The value of newParse is not preserved between invocations of the function; you're setting it equal to [] (well, you're creating a new variable with the value []).
Since the only time you return is
newParse = []
if len(list) == 0:
return newParse`
you will always be returning [] because that is the value of newParse at that time.
Because you are doing this recursively, you are calling the function anew, without keeping the function's own state. Take a moment to consider the implications of this on your code.
Instead of initialising newParse = [], add an optional parameter newParse defaulting to a bogus value, and set newParse = [] if you receive that bogus value for newParse. Otherwise, you'll actually be getting the same list every time (i.e. the contents of the list object are being mutated). And newParse through in your tail call.
You also seem to have the problem that your definition and and the supposedly-recursive call refer to different functions.
def sort(list, newParse = None):
if newParse is None:
newParse = []
if len(list) == 0:
return newParse
else:
x = min(list)
list.remove(x)
newParse.append(x)
return sort(list, newParse)
parse(list)called anywhere in the code...sort()method, that is faster and more efficient than anything you can write yourself in Python.