Krugman: Economic recovery plan must overreach to get results

[Doctor_J]

http://www.nytimes.com/2008/11/10/opinion/10krugman.html

"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.

...

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.” "

[Idealism]

1. There has been so much debate over this point

and still most economists I have read are at odds over what really brought our economy out of the Great Depression: the war or the new deal. I would be interested to find Ben Bernanke's perspective on this idea, as he is one of the top Depression experts. Anyone know if he ever answered this question?

[Doctor_J]

2. I would tend to not listen to anyone whose policies got us to this point

Any right-wing "economist" should be ignored, if not ridiculed, for making any suggestion on getting us out of this mess.

[PinkoDonkey]

7. Exactly.

Anyone still touting laissez-faire capitalism should be looked at with the same degree of respect and deference as a Stalinist.

[enlightenment]

3. Perhaps in this volume?

http://press.princeton.edu/titles/6817.html

"Essays on the Great Depression" Bernanke

Here's the TOC:
TABLE OF CONTENTS:

Preface vii
PART ONE: OVERVIEW 3
1. The Macroeconomics of the Great Depression: A Comparative Approach 5
PART TWO: MONEY AND FINANCIAL MARKETS 39
2. Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression 41
3. The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison - With Harold James 70
4. Deflation and Monetary Contraction in the Great Depressim An Analysis by Simple Ratios - With Ilian Mihov 108
PART THREE: LABOR MARKETS 161
5. The Cyclical Behavior of Industrial Labor Markets: A Comparison of the Prewar and Postwar Eras - With James L. Powell 163
6. Employment, Hours, and Earnings in the Depression: An Analysis of Eight Manufacturing Industries 206
7. Unemployment, Inflation, and Wages in the American Depression: Are There Lessons for Europe? - With Martin Parkinson 247
8. Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries - With Martin Parkinson 255
9. Nominal Wage Stickiness and Aggregate Supply in the Great Depression - With Kevin Carey 276
Index 303


eta: corrected spelling

[Juche]

4. Its exactly what we need now anyway

We desperately need to fix our electric grid, build alternative energy, repair our transportation system and infrastructure, get wireless broadband available everywhere, etc.

This is a blessing in disguise because if public spending will help us get out of this mess, its killing 4 birds with one stone. We fight global warming, make our economy more cost competitive globally, improve safety & quality of life and we ride out this economic mess.

[judasdisney]

5. Bush/Rove always "overrequested" esp. on triple-sized tax cuts in '01-'02

[annabanana]

6. This is an important hunk 'o history that deserves to be

revisited now.

[femrap]

8. No matter how one looks at it....

WW2 ended the Depression. It is so very, very different now.

[angstlessk]

9. It was not the WAR that ended the depression it was the SPENDING we put

out and the number of people working directly for the government (military), or indirectly for the government (weapons industry). This could happen sans a war if we spent that much on greatly needed infrastructure as they spoke of up thread.

[femrap]

10. We need a few major goals...

to spend on...say the Electric Car. This was already done by Saturn and every one of them were shredded except one. Solar power plants would be another. Insulation of existing homes, apartments, schoolsetc.

But it always seems that the boys want to fight each other...but this war will be nuclear.

[Azlady]

11. Kick