Tuesday, February 10, 2009

Ah, If Only Women Could Run the Country....

I've been trying over the past week to get excited about this stimulus package, but I look at the number of job losses and I get depressed. Our country sinks further into oblivion and yet our lawmakers continue the schoolyard politics.

Apparently, everyone in Washington is an economist now. Everyone is an expert on the New Deal polices and how they did or didn't work. Forget the years of study, forget your degree. Now all you need is to be rich enough to run for political office. That's the only qualification you need to make such judgements.

President Obama recently said such while introducing his economic team (men and women who are actually economists by profession),
You’ve got some economists and some folks who think they’re economists. By the way, these days everybody thinks they’re economists.”

Our lovely Senator Mike Crappo from Idaho said recently, that he rejects most economists' view that government spending stimulates the economy. He said the bill fails even economists' standard. Even though "I don't profess to be an expert."

Ah, the truth will set you free. If only some more on Capitol Hill would make such comments, instead of bringing up what they consider FDR's failed New Deal policies. Senate Minority Leader Mitch McConnell recently said (and according to Carlos at Thinking or Sitting experienced what he called New Deal denialism),

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, unemployment was still 15%. And, it's widely agreed among economists, that what got us out of the doldrums that we were in during the Depression was the beginning of World War II."

Huh, are you now an expert, Senator McConnell?

Even President Obama thought it odd, has all of the Congress and Senate been taking a correspondence course in economic history?
And in fact there are several who have suggested that FDR was wrong to intervene back in the New Deal. They're fighting battles that I thought were resolved a pretty long time ago.”

So is it true I wonder, did FDR's plan indeed fail? Was it in fact WWII that drew the US out of the Depression and FDR's policies only made it worse? Let's look at some numbers.

GDP, the most common tool economists use to measure the health of the economy looked like this from year to year:
1929 (start of Great Depression) - 8.813
1930 - 8.054
1931 - 7.537
1932 - 6.557
1933 (FDR takes office in March) - 6.473
1934 - 7.173
1935 - 7.812
1936 - 8.828
1937 - 9.281
1938 - 8.961
1939 - 9.684
1940 - 10.534
1941 (US enters WWII) - 12.337

Do number's lie? I thought number's were indeed, like Switzerland. They remain neutral, and hold no political agenda.

An historian, Jonathan Alter, a senior editor at Newsweek and author of “The Defining Moment,” about FDR’s first 100 days, said:

"It’s ridiculous. [McConnell] needs to spend a little time in the library in Kentucky and read more than the right wing critiques. What was he imagining, that tax cuts got us out of the Depression? It was GOVERNMENT SPENDING that got us out of the Depression. First, FDR was able to cut the unemployment rate from 25% to 14%. Now they might not consider that successful (unless) you were in that group of millions and millions of Americans that were put to work and had their hope restored. Overall the New Deal was tremendously successful.”

Nobel Prize winner for Economics Paul Krugman, stated this about the effect of FDR's listening to Republicans in 37-38 when he tried to balance the budget (note the dip in GDP during those years on the graph above):

"Note in particular that in 1937-38 FDR was persuaded to do the “responsible” thing and cut back — and that’s what led to the bad year in 1938, which to the WSJ crowd defines the New Deal.Implications for Obama: be inspired by FDR, but don’t imitate him slavishly. In particular, your economic policy should be bolder, not more cautious.”

Now seriously, to say FDR's policies had no influence on the Depression is just ludicrous. But at the same time, I believe that the beginning of WWII did eventually influence the numbers. The war meant jobs, even before the U.S. became involved militarily. But if you look at the graph, the arrow was already heading up long before then. And in truth, since I wasn't even alive during those strenuous years, I look to the people who were. They kept FDR in office for three terms!

I'm sorry, but contrary to the supposed, self-made economists that make up the Republican legislative branch of our government right now, belittle him all you want. FDR did something right. His actions were the bridge over a disastrous tidal wave.
Admit it.
Accept it.
Move on.
Let's get the country moving again.
***I'm kidding about the women thing. We'd probably be just as bad..


Ben and Christina said...

Well said- this is turning into such a political game it's rediculous. Now I guess some Reps. are voting yes in the house- but probably just because if it fails they can say they voted no (the first time) and if it succeeds they can say they voted yes (the second time). There's actually fewer tax cuts in the revised bill then the original, so they can't be happier about it, but they looked like such babies and obstructionists that now they are trying to say they are great compromisers (my opinion here).

I am glad the revised bill has at least some moneys put back in for education (building schools). That ticked me off to high heaven when that horrible Maine woman insisted everything about education be struck out. Can you hate children any less, you mean Maine woman??

Please understand, I am not upset at all with Republicans in general-I think we can all understand that this package is necessary but a tough pill to swallow, and that there is a great deal of job creation in it which is important. I am just frustrated with the politicians playing their political tricks instead of trying to solve the problem.

I was thinking that WWII did indeed help our country get out of the Great Depression. Obviously, I don't want a WWIII to get us out of this mess, so I was trying to think of what new field could create and sustain jobs to stabalize our economy. I think going green is the answer- and I am quite pleased there are a lot of green jobs in the stimulus package.

Whether we like or loathe Obama, let's pray this works for all of those millions of people out of work! If it fails, we are ALL in trouble.

Lula O said...

What I find interesting is the glitch between years 37-38. Is the fact that it coincides with when FDR tried to balance the budget, just a freakish coincidence? What other explainations are there I wonder...

Bryce and Mandy said...

I am so glad you brought this up. I find it crazy that so many are turning on FDR saying he made the Depression longer. Where did this idea come from? I took a million history classes and I haven't ever heard this theory before. Don't you think at least one professor would have mentioned this theory?

I don't know, maybe it is a new theory or maybe it is like the theory that the moon landing was faked and for some reason everyone is believing it.

Thanks for the graph. It is very interesting and proves your point very well. I do find it odd that as soon as FDR took office things started to improve and the dip is interesting too.

Apparently he must have been doing something right if people wanted him in there three times.