Blog #3 Judith Stein Chapter One

Preconception about the institutionalizing of The New deal, the objective of this initiative was to restabilize the United States economy to prevent circumstances such as the Great Depression during the 1930’s from occurring again. Noting this, one of the key points during this time was the documented unemployment rates that were at an all time low in comparison to the rates during the Great Depression which was used to demonstrate that the New Deal was a success to the nation. The programs that were introduced allowed for Americans, mainly those in the middle class, to have access to “discretionary income” which would further aid companies and is a cycle established from this (Stein 2). What swerves me during the middle part and heading towards the end of the chapter is how undervalued actual unemployment rates were and the methods that were used to achieve said low unemployment percentages. Stein elaborates on how instead of the unemployment rate being around 3-5 percent realistically they should have been around 20-23 percent as the use of daily surveys were what allowed these low unemployment rates to surface. The use of daily surveys does not take into account other variables such as continued labor for the same people and it can be said that this format of obtaining the unemployment rates was very flawed. 

During this read what also intrigued me was the institutionalization of Keynesian ideas into the United States. Keynes’ ideology as far as seeing unemployment as a threat to free society and civilization aided the idea of The Great Compression in the 1940’s. Prior to this read I had heard about this concept of Keynes economics from previous class discussions, although it was not something I was completely familiarized with. Viewing how Keynesian economics aided the United States during a time where they were starting to fall behind in comparison to countries such as Europe and in Japan where they were starting to see economic progress as well. A question that arises from this reading is what flaws if any come about from this new Keynesian economic model as with everything that becomes institutionalized in society has flaws or setbacks that take time to adjust to these new policies institutionalized.