but a lot of people painted rocks!
Specious counterarguments to specious arguments, and here we go:Responding to a column from Amity Shlaes arguing that the New Deal prolonged the Great Depression, Dean Baker writes that, nuh-uh, the New Deal made there be jobs, so there:
...the discussion is contradicted by the known facts of the era. Roosevelt's New Deal Agenda lowered the unemployment rate from 25 percent in 1933 to 10 percent in 1937. None of us would be happy with 10 percent unemployment, but it is difficult to complain about policies that reduced the unemployment rate by an average of almost 4 percentage points a year. The annual growth rate over these four years averaged 13.0 percent.This is called "changing the subject," and it is, again, exactly what dead-ender Bushies did with the Holy Mythical Surge. The notional point of government intervention in the economy is the restoration of markets. Government gives away massive assloads of cash, and commercial vitality switches back on. If government solves the problem of ten million unemployed by paying five million people to dig holes and five million people to fill in holes, then, yes, government created ten million new jobs. But do those jobs work as advertised? If the government gives away massive assloads of free cash, does GM unmake shitty cars and suddenly produce good ones? Does Circuit City somehow un-die?
I challenge any takers to read Baker's post and find the part where he breaks down how many jobs came from straight from the New Deal, and how many came from the stimulation of the private market by the New Deal. Because otherwise, we can have full employment right now, and no need for further discussion: Everyone should just work for the government, problem solved. ("President Chris Bray reduced unemployment by one hundred percent with America's glorious new make-believe government-run 'tractor factories'!!!!!")
The question is not, "can government spending create jobs and personal spending?" -- because duh, if you give people massive assloads of free cash to dig holes and fill them in, more jobs and spending will result. But is free government money a path to a real and sustainable private economy, or does it just create its own kind of bubble? And what happens if the nation's creditors say that, no thanks, we decline to help the United States take on a few trillion dollars of extra debt?
And, above all, can government really fix the collapse of a form of notional prosperity built on credit cards by pulling out the national credit card?
Lots of spending equals lots of spending, nothing more. Maybe it leads to strong commercial markets. But it's not a given, and not all jobs are jobs; work created for the sake of creating work is welfare, and leads only to more welfare. I'm not opposed to welfare spending, if we're headed into a depression. But if that's what it is, call it that. Let's not pretend that free cash creates real jobs.
posted by Chris Bray @ 3:19 PM
2 Comments:
And, above all, can government really fix the collapse of a form of notional prosperity built on credit cards by pulling out the national credit card?
I'm a little wary of this line of thought -- though I agree with the rest of the post, particularly with the observation that what's really at stake is welfare spending.
To me, blaming the crisis on credit cards is like blaming the man who sneezes for destroying the house of cards. The problem is not the sneeze, it is the fact that you chose to make your house out of cards. I guess the war analogy equivalent would be blaming the failure in Iraq to an insufficient number of troops rather than the fundamental stupidity of the decision to invade. The former thinking leads to the surge; the latter to withdrawal.
Iceland's economy didn't collapse because some American family bought a flat screen TV too many. I tend to think of the primary cause of the crisis as the separation of institutional (banks, investment firms) risk from any underlying reality -- resulting in things like a perverse incentive to sell homes to underqualified people.
While I know some folks at the real-estate speculation end were devious, for the most part I think they were stupid. And the barriers ordinarily erected to keep the stupid from doing harm to themselves were systematically dismantled. And so I guess I don't have a problem with the government stepping in with welfare spending to tide the (some) stupid and (many) innocent over until the business crisis passes.
I also recognize that there is now tremendously underused productive capacity in the US economy right now, and there probably are broadly beneficial projects towards which that productivity might be directed. But on this point I suspect we disagree.
Anon @ 6:37 PM writes:
"And the barriers ordinarily erected to keep the stupid from doing harm to themselves were systematically dismantled."
Bingo ... an absolute bull's eye!
Then we have those who are not stupid by nature, but their avarice placed them in the stupid group, and while it's fairly tough to erect barriers to greed, at the end of the day, they're just stupid.
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