Jonathan Chait has written a lengthy but excellent article rebutting the current conservative argument against Obama’s plans to stimulate the economy. It deconstructs The Forgotten Man by Amity Shlaes, the book endorsed by Republican luminaries as an argument against the so-called “New New Deal.” (This is not an accurate term, as no one is arguing for a complete emulation of every New Deal policy Roosevelt enacted, but it will do.)
One thing I come away with is this: Government spending stimulates the economy. This is inarguable. It worked when the government bought public works projects in the New Deal. It worked when the government bought bullets and tanks in World War II. It worked when the government bought planes and ships in Reagan’s administration.
The Republicans are arguing for cutbacks in public spending, conveniently returning to the position of “fiscal responsibility” now that they are out of power. Generally, I want balanced budgets and a smaller government too, but cutbacks during a financial crisis this would be irresponsible. I would rather have more debt than another Great Depression. And if the government must spend money, I would far rather we buy better infrastructure than more guns.
The Republicans today are parroting Herbert Hoover, who warned that the spending of the New Deal portended “gigantic socialism.” The comments after the article linked above do nothing to help the Republicans argument–They are barely coherent, badly spelled, full of name name-calling, aggressive statements of faith without any supporting facts.
It’s a shame, really, because the Democrats need strong, thoughtful opposition if the country is going to succeed in the long term. We need at least two parties with intellectual honesty and good sense, and the Republicans aren’t doing their part right now.
In any case, if you have any interest in the current argument over the economy, read the article linked above. It’s well worth the time it takes to get through it.
Paul Matzko
June 26, 2009 at 12:55 am
It was Hoover rather than FDR who started most of the major components of the "fiscal stimulus" package accompanying the New Deal. He boosted federal spending, funded a large expansion in public works, and raised taxes to cover the outlay. Even worse, Hoover tinkered with interest rates and signed into law the Smoot-Hawley tariffs.
Sure, FDR expanded upon Hoover’s start, but it is historically inaccurate to set up Hoover as a laissez-faire stalwart in opposition to an interventionist FDR.
For a great classic analysis of the true effect of government intervention in the market during the Great Depression I would recommend Murray Rothbard’s "America’s Great Depression." Historian Thomas Woods has also done a great rebuttal of the notion that government spending stimulates the economy more efficiently than private spending. http://www.mises.org/media.aspx?action=category&ID=79
J.D. Harper
June 26, 2009 at 4:55 am
Indeed, a black-and-white depiction of either presidency is an oversimplification. Page 3 of the article linked above points out the factionalism of the Roosevelt administration, and how it see-sawed between trying to balance the budget and trying to stimulate the economy.
Which of the lectures on the page you linked to contains the rebuttal you mentioned?