Help The Starving Rich People First

by publius

Shorter Amity Shlaes: 

The history of the New Deal shows that Obama should give rich people a lot more money.

For a slighter longer take, see Dean Baker:

[Shlaes's] discussion is contradicted by the known facts of the era. Roosevelt's New Deal Agenda lowered the unemployment rate from 25 percent in 1933 to 10 percent in 1937. None of us would be happy with 10 percent unemployment, but it is difficult to complain about policies that reduced the unemployment rate by an average of almost 4 percentage points a year. The annual growth rate over these four years averaged 13.0 percent. It is always possible that the magic of the market would have done better, but there is no reason that we should believe so.

Schlaes is correct in pointing out that things turned bad again in 1937. The Blue Dogs of the Roosevelt era won sway and got Roosevelt to cut spending and raise taxes. This threw the economy back into a serious recession, just as any good Keynesian would have predicted.

Comments

[bob in fla]

"None of us would be happy with 10 percent unemployment, . . ."

It's apples & oranges. LBJ changed the formula for deciding the unemployment rate in the 60s, narrowing the definition to decrease the number by ~1/2. From what I've read elsewhere, if unemployment rates were figured today like they were in 1937, the current rate would be about 13 - 16%. So 10% by those standards would be better than what we see today.

[long island girl]

ever since, unemployment has always been a problem . It's the lowering the rate that's quite a challenge. Unemployment rate is quite getting higher, we'll just hope our new President Obama will find a new strategy on finding ways to make it lower.