Lessons from the Political Economy of the New Deal

John Joseph Wallis , Oxford Review of Economic Policy 26(3) , 442-462 , January 2010.

The New Deal produced a fundamental change in the structure of American government. The national government came to play a much larger role in the financing of social welfare programmes, while administration of the programmes was largely located at the states. Both the purely national and the shared ‘federal’ parts of the welfare system were characterized by impersonal rules. The political economy of how the rules came about and how the New Deal experience may have contributed to Americans changing their views on the danger of dealing with the national government is the primary focus. The paper closes with speculations about the possible effect of changing views on American participation in the Second World War after 1939.

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