The Media's Top 10 Economic Myths of 2008 (No.1)


1. America needs a new, New Deal.

Media myth: Time magazine and other media outlets pushed the idea that Obama must be the next FDR, but they are misrepresenting the impact of the New Deal.

Originally published by the Business & Media Institute

Imagine the classic image of FDR sitting in his car grinning, with a cigarette perched from his mouth. Now imagine it had the face and hands of president-elect Barack Obama instead of FDR.

No, it wasn't a dream – it was the cover of Time magazine on Nov. 24 which made it clear the media had crowned Obama the new FDR and wanted him to institute a new New Deal.

The photo illustration of Obama and FDR came with a headline that declared: "The New New Deal: What Barack Obama can learn from F.D.R. – and what the Democrats need to do."

But even before Obama was elected, journalists were looking for FDR. CNN's Wolf Blitzer asked before the election, "who's gonna be FDR as opposed to Herbert Hoover?"

In a discussion of economic stimulus packages, ABC's George Stephanopoulos said on Oct. 19 that he thought Obama "would want to do something like what FDR did in 1932."

Guests and experts also sounded the call. On CNN, Jeffrey Sachs of the Earth Institute at Columbia University called for a revamped New Deal more than once. Sachs was a favorite expert of CNN in October appearing on 10 of the first 23 days of the month.

But what news reporters, anchors and guest didn't tell viewers is that according to several economists FDR's New Deal actually prolonged and deepened the Great Depression.

In a 2004 study, two University of California, Los Angeles (UCLA) economists found that FDR's policies lengthened the suffering of the Depression by seven years. The two economists specifically blamed anti-free market measures including the National Industrial Recover Act (NIRA) and later the National Relations Act.

Another free-market economist who has written about FDR's negative impact on the economy is Robert Higgs. Higgs told the Business & Media Institute that a new, New Deal would be disastrous. "I cannot imagine a worse course of action, short of outright socialization of the entire economy. The measures comprised in a new New Deal will not hasten general economic recovery, but will only bulk up the power of government and transfer income to privileged interest groups at the expense of taxpayers and consumers," Higgs said."