Q. Did Keynesian economics, the stimulus spending, work in the Depression of the ’30s?
A. No. And I think history has really proven that to be true. Most economists agree that the thing that really worked, which is a sad commentary, is the war.
Benen goes out of his way to be insulting, while Yglesias (surprisingly) agrees with her answer. But both attempt to spin WWII as nothing more than a Keynesian attempt to get the U.S. out of the Depression.
Benen and Yglesias are big believers in huge amounts of government spending in order to get the U.S. out of it’s current economic funk, despite the fact that over $2 trillion has been spent on this and it still hasn’t worked (today’s unemployment numbers continue to show how the Democrats in the White House and Congress still don’t have a clue). But in order to justify their support for the failed hyper-spending by the federal government, they have to revise the historical record.
Now, it’s no longer unusual for right-wing voices to insist that the New Deal didn’t work. It’s an absurd position, belied by reality, but it’s hardly shocking anymore. Republicans went through a period in which they moved away from Hoover and accepted much of the FDR legacy — just ask Ike — but those days are over, and Hoover is back en vogue amongst 21st century Republicans. It’s crazy, but it’s true.
The reality is that the New Deal didn’t work (more on that later) and 21st Century Republicans, the conservatives, do not embrace the policies of Herbert Hoover. In order to counteract the stock market crash of 1929, Hoover went on a government spending binge, which led to increased deficits; to offset the deficits, he raised tax rates across the board, making things worse. Liberals like Benen are notorious for claiming that Hoover did nothing to stem the economic fallout from the 1929 crash from which the Great Depression resulted; unfortunately, the truth is that Hoover had the government do quite a bit, in the Keynesian mold, and things got worse.
Stimulus spending during the 1930s had little positive impact on the economy since there was in fact very little stimulus spending during the 1930s.
Is Yglesias kidding? That’s when FDR put together the WPA, the NRA (National Recovery Administration), the TVA, and all kinds of other A’s that were a part of FDR’s New Deal, which included billions upon billions in new government spending, in a much greater amount than Hoover. And like Hoover, FDR raised income taxes on the wealthy; and with the repeal of Prohibition, was able to generate revenue from taxes on liquor (that is what is called a tax increase). While some of the programs did reduce unemployment from its high point of 25%, it never got down to anywhere near 10%; in 1937, FDR introduced more programs, and more spending, which began a brand new recession that kept the Great Depression going. As with Benen, Yglesias has to engage in revisionist history, better known as lying, in order to claim FDR’s New Deal was in large part what ended the Great Depression. Angle is closer to being right than either of these two.
But then both get more stuck in their ideology and make it seem as if WWII was some kind of Keynesian exercise to get the country out of the Depression. Benen [emphasis from original]:
The Depression ended once and for all, thanks to World War II. That’s not an unreasonable assessment. But what does Angle think that means, exactly. In the first breath, she argued that Keynesian economics and stimulus spending were discredited. In the second breath, she argued that WWII boosted the economy.
But the first thought doesn’t match the second. The war was a shot in the economy’s arm because of all the spending. The government generated manufacturing on a scale unseen in American history, which put people back to work, got factories humming, etc. If Angle realizes the war improved the economy, how, exactly, does she think that happened?
I don’t think so. The huge increase in government spending had nothing to do with getting the U.S. out of the Great Depression, but to fight a war against those who attacked us (Japan) and who declared war on us (Germany, Italy). Production of goods for domestic purposes were redirected to manufacture goods to do battle. Those people who had been perpetually out of work for much of the previous decade had enlisted in the military, been drafted into the military, or had jobs to manufacture products for the military.
Yglesias, who links to Benen’s piece, throws logic and reality out the door:
The war is a textbook example of how deficit spending by the government can boost the economy by mobilizing real resources for some public purpose.
The last time I checked, lefties like Benen and Yglesias hate how much the U.S. government currently spends on defense. Both would love to redirect much of that spending, along with further taxation of the wealthy, to domestic policies they like. WWII wasn’t just some “textbook example” of how to boost the economy; as I said above, FDR redirecting the economy to go on a wartime footing had nothing to do with relieving the country from the effects of the Great Depression, but was done to win a war against a brutal and effective enemy. If anything, the FDR-led economy didn’t even fully recover until after he died and the war was over, and that was because the U.S. was the only country that wasn’t all that seriously affected by the war (we weren’t bombed). Plus, Republicans had taken control of Congress in 1946 and passed a series of bills (especially the Taft-Hartley Act) that actually helped the private sector and the economy recover following the Depression and WWII, even overriding vetoes by President Truman.
Getting back to Yglesias’ statement, FDR’s actions during WWII included a massive effort to get the entire country and every American prepared and able to defeat Nazi Germany, Italy, and Japan. Unlike a war, there is nothing domestically that measures up to a war that allows having the government spend copious amounts of tax dollars, especially dollars that have to be borrowed, to try to prop up the economy. Fighting a war is a function that must only be directed by the government, not the private sector; conversely, almost every single domestic functions can be done better by a fairly unencumbered (from the government) private sector. Considering the government did an awful job getting the country out of the Great Depression, and is doing a horrible job getting the country out of the current recession, Yglesias isn’t even close to being correct. For the government to do what Yglesias says needs to be done to get the economy out of problem would require the Constitution to be suspended in a way not ever seen in this country, not even during the Civil War.
Unlike Yglesias, Benen gets nasty towards Angle in his post, introducing more of his revisionist history (lies) [bold emphasis mine]:
The rest of the interview was relatively boilerplate — she wants to “pay back on the debt” and “reduce marginal tax rates,” blissfully unaware of the contradiction — and a reminder of why Angle is hard to take seriously.
But also note that the NYT asked if she’s “too conservative” for Nevada. Angle replied, “People have always said — those words, ‘too conservative,’ is fairly relative. I’m sure that they probably said that about Thomas Jefferson and George Washington and Benjamin Franklin.”
First, no, “they” didn’t. Second, we knew Jefferson, Washington, and Franklin; Jefferson, Washington, and Franklin were friends of ours.
Sharron Angle, you’re no Jefferson, Washington, and Franklin.
I find it hard to believe that demagogues like Benen know anything about Jefferson, Washington, and Franklin. Benen and other liberals like to hijack quotes from these three giants, but liberals have to take those quotes out of their real context in order use them to bolster the liberals’ positions. Angle may not be a Jefferson, a Washington, or a Franklin, but those three would never, in a million years, want to be friends of Benen and today’s liberals; I would bet that Jefferson and Franklin would update the Declaration of Independence to replace references to the British government of King George III with references to the federal government under King Barack, Duke Harry of Nevada, and Duchess Nancy of San Francisco.
Ironically, who is Benen serving in his vicious attack on Angle? The despicable Duke Harry Reid.
In the end, and despite all their efforts, both Benen and Yglesias show that Angle is right. Good job, Sharron. Jefferson, Washington, and Franklin would be proud of you.