Monday, January 25, 2010

Paul and Larry

Krugman, January 25, 2010:
So one case you can make is that Obama was just fated to have a bad first year. FDR had the good luck not to take office until more or less everything that could go wrong, had; the bank runs had already happened, the big decline in GDP was already nearing its end. Obama, by contrast, came into office early enough to take the blame for the continuing slump.

Me, December 23, 2008:
Roosevelt took office in 1933, more than three years after the trigger of the Great Depression. Obama, on the other hand, will take office only months after the trigger of this depression. Roosevelt thus did not have to take the blame for the half-measures and incompetent management that inevitably follow a true catastrophe. Obama, on the other hand, does not have someone like Hoover to point to and say, "Whatever we do, we know we can't do that."

3 comments:

  1. Obama was not necessarily fated to have a bad first year. He could have pointed at history and said "look what was necessary to stave off the Great Depression last time" and pushed for it, hard. With the right management, and with support from his party, he could then have cast the Republicans (accurately) as the people who stood in the way of recovery.

    Instead he sat around doing as little as possible.

    Of course, it's worth noting that both FDR and Hoover had actual leftists in office at the time, who genuinely pushed for serious efforts to rebuild the economy. We don't have those any more.

    (It's also worth noting that Hoover didn't exactly shy away from New Deal-style programs or even direct charity, he just tried too hard to limit their scope so as to avoid -- rightly or wrongly -- having the government compete with any surviving industry. In hindsight, that's an obvious mistake, but by the time it became obvious, it was too late to do anything about it. You can make a case that most of the ideas in the New Deal were present, albeit in weaker form, in Hoover's administration.)

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  2. After posting that first comment, I went and looked at the news, and Obama has announced a freeze on discretionary spending, which is going to hurt very badly. And in light of your post, that's interesting.

    During the pre-FDR Depression and New Deal, which is the only close parallel we have for the current problem, the economy was basically totally reliant on government spending for any faint hint of stability. Obama must know this, if he isn't an utter idiot.

    It's also true that, although no doubt the ruling class would love to reduce as many of us to poverty as possible, they cannot actually allow the U.S. to become a failed state. There would be nowhere to flee to -- we have a sufficient military presence (and would continue to have it, even in a breakdown) to force them to be extradited. So although Obama may not care about the rest of us, he must know he can't just let everything smash.

    We are left with three possibilities, none of them really good but two of them mildly intriguing:

    1. Obama really is just a scared idiot, and is caving in to the Republicans because he is out of ideas. In this case, it would be nice if he'd just admit it so we can give up now. (This is not one of the interesting options.)

    2. Obama has decided that the level of reform currently being considered is useless, and that proper reform won't be possible until things are worse than they are. He is pushing to make things worse as fast as possible in the hopes that the backlash will happen by 2011 and he can spend 2012 actually fixing things, thus avoiding pursuit by a mob with torches and pitchforks. (This is safer than you might think -- the Democrats are likely to retain control of at least the Senate until 2012.)

    3. Obama has decided that the best way to stymie the right wing is to let them have their way, sacrifice his own career at least for the time being (he has Carter's example before him), and try to time things so that things hit poor-people-eating-their-own-children rock bottom two years into his Republican successor's first term.

    Personally, I incline towards option #1, but (as with so many things) I'd love to be wrong on that.

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  3. During the pre-FDR Depression and New Deal... the economy was basically totally reliant on government spending for any faint hint of stability.

    And FDR himself damn near wrecked the recovery by being too fiscally conservative in (IIRC) 1936. And we don't know what would have happened were it not for the Second Imperialist War, which eliminated competition from Europe, put us in a severe productivity shortage, and afforded an opportunity for vastly increased American colonialism and imperialism.

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