Krugman - 1938 in 2010

[oxymoron]

Here’s the situation: The U.S. economy has been crippled by a financial crisis. The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously high. More action is clearly needed. Yet the public has soured on government activism, and seems poised to deal Democrats a severe defeat in the midterm elections.

The president in question is Franklin Delano Roosevelt; the year is 1938. Within a few years, of course, the Great Depression was over. But it’s both instructive and discouraging to look at the state of America circa 1938 — instructive because the nature of the recovery that followed refutes the arguments dominating today’s public debate, discouraging because it’s hard to see anything like the miracle of the 1940s happening again.

Now, we weren’t supposed to find ourselves replaying the late 1930s. President Obama’s economists promised not to repeat the mistakes of 1937, when F.D.R. pulled back fiscal stimulus too soon. But by making his program too small and too short-lived, Mr. Obama did just that: the stimulus raised growth while it lasted, but it made only a small dent in unemployment — and now it’s fading out.

And just as some of us feared, the inadequacy of the administration’s initial economic plan has landed it — and the nation — in a political trap. More stimulus is desperately needed, but in the public’s eyes the failure of the initial program to deliver a convincing recovery has discredited government action to create jobs.

More: http://www.nytimes.com/2010/09/06/opinion/06krugman.html?src=me&ref=homepage

[sandnsea]

1. Wow, Obama did six years in one

FDR had just started getting the WPA going in 1935, two years after he took office. By Krugman's own admission, Obama has gotten us to a level of economic stability that it took FDR six years to get to, WITH the WPA.

I think that means Obama is doing just fine.

[lfairban]

2. That makes one of you.

n/t

[pnorman]

4. Well. here's one more!

That "mini depression" of 1938 was largely due to FDR drastically scaling back his New Deal projects. It was largely a defensive measure against his internal enemies, the Southern Democrats. It took preparations for the upcoming war, to get the economy back on track, In other words, it went from Classic Keynesianism to War Keynesianism

[nofurylike]

3. well said, sandnsea. thank you! nt

[Hannah Bell]

5. When fdr took office, unemployment was 24%. Two years later, it was down 3 points to 21%

When Obama took office, unemployment was 7%.

Two years on, it's almost 3 points higher.

http://www.bls.gov/news.release/pdf/empsit.pdf


So what are you talking about?