Why a new New Deal when the orginal New Deal failed?

Everyone knows that Franklin Delano Roosevelt saved the country from the ravages of the Great Depression with his New Deal. We've been taught for decades that Herbert Hoover's blind adherence to laissez faire economics led to the Great Depression and Roosevelt's increased regulations and spending saved the country.

However, did FDR really save the country with the New Deal? Some economists and writers are now challenging conventional wisdom and many historians' picture of the USA in the 1930s.

Harold L. Cole and Lee E. Ohanian summarize their findings about the New Deal in an article in the Wall Street Journal. In view of Democrats' desire to implement a new New Deal for the present financial crisis, everyone should read the article to get an insight into the results of the original New Deal.

Cole and Ohanian conclude that "Our research indicates that New Deal labor and industrial policies prolonged the Depression by seven years." They point to studies that show that the economy should have recovered by 1935 or 1936 by simply following ordinary economic policies. New Deal policies allowed wages to rise to levels in excess of productivity growth which depressed production and employment.

This resulted in the downturn of 1937-1938 which created a "recession in a depression." Thus, the New Deal does not provide the easily followed guide for economic recovery as many would have it. Instead, Cole and Ohanian contend that the "main lesson we have learned from the New Deal is that wholesale government intervention can -- and does -- deliver the most unintended of consequences."