Nice chess move on Reasons part, at least in this segment. Their ideology isn't popular across the demos so they have to get clever.
We have to be careful in politics by distinguishing positions based on ideology (government intervention was the wrong theoretical approach) and positions based on empirical analysis(New Deal didn't work). This might be one of those situations.
Go back and watch it again. See if notice the big flaw.
They cite Harold L. Cole and Lee E. Ohanian's study. Who found that New Deal policies extended the great depression:
The policies were contained(my emphasis--Jim) in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.
Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.
Notice the straw man in Reason's argument... "The New Deal." Somehow making the NIRA and all of the New Deal policies into a single entity out of whole cloth rather than a hodge-podge of policies--some which worked some which didn't.
I even think Cole and Ohanian's key words: contained; means they would have to agree(though maybe not ideologically per say).
But conservatives have made a clever chess move and created a fictitious New Deal that never existed. Creating a "New Deal"(with creepy music in the background) and using selective data and examples is true to form for how conservatives work.
I think this is some kind of type/token mistake, and a confusion on the part of the general public who may not have the time to dig into the history of the great depression. Also its tough because the new New Deal types such as myself don't always clarify we don't mean all of the New Deal (do we really have to?).
The point is I don't know of a single economist that supports the idea of implementing all of the policies contained within this abstration known as "The New Deal". (Though honestly I load boxes for a living and don't have a PhD in economics so readers can feel free to enlighten me if said economist exists.)
Tyler Cowen notes:
The traditional story is that President Franklin D. Roosevelt rescued capitalism by resorting to extensive government intervention; the truth is that Roosevelt changed course from year to year, trying a mix of policies, some good and some bad. It’s worth sorting through this grab bag now, to evaluate whether any of these policies might be helpful.Eric Rauchway over at the edge of the American West agrees:
I’m pleased to join forces with Tyler against the wicked NRA-revivalists when they show up, and against the now actually existing opposition on the right, who would fight against these clear conclusions.
concurring when Tyler says that:
The good New Deal policies, like constructing a basic social safety net, made sense on their own terms and would have been desirable in the boom years of the 1920s as well. The bad policies made things worse. Today, that means we should restrict extraordinary measures to the financial sector as much as possible and resist the temptation to “do something” for its own sake.
Krugman agrees:
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 cautious.
About the New Deal’s long-run achievements: the institutions F.D.R. built have proved both durable and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would be if the New Deal hadn’t insured most bank deposits. Imagine how insecure older Americans would feel right now if Republicans had managed to dismantle Social Security.
and goes on to point out the flaws in the ideologues, such as the folks at Reason...
Now, there’s a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it’s important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.
That said, F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the ’30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful “not because it does not work, but because it was not tried.”
This may seem hard to believe. The New Deal famously placed millions of Americans on the public payroll via the Works Progress Administration and the Civilian Conservation Corps. To this day we drive on W.P.A.-built roads and send our children to W.P.A.-built schools. Didn’t all these public works amount to a major fiscal stimulus?
Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.
And F.D.R. wasn’t just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.
In fact Cole and Ohanian note the unlikelyhood of some of these policies getting implemented themselves:
"So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."
So why the crisis?
Maybe the folks at Reason disagree with all of the New Deal policies and find all of them to be a threat? Do the folks at Reason really want to go old school and bring back child labor? Ending child labor was one of those evil New Deal policies. Those lovey-dovey liberals thought we should move towards a more civilized society by way of creating a stronger more dynamic economy. By ending the abhorrent practice of poor children "freely" chosing to sell their labor on the open market, and getting those children in schools we created more social capital, reaping the rewards that a more educated workforce brings you(do the evils of spreading the wealth around ever end?).
But I highly doubt they do. Though I think it's likely that some people who watch this won't realize this...
Eric's post hits on this absurdity of saying the New Deal didn't do some good. He notes that those who argue about the failure of the New Deal surely have to contend with, "the people saved from starving and homelessness by CWA, WPA, and CCC." The people at Reason may argue that in the long run some abstract unimplementable "hand's off" approach would work best. But are they truly denying many were helped by policies from the New Deal?
I see such a hands off at any cost policy position as sacrificing humans suffering now for the utopia of unrestrained capitalism, which sounds like the ideals of a guy who also thought the ends justify the means. Not to mention the question of how these free market types would pragmatically get the population, or the buisness community, to adhere by market fundamentalism? I can never seem to get an answer from right-libertarians on that one.
So while there may be ideolocial arguments from Reason, maybe they can be a little more open about it rather than try to disguise theory inside of a policy debate to scare people.
For more on this subject:
The Great Crash and the Onset of the Great Depression by Christina D. Romer
Stop lying about Roosevelt’s record
With Tyler against the strawmen and conservatives.
Econbrowser: The New Deal and the Great Depression
Keynes to FDR, February 1, 1938
An Open Letter to President Roosevelt from John Maynard Keynes
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