I few days ago I was asked about the Great Depression by /u/killanamao. I told killanamao that I'd reply but I didn't get around to it. So, I decided to write a post on it instead.

There are many article by Austrian Economists criticising Roosevelt's approach to the Great Depression. I think this sometimes gives the impression that only Austrian Economists hold that view. That's not true. Many Mainstream Economists have also criticised Roosevelt's policies at that time.

Mainstream Economists support some of Roosevelt's changes and criticise others. Even Keynes criticised some of them in his public letter to Roosevelt. The New Keynesian economist Greg Mankiw has favourably cited criticisms of Roosevelt on his blog (here and here). He takes the view that Roosevelt's abandonment of the gold standard was his best policy.

An old article from David Sirota was what prompted the question from killanamao. In in he quote Eric Rauchway:

Excepting 1937-1938, unemployment fell each year of Roosevelt's first two terms (while) the U.S. economy grew at average annual growth rates of 9 percent to 10 percent

Rauchway is quite right about his statistics. But we have to understand how to interpret them.

Firstly, recoveries are usually quite fast. This is something that people have forgotten recently because the recovery from the crisis of 2008 was fairly slow. In general, during a recovery the growth rate is higher than it is in normal times, until the previous level of GDP is met. Secondly, we must remember that normal growth rates were higher in those days than they are now.

Trends are a better way of looking at this. So, GDP growth is averaged for a long period of time. Then deviations above and below the trend can be identified. What stands out about the Great Depression is it's "Greatness". GDP went very far below trend, to half of what it had been. It was only in 1936 that GDP rose above what it had been in 1929. GDP per capita took until 1940 to rise above what it had been in 1929.

As Robert Murphy pointed out, other countries recovered at similar rates or more quickly. Especially in terms of unemployment. Murphy writes:

There was no "Canadian New Deal," for example, yet unemployment rates in Canada were not nearly as severe. During Hoover's years, US unemployment was, on average, 3.9 percent higher than Canada's, and during Roosevelt's tenure it got worse, with the gap increasing to 5.9 percent (p. 104).

I mentioned earlier the time it took for GDP per capita to get back to where it was. I think that's a good measure of it. In Britain, for example, GDP per capita rose above it's 1929 peak in 1934. That is, 6 years earlier than in the US. That happened around the same time (34 or 35) for most Western European countries.