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Arthur James In December 1933,the economist John Maynard Keynes wrote an open letter to President Roosevelt, which began:
"You have made yourself the trustee of those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system. If you fail, rational change will be gravely prejudiced throughout the world, leaving orthodoxy and revolution to fight it out."
(quoted from Donald Markwell,"John Maynard Keynes and International Relations: Economic Paths to War and Peace", Oxford University Press, 2006, page 176)
Although the circumstances are different, exactly 75 years later President-elect Obama is in something like the same position. People around the world see him as the trustee of their hopes, both for better international relations and for revival of the world economy.
As in FDR's time, when Depression led remorselessly to war, so today, the two may be more closely connected than we would like to think.
President Obama must ensure that the US provides leadership in dealing with the global economic crisis of our day. This, too, is one of the lessons - probably not widely enough appreciated - of FDR's time, and of Keynes's insights (see Markwell's book quoted above).
Open Thread for Night Owls, Early Birds & Ex-Pats
Daily Kos —
Some guy named Paul Krugman has a column in Monday's The New York Times, where he writes: Franklin Delano Obama? Suddenly, everything old is New Deal again. Reagan is out; F.D.R. is in. Still, how much guidance does the Roosevelt era really offer for today’s world? The answer is, a lot. But Barack Obama should learn from F.D.R.’s failures as well as from his achievements: the truth is that the New Deal wasn’t as successful in the short run as it was in the long run. And the reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too ...
Lessons
Matthew Yglesias —
... I hope President-Elect Obama and the congressional leadership are all reading Paul Krugman’s column. What’s more, I also hope the congressional non-leadership pays close attention to his column. It’s those members in the most marginal districts who are most likely to look at plans for an expansive agenda and start getting queasy, but in truth it’s those very same members who aren’t going to win re-election unless dramatic action is taken. The bulk of the most liberal members have safe seats and will be congressmen for life if they want to ...
History Lessons from the New Deal
J. Bradford DeLong's Grasping Reality with All Eight Tentacles —
Paul Krugman:
Franklin Delano Obama?: The reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious....[T]he institutions F.D.R. built have proved both durable and essential... remain the bedrock of our nation’s economic stability. Imagine how much worse the ...
Your Abbreviated Pundit Round-up
Daily Kos —
... ways, have been about a moral reorientation, a reaching out, the rediscovery of the ways in which we can be our brothers’ and our sisters’ keepers. Diana Strelow, 73, of Portsmouth, Va., put it this way: "My vote for Obama was and is about my hope that an intelligent, self-respecting president will lead to a renewal of civility on the part of all of us — perhaps a renewal even of the love that Americans once had for each other." Paul Krugman: If you expect Obama to be FDR, best to look at the failures as well as the triumphs of ...
Early Morning Swim
Firedoglake —
... Obama and W. meet at the White House today.
Palin: "It's amazing that we did as well as we did."A new New Deal?
Reid comes to Short Ride's defense.
More socialism from the Bush administration.
Will Obama save us from the scary left?
Wingnut radio: if you thought it was angry before...
George Will feeling fragile on "This Week."
That Bailout Just Keeps Getting Bigger and Bigger...
Hit & Run —
... D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said in a letter to Treasury Secretary Henry Paulson that the Bush administration should consider expanding the $700 billion financial rescue to include car companies. "A healthy automobile manufacturing sector is essential to the restoration of financial market stability," they wrote. Maybe, says Paul Krugman, a World War II-size jobs program will turn the trick: F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two ...
Foot on the gas
Political Animal —
FOOT ON THE GAS.... Not surprisingly, Barack Obama is getting all kinds of advice about how aggressive to be after taking office. A growing number of prominent voices seem to be saying the same thing: err on the side of being bold. Paul Krugman notes ...
China’s Stimulus In Perspective: Comparable U.S. Package Would Be $2.4 Trillion
Wonk Room —
Over the weekend China unveiled a “massive” $568 billion stimulus plan to “loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand.”
The announcement sent markets around the world soaring as it eased fears of a huge dropoff in Chinese demand.
This emergency spending by the Chinese government will invest “the equivalent of almost a fifth of its gross domestic product last year on infrastructure.” The $568 billion is approximately 18% of China’s $3.3 trillion 2007 GDP. ...
The Battle of the Pauls
Obsidian Wings —
by publius
Contra Krugman, Professor Paul Light in the Post urges Obama to think small:
Obama would be wise to recognize these limits on his first-year agenda. Instead of throwing a super-size agenda at Congress, he should start with a few tightly focused progressive initiatives that will whet the political appetite for more. His best ...
Open Thread for Night Owls, Early Birds & Expats
Daily Kos —
Audacity, a word made rather more popular than before by Barack Obama, has been spoken or implied - strongly or cautiously with multiple caveats - in the messages of several megamedia pundits the past few days. Along with some pushback of post-election propaganda by Republicans. Paul Krugman kicked it off with an argument for a new and bolder New Deal: The economic lesson is the importance of doing enough. F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy and with his legacy. My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 ...
George Will: ‘The First New Deal Didn’t Work’
Think Progress —
Economists on both the left and right broadly agree that the need for stimulative government spending is necessary to prevent a further collapse of the global economic system — just as the New Deal and the deficit spending of World War II restored the health of the global economy in the last century.
This morning on ABC’s This Week, conservative columnist George Will echoed the false right-wing meme that FDR’s New Deal policies made the Depression worse:
Before we go into a new New Deal, can we just acknowledge that the first New Deal didn’t work?
Watch it: ...
George Will: ?The First New Deal Didn?t Work?
The Hollywood Liberal —
George Will: ?The First New Deal Didn?t Work? Economists on both the left and right broadly agree that the need for stimulative government spending is necessary to prevent a further collapse of the global economic system — just as the New Deal and the deficit spending of World War II restored the health of the global economy in the last century. This […] Economists on both the left and right broadly agree that the need for stimulative government spending is necessary to prevent a further collapse of the global economic system — just as the New Deal and the deficit spending of World War II restored the health of the global economy in the last century. ...
The New Deal
Political Animal —
THE NEW DEAL.... A few days ago, Tyler Cowen had an op-ed piece in the New York Times questioning the efficacy of FDR's New Deal policies in addressing the Great Depression. The Heritage Foundation also recently went after the New Deal. Yesterday, on ABC, George Will summarized the conservative line nicely: "Before we go into a new New Deal, can we just acknowledge that the first New Deal didn't work?" Actually, no, we can't. Paul Krugman explained reality a few weeks ago, but since some political observers seem to have missed his piece, it's worth reemphasizing. The New Deal brought real relief to most Americans. That said, F.D.R. did not, in fact, ...
Are Progressives Out of Ideas?
The Next Right —
One of the main reasons bandied about for the GOP's decline is its lack of ideas. According to this re-telling, conservative think tanks once kept the idea pipeline freshly stocked, and it was this intellectual revival that underpinned GOP victories in 1980 and 1994.
The fact that this argument gets made internally shows that conservatives care more about ideas even when they (supposedly) don't have any than Democrats do when they are ascendant and (supposedly) chock full of them.
Witness my daily e-mail from the Center for American Progress: The New New Deal.
We are now engaged in a full-on debate over the return of nearly eight decades old economic ...
How Best To Fix Our Broken Economy?
Firedoglake —
Far-right pundits and their allies in the media, using the false and discredited "center-right nation" trope, parrot incessantly the notion that Obama had better not push any actions that they deem too lefty, especially where fixing the economy's concerned Meanwhile, a growing chorus of economists and other financial experts are advising -- no, insisting -- that Obama take immediate, bold, and sweeping measures, the very measures the righties deem anathema, to fix our broken economy. This means calling Grover Norquist's deficit bluff, which is based on the belief that a Democratic ...
Changes in money-wages and Amity Shlaes
Paul Krugman —
Not much point in going through Amity Shlaes’s latest : after having inadvertently revealed that she has no idea what Keynesian economics is, she’s back on the warpath against FDR, and me. The main line of empirical argument seems to be that FDR didn’t succeed in ending the Great Depression. Since that’s also what my side of the debate says — fiscal expansion was too cautious, and disastrously abandoned in 1937 — I don’t see what this is supposed to prove. But I think it’s worth pointing out why Ms. Shlaes thinks the New Deal was destructive of employment: namely, that it raised wages. Funny she should mention that — because the effect of wage changes on ...
Reacting Versus Responding
The Mahablog —
A wise person pointed out to me once that there’s a difference between reacting and responding. As it says here, reacting is a reflex, like a knee-jerk. Reacting is nearly always triggered by emotions — attraction or aversion — and is about making oneself feel better. Responding, on the other hand, is a thought-out and dispassionate action that is primarily about solving a problem.
By now it’s clear that the Bushies are a tribe of reactors, not responders. Their well-established pattern is not to acknowledge a problem until it bites their own ass somehow, and then they react, sometimes over-react, with “solutions” that (pick as ...
Thinking big
Political Animal —
THINKING BIG.... We've heard quite a bit from the president-elect and his transition team about the need for bold and determined action in response to the financial crisis, most notably in the form of a massive stimulus package, focusing on public works. How massive? As the crisis intensifies, the vision becomes even more ambitious ...
An increasingly ambitious stimulus
Political Animal —
AN INCREASINGLY AMBITIOUS STIMULUS.... Way back in the midst of the presidential campaign -- seems like a long time ago, doesn't it? -- Barack Obama talked about a $175 billion stimulus package. As the economy continued to deteriorate, the talked-about figure became $500 billion. Last week, the Wall Street Journal had an item ...
The right targets FDR
Political Animal —
THE RIGHT TARGETS FDR.... In keeping with the recent trend, Fox News personality Brit Hume became the latest in a series of conservatives to demonstrate bizarre confusion about the Great Depression. Hume insisted this morning that "the New Deal -- everybody agrees, I think, on both sides of the spectrum now, that the New Deal failed." He added, "President [Franklin] Roosevelt waged what could only be called a jihad against private enterprise." The right has been repeating similar nonsense for a couple of months now . It's demonstrably ridiculous, but that's not stopping them. David Sirota has written a couple of excellent items lately, responding to ...
Jim Hightower: Obama Must Be Even Bolder Than FDR
The Latest on Air America —
When Franklin Roosevelt was accused of being a traitor to his own privileged class, he jauntily replied: “I welcome their hatred.” He would feel right at home today, then, for FDR-haters are on the prowl once again, now led by right-wing think tanks and talk-show yackers who are busy rewriting history to belittle the achievements of Roosevelt’s New Deal. Their real target is Barack Obama’s economic recovery plan, which is largely modeled on the New Deal approach of government spending for roads, schools, parks, conservation, and other public works, putting millions of people to work on jobs that need doing. The official line of these naysaying popinjays was laid down last fall by ...
Shlaes strikes again
Political Animal —
SHLAES STRIKES AGAIN.... Over the summer, the Washington Post ran a piece from conservative writer Amity Shlaes, explaining that the national economy was fine, there was no recession, and that Phil Gramm was right to call us a "nation of whiners." Undeterred, in early December, the Post ran another piece from Shlaes, which argued that the federal government shouldn't try to respond to an economic downturn through stimulus investments. In late December, the Post ran yet another piece from Shlaes, repeating the same point, and arguing that FDR's New Deal did not improve the economy in the 1930s. It's been a month, so the Post decided it's time, once again, ...
McConnell vs FDR
Political Animal —
MCCONNELL VS FDR.... Why wasn't the Senate Republican caucus able to play a constructive role this week on economic policy? Because they simply perceive reality in a different way. ...Senate Minority Leader Mitch McConnell has the intellectual honesty to come right out and say that he's opposed to the concept that massive public expenditure will save a tailspinning economy. [...] McConnell's been respectful to Barack Obama, but he's pure hell on FDR, as evidenced by tonight's peroration on the stimulus: "But one of the good things about reading history is you learn a good deal. And, we know for sure that the big spending programs of the New Deal did not work. In 1940, ...
They didn't err on the side of too much
Political Animal —
THEY DIDN'T ERR ON THE SIDE OF TOO MUCH.... Back in November, Paul Krugman advised Barack Obama and his team to figure out what kind of stimulus the economy actually needs and then " add 50 percent ." As Krugman saw it, "It's much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little." That sounds reasonable enough. The Fed has already cut interest rates and extended credit. Congress has already cut taxes. The CBO nevertheless believes the economy will fall $1 trillion short this year, and another $1 trillion short next year. The point of the stimulus package is to help make up at least some of the difference to get the economy ...
Telling them what they want to hear
Political Animal —
TELLING THEM WHAT THEY WANT TO HEAR.... From time to time, I've suggested that congressional Republicans act as if they don't believe in reading books. I stand corrected . There aren't any sex scenes or vampires, and it won't help you lose weight. But House Republicans are tearing through the pages of Amity Shlaes' "The Forgotten Man" like soccer moms before book club night. Shlaes' 2007 take on the Great Depression questions the success of the New Deal and takes issue with the value of government intervention in a major economic crisis -- red meat for a party hungry for empirical evidence that the Democrats' spending plans won't end the current recession. "There aren't many ...
Don’t Go There
Suburban Guerrilla —
I can draw only one of two conclusions: Either the Obama administration’s economic advisers and their Congressional enablers are as dumb as a box of hammers and completely oblivious to the history of the first Great Depression, or they do know and are gambling with the nation’s economy anyway – because they’re afraid the Republicans might draw blood in the next election cycle:
WASHINGTON — Faced with anxiety in financial markets about the huge federal deficit and the potential for it to become an electoral liability for Democrats, the White House and ...
