Five Ways to Wreck a Recovery

· Assuming bigger government will bring back growth. There's a sense today that Washington has retreated too much from daily lives. Wall Streeters mutter that "the system" (the financial markets) doesn't work anymore. In the 1930s, people didn't just mutter that -- they believed it. Public-sector expansion seemed the only way to sustain America's promise. New Deal programs did much to alleviate the pain month to month -- many found dignity in six months of work at the Works Progress Administration, the Public Works Administration or the Civilian Conservation Corps. But economics is a competition for scarce capital. Such state solutions tended to suppress the creation of long-term private-sector jobs, as did the aggressive Wagner Act for organized labor. The National Recovery Administration, the New Deal's centerpiece, favored large businesses at the expense of small fry. The new Tennessee Valley Authority and Roosevelt's repressive Public Utility Holding Company Act combined to crowd out private utilities that hoped to light up the South. As for Wall Street, those New Yorker magazine cartoons were accurate: Wall Streeters retreated into their martinis and country houses rather than rebuild. This yielded the "Depression within the Depression" of 1937.

· Ignoring the cost of inconsistency. FDR spoke of "bold persistent experimentation." Obama speaks of "change." Both can do damage. What's more, the list of experiments is always finite. Our bailouts look reassuring, but even Washington cannot rescue the entire economy. And foreign investors wonder where Washington will stop. Already concerned about the inconsistent dollar policy, China is now troubled by the inconsistent rescues.

The proximate danger today is a repeat of the 1970s, not the 1930s. But if lawmakers don't remember the old missteps, they might find that their new recovery legislation imperils our recovery.

Amity Shlaes is the author of "The Forgotten Man: A New History of the Great Depression" and a senior fellow at the Council on Foreign Relations.