The federal government has passed big reforms in response to economic crises before. Could it happen again?
The Harvard University historian Lizabeth Cohen wrote about comparisons between today’s economic crisis and the Great Depression. She joins James Hamblin and Katherine Wells on the podcast Social Distance to share lessons—and warnings—from the New Deal.
Listen to the episode here:
What follows is an edited and condensed transcript of their conversation.
Katherine Wells: Many people are trying to make connections between the Depression and today. And I’m curious, what are the parallels you see, or do you think it’s a very different time?
Lizabeth Cohen: Learning from history is always complicated. It’s not really valid to say that history repeats itself. Circumstances are always different, but there are lessons to learn. And they’re more on the level of the kinds of commitments, the strategies broadly employed, not so much the nitty-gritty of this program versus that program.
Wells: We talk a lot about unemployment, for instance, being like, you know, “We’ve never seen this high of unemployment since the Great Depression.” Does that mean these times are similar?
Cohen: Well, there are important differences to say before we acknowledge that. Twenty five percent of the American workforce was unemployed in 1933 when Franklin Roosevelt became president. And the latest statistics I just saw today suggests that we’re getting close to a quarter of the workforce being unemployed today. So obviously, that’s similar. But we have to remind ourselves that this has happened over, what, two and a half months and it took many years to get to that point in the Great Depression. So, you know, that was a gradual disaster. This is one that’s hit us very fast. And we are also laboring under a medical emergency where, you know, many of the things we might have done are constrained by the fact that we are quarantined and trying to social distance and so forth.
One of the important comparisons I think to make today is that, from the very first speeches that Roosevelt gave at his inauguration, for example, he talked about the importance of getting people back to work. They thought about consumption and the importance of people having enough money to spend and to rev up the economy that way. But they were very clear that jobs were the way to get there.
Most of the New Deal programs, particularly at the early side, were oriented towards creating jobs. And we don’t hear that today because we’re really living in an economy that is so oriented around consumption. Before the collapse, 70 percent of GDP was consumption-related. And so it’s not a surprise that what our Congress did was give people money to spend, but not actually put a jobs program into place (though some of the CARES [Act] money does require people being kept on the payroll).
It’s a very different orientation today. We have a very different economy. People were working in manufacturing and big plants. Today, we have this gig economy where work is defined in lots of unusual ways that would be unrecognizable in the 1930s. So our economy looks very different.
James Hamblin: You mentioned that so much of our money now is spent on consuming. Was that not the case [during the Depression]?
Cohen: Certainly people were buying things, and you see that in the early New Deal, but nothing like the way we view it today. And it really took the Keynesian revolution of the late 1930s that we should, in fact, in a recession or a depression, run a deficit. “We should prime the pump. That would be the way to get the economy back.” And so by the late 1930s, that’s what they embraced. And then by the postwar period, it did lead to enormous prosperity. But part of the reason for that was that we had a much more progressive tax structure. And so there was much more redistribution of wealth. We did not have the inequality of income and wealth that we have today.
Hamblin: This is clearly an extremely complex issue. It’s going to be really hard to draw tight parallels. But did the New Deal increase equality among people or did it put us on the road toward the inequality that we have now?
Cohen: Well, a lot of people were brought out of dire straits by the New Deal. There still was plenty of inequality. And I would remind us that there was tremendous racial inequality in terms of access so that even an agency like the Civilian Conservation Corps, which is one of the earliest New Deal programs. It began in the north with integrated camps. But before too long, they were segregated.
So we have to remind ourselves that, although there was progress made, there were compromises that Roosevelt made in order to get many of these programs through. But what was so important about the New Deal is that it introduced into people’s lives the possibilities of what a federal government could do.
Wells: That’s interesting, especially now, because it feels like we’re in a time where the federal government is sort of abdicating its power in a way and throwing things back to states in terms of the coronavirus response. When we talk about the New Deal, I’m curious about what were the political circumstances that led to people being up for big reforms. A lot of people say we’re so gridlocked now and we have such deep divisions that there’s just no way that big reforms could happen. Was the government significantly more functional during that time?
Cohen: Well, that’s an important point. I think, first of all, remember that this is taking place over a long period of time. Roosevelt was president for 12 years. It is very gradual. And some of those things worked and some of them didn’t. And when they didn’t work, they threw them out and tried something else. So we shouldn’t assume that there was a blueprint that they put into action. They experimented. And that’s probably one of the most important lessons to take from the New Deal, that there was not sort of some ideological commitment, but rather a willingness to be improvisational.
Wells: Does that mean that Roosevelt was a capable and personal leader who knew how to connect? He had a way to build consensus. Are those things required for this kind of experimentation and reform to take place? And do we have them now?
Cohen: Well, Franklin Roosevelt was truly an amazing leader, I think. He had had no adversity himself, which I think bred compassion in him. But he was very personable. He was very clever, very articulate. And he was willing to compromise. You know, it’s hard to swallow some of the compromises that he made.
Wells: Right, some of the compromises increased or solidified a lot of racial injustice, right?
Cohen: Yes, exactly. You know, so that agricultural domestic workers were left out of Social Security and out of the Fair Labor Standards Act. There was a lot of popular support for anti-lynching legislation. He felt he couldn’t go there and still hold on to the support of southern Democrats, which he knew he needed for what he felt was the broader good.
Hamblin: So, he sort of entrenched some of these systems that are still unjust today. Does that mean that it’s better to wait and not implement a big system like that until you can be sure that it is done fairly and justly? Or do you act in a moment of crisis like this and try to fix it later?
Cohen: I think that Roosevelt would say that the only way you’re gonna get these things to change is to be incremental about it.
Wells: You wrote about how the new New Deal was not just about policy or politics, but kind of about culture too. And I wonder if that is something that is as malleable today as it was then.
Cohen: Yes, I feel that very strongly, that we have to bridge these divides and that we may be making a little progress on that as we make grocery clerks and package deliverers and Amazon warehouse workers into the heroes of the present moment. But it’s got to go further than that. On the part of the New Dealers, I think they started off with commitments to employ people who were really out of work, and many of them were photographers and painters and writers. But what it ultimately became was a really important project to show people how the whole country was experiencing the Depression. So you had photographs from Dorothea Lange, from Walker Evans, that gave people a real picture of the suffering that was taking place in Appalachia and California. And I think that ultimately it did become a way to to build empathy and to help people feel that this was a shared suffering and to then be invested in what the government was doing to really help people. But we have been through the culture wars, and these divides are great.
Though, we shouldn’t exaggerate the extent to which they didn’t exist then. The 1920s, for example, was a period of other culture wars. We had this one cultural world of rural America and urban America—which was very different, filled with immigrants, many of whom were viewed as un-American. We had put into law and then in 1924, a new immigration restriction that made it basically impossible for people to come from Eastern and Southern Europe, to say nothing of Asia.
Wells: You say history doesn’t repeat itself, but it’s really ringing a bell.
Cohen: Yeah, right? So, I don’t know if it’s refreshing and comforting to discover that there were some pretty terrible things that happened in the past as well. But they did get through it.
Wells: But there can’t be an excuse that things are somehow worse today than they were.
Cohen: Yeah, exactly. But, you know, there are new kinds of obstacles. The fact that people get their news from different sources and they get them from many different sources. You know, we have a challenge to build sort of a common culture. But we have to keep up our oath. We are fortunate to live in a democracy and hopefully we can participate in it come November.