The 1937 recession was a deliberate natural experiment in austerity that failed

Evidence

Since recovery seemed under way, the lip service that Roosevelt had been paying to the notion of balancing the budget became a policy issue, and after the 1936 election his treasury secretary Henry Morgenthau sought a return to orthodoxy. This led to a round of monetary tightening, which came on the heels of a fiscal contraction that was a result of new social security taxes kicking in. This increased unemployment, causing a short but sharp recession in 1937 and into 1938. This recession, a perfect natural experiment in austerity policy since the contraction was deliberate, expenditure focused, and happened in an upswing, failed miserably and shifted the balance of power from budget balancers to advocates of spending. — Mark Blyth, Austerity, 510

Categorization

• XREF: The ‘natural experiment’ framing is the same analytic lens Mattei applies to austerity episodes; useful comparative case for the reader’s existing work. — connects to: Swedish austerity in the 1920s produced the greatest slump in the nation’s history — Mark Blyth, Austerity: The History of a Dangerous…, 520; Austerity became self-defeating because it worsened the deficits it claimed to fix — Mark Blyth, Austerity: The History of a Dangerous…, 516; Austerity in the 1930s contributed directly to global catastrophe. — Mark Blyth, Austerity: The History of a Dangerous…, 69 (+1 more)
• SEED: Angle: ‘The 1937 recession as a controlled experiment proving austerity fails in upswings’ — a sharp historical illustration of the mechanism the whole book critiques.

Broader Connections

• Austerity became self-defeating because it worsened the deficits it claimed to fix #corroborates (0.85) — Mark Blyth, Austerity, 516