Econoblog, Arnold Kling vs. Brad DeLong, excerpt:
The New Deal is a mythical event in history. Just as we revere the
constitution as the basis for our government and we revere Abraham
Lincoln for ending slavery and preserving the union, we are supposed to
revere the New Deal as somehow providing the basis for our modern
prosperity. Yet the policies of the New Deal are quite a mixed bag, to
say the least. Most were discarded by 1950. The survivors include
agricultural policies that were almost certainly wrong then and are
almost certainly wrong now. Most of the financial regulations, such as
interest rate ceilings on bank deposits, proved unworkable by the
1970s. Social Security, and its offspring Medicare, are going to be the
next great financial crisis in this country.
Can you guess which of the two wrote that?
The Kling-on?
Conflating the problems of Medicare with Social Security… I didn’t see that coming.
RE: Jeff Goldman
There was a deflation of 40% when Martin Van Buren was president. Van Buren resisted intervention letting wages and prices free fall in response. Production actual grew and unemployment was low. American society did not disintegrating. Many of the New deal policies contributed to the problem in that they attempted to stop the free fall in wages and prices. The fall in wages and prices was needed because there was less money.
The government tried to do something to mitigate/end the depression. So the government was obviously wrong, evil and stupid.
Floccina: The difference is that during Van Buren’s term, the country didn’t have a (relatively) large communist-leaning faction and a (relatively) large fascist-leaning faction. Though I think many of FDR’s policies were bad ideas individually on their own terms, the whole package combined with FDR’s rhetoric made people feel like they were being taken care of within the system, and so didn’t need to overturn it. Which doesn’t mean that the New Deal was the best program that could have accomplished that, or that its legacy programs make a ton of sense. But “It kept us out of fascism” is a non-trivial endorsement.
Jadagul, there was a communist party in the United States that got a tiny percentage of the votes, but there was no large fascist movement that could have feasibly come to power. The U.S was no more at risk of fascism than Canada or Australia.
I think that the ironic part of this debate is that I had been under the impression that DeLong had had a surreptitious policy of ignoring Kling. I can’t tell you how many Kling posts I have seen responding to a DeLong post and, as far as I could tell, I had never seen DeLong retort or even acknowledge Kling’s existence.
I wonder if the WSJ people were being mischievous.
Germany came out of the depression earlier than the us because Hitler was the first Keynesian.
I find it amazing that these two debated the depression without saying a word about Keynesian economics are comparing the modern mixed economy to the actual record of the US in a small government world.
Kling writes:
What would have happened in the U.S. without the New Deal? My father answers with one word: Fascism.
Given the climate of the time, which included intense despair alongside revolutionary fervor, a government that was seen as doing nothing could not have survived.
That’s a position that
your co-blogger Alex was pretty scornful of a couple weeks ago.
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