said, those in its defense do stress on the fact that the permanence of New Deal programs does hint at its success. If it were not for this success, the following governments, especially the Republican government which came to power in 1950s, would have had done away with them.