The New Deal: Effectiveness and Impact on The USA

It was all the rage, that famous and infamous New Deal. Created by then-president Franklin Delano Roosevelt, it aimed at the revival of economy and expansion of labor—both of which had dwindled in the economic depression that plagued the United States in the late twenties and thirties. This revolutionary approach to economic recovery garnered almost unanimous support for Roosevelt, earning him four terms before his abrupt death in 1945. However, by the twenty-first century, historians began to question whether the New Deal was as effective as it was once thought to be. While the New Deal did create some successful programs that remain active to this day, several of its policies were aimed at harming the very people it promised to benefit. Ordinary American laborers, especially those of minority groups, were adversely affected by the Roosevelt administration and its respective agencies.

The New Deal provided minimal financial benefit to Americans, despite having promised them of such. A 2003 article by the CATO Institute blamed the infrastructure of the program: as it was funded by increasing federal taxes (primarily excise taxes on everyday items), any benefits citizens earned through the New Deal were immediately taken back by the government. Besides, citizens hardly received any benefit in the first place. Policies enacted by the New Deal discouraged employment and economic growth—for example, the National Industrial Recovery Act pressured businesses to downsize by raising workers’ wages, while the Agricultural Adjustment Act left many farmers without a job (Powell). While Americans were promised relief and recovery, they soon found themselves in a paradoxical cycle wherein they were being exploited in return for aid, making little net progress in the end. When they were not being exploited, they were pushed further into economic depression with ill-considered policies that utterly failed in execution. Critics of the New Deal, such as populist politician Huey P. Long, believed it was only widening the already large gap between the rich and the poor (“Critics”). The Great Depression had little effect on the rich; they had reached a level of wealth in the Roaring Twenties such that they had become almost invincible to economic change. Meanwhile, the less financially stable were rendered helpless by the economic crisis. Yet the New Deal made matters worse. The tax-based infrastructure of the program made the poor poorer, while the rich remained stagnant in their wealth.

In addition to the classism that plagued the New Deal, the program was a continuation of the already prominent discriminatory attitude towards minority groups. One group majorly affected was blacks. Roosevelt’s administration encouraged, and at times, enforced, segregated residence between blacks and whites. For example, the Federal Housing Administration operated under the misapprehension that African Americans were a threat to property value; as such, the FHA discouraged whites from loaning homes in black-dominated neighboorhoods. The government also forced blacks migrating to the North and West to live in lower-quality residences, grouped in neighborhoods segregated from whites (Lane). There was no evidence that the very existence of minority groups would harm the nation’s economic well-being, yet the Roosevelt administration chose to exclude an entire race from its grand promise of economic recovery—in the name of preserving its prejudiced perspective. Women were something of an afterthought in the New Deal. They were employed mostly by the Works Progress Administration, which assigned them lower-paying jobs than men. Employment by the WPA was also significantly biased towards men—only about fourteen percent of employees were women (“Women”). Despite the decades of women’s rights movements, society still held that women should remain at home and tend to household affairs. The New Deal was no different; even in a time when any labor would assist economic recovery, the Roosevelt administration was willing to sacrifice efficacy in favor of their prejudiced views.

Despite these flaws, the New Deal did have its successes. Several of its products survive to this day, aiming to protect the American people and preserve American land—e.g. Social Security and the Federal Deposit Insurance Corporation. The former, initially introduced through the Social Security Act of 1935, is a federal insurance and social welfare program guaranteed to most legal residents in the United States. The latter provides deposit insurance to investors, initially created in 1933 to restore trust in the American banking system after it was lost during the Great Depression (Bandyk). These programs empower Americans by guaranteeing them financial protection and security, without which the American Dream is impossible. While the programs provided little immediate benefit to those who suffered in the 1930s, their evolved forms have provided relief to millions across the nation. The New Deal also remains alive through utilities, transportation, and national parks. Projects led by the Public Works Administration and the Works Progress Administration created countless roads and buildings still used today. The Civilian Conservation Corps expanded the National Park Service through the addition of more national parks and performing environmental restoration projects (“Legacy”). Without these projects, America would not have reached the standards of living we currently have. The technological and economic prosperity that marked the late twentieth and early twenty-first centuries was birthed by the fundament laid down by Roosevelt’s New Deal.

Despite these long-term successes, the New Deal failed in its mission to bring prosperity and stability to Americans and instead achieved quite the opposite. Lower-class workers and minorities remained in their grim state, as they reaped little benefit from the program’s ambitious agencies and projects. Regardless of the benefits and drawbacks, economists and historians continue to look back to the New Deal in the hopes that it will provide some answers to their questions. For example, what should an ideal relief program for such a crisis look like? What is the role of government in general, and to what extent should be involved in the nation’s economic affairs? A perfect government with perfect policies is impossible, but the New Deal is a valuable source from which the nation can learn and improve upon. Thus, if another grand-scale economic crisis strikes again, the government will know what to do.