So that's where we are right now, the Republicans and the Tea Partiers have Obama over the same legislative barrel where the Conservative Coalition had FDR in 1937-38. FDR was not able to impose his will on Congress to get them to do what was necessary to bring America out of the Depression; it took the massive government stimulus that was WWII to do that. Likewise, Obama is not able to impose his will on Congress to get them to do what is necessary to keep us from going into the second dip of the Great Recession. I can only pray that it won't take another world war or similar catastrophe to pull us out of it.
Apparently, President Obama has not learned the historical lesson of the Great Depression, and the unmistakable political parallels that forced its prolongation despite FDR's best efforts. The Republicans and the Tea Partiers didn't learn the lesson either, and almost certainly don't realize how closely they're copying the playbook of the Conservative Coalition and its efforts that resulted in the second dip of the depression.
But the man in the White House is the one who bears the ultimate responsibility for the all-but-certain second dip of the great recession, if for nothing else than his failure to educate the American people about this crucial lesson of history. Sadly, it looks as if we're all doomed to repeat the lesson.
Article comments
— go to most recent comments1 - Gordon Trenchard
Your source is Wikipedia? Seriously?
And the economic theory you repeat from them isn't current, it's totally out of date. For at least the last decade the general belief among economists is that Roosevelt's spending took a serious recession and turned it into a depression.
Gordo
2 - joe
I think Obama can bring us out of this depression if only he could be Fdr. Unfortunately Obama was probably afraid of been branded a socialist and therefore gave the money to the bankers and the private sector who sat on it, instead of using the public sector to get us out of the depression. The stimulus money could have taken us out of the depression if only Obama had used some of the money for government projects and given the rest to us the consumers and asked us to go shopping.
3 - sorin
Yeah i guess wikipedia or google is the source. :) Good luck
4 - troll
the more that I read about the Depression years following the trough with their high growth rates the less apt I find comparisons with today's stalled-out economy
5 - roger nowosielski
Whatever the case may or may not be, Glenn, it is a good thing to see you writing an article on a subject that has been hotly disputed in the comments section. That's how it should be, and an attempt at articulation is always the best start.
And now that you've opened the proverbial Pandora's box, may the best man or woman win!
6 - Glenn Contrarian
Thanks, Roger - I'll take that at face value.
7 - Glenn Contrarian
To the editor -
The fifth paragraph - the one that begins with "In the United States" - should be blockquoted since it is entirely a quote. The fault is mine since I used italics instead of blockquotes and you did your best to take care of it. I'll try to remember to use blockquotes in the future.
Thanks -
Glenn
8 - Glenn Contrarian
For those who scorn my use of the Wikipedia, you should bear in mind that the writers provide references. For instance, if you'll check, the first paragraph that I quote is referenced from a book called Franklin D. Roosevelt and the New Deal (1963) p. 262-63, by William E. Leuchtenburg.
I realize that when you don't what my article says, it's a lot easier for you to use a broad-brush accusation and simply dismiss the whole because I used the Wikipedia. BUT you're being too lazy by half in that you're not checking to see what references are used by the Wikipedia.
Next time, dig a bit deeper before you start posting assumptions...because I'll call you on it every time.
9 - roger nowosielski
I meant it, Glenn, and no, I'm not your enemy.
10 - Kenn Jacobine
Glenn,
Your theory has so many holes in it I do not know where to start.
Here is a good one though. You say conservatives formed a coalition to force FDR to accept spending cuts. You also state that these same conservatives were for tax cuts. Yet the data (click on my name) indicates that federal receipts continued to increase through the decade. The fact is that FDR raised taxes enormously to pay for his programs. You give more credit to the conservative coaliton than it deserves.
After 3 years of FDR's policies the economy experiencing another downturn is a testament to the fact that all he did was reinflate the bubble. If the economy was that vulnerable to government spending cuts than the recovery was an illusion. All the malinvestment from the easy money policies of the Fed in the 1920's had not been liquidated like it needed to be for the economy to move on.
Obama is making the same mistake today. Spending cuts will bring about liquidation and recovery. He doesn't have the sense or courage to do it though.
11 - roger nowosielski
... then the recovery was an illusion.
12 - Glenn Contrarian
Kenn -
I'm in a bit of a hurry right but I'll help educate you on the numbers when I get the chance. But I do know this - your "bubble" theory cannot stand for the simple reason that our WWII industrial buildup was a government-driven economic stimulus writ large, and you know it. If your "bubble" theory were true, then we would have been driven into an even deeper depression as soon as the war ended.
And you know it.
13 - roger nowosielski
Wasn't there a dire need in the immediate aftermath of the war for industrial production in all sectors to rebuild the war-devastated nations (and the corresponding demand)? And which country but America could better fill the need?
14 - James Pound
The government can get us out of a recession Hmm
The government spends money they initially took from us. hmmm
If they did not take money from us there arguably would be more money to spend.
If we had more money to spend people would spend it.
If people spend their are jobs and more money to spend.
Wash Rinse Repeat
So the government takes our money (taxes (aka legalized theft)) and causes us to be dead broke after bills and the higher cost of things, we don't spend, jobs get lost, government spends money (our money) to create new jobs and says it is doing us a favor. Given that their are inefficiences in any transfer of money, wouldn't it be better to NOT give the government money and just spend it ourselves, thus staving off the depression before it starts?
Or is it that the government wants to feel useful so they create a problem (recession) via taxes that they can then solve via stimulus.
Hmm
15 - roger nowosielski
Sounds like a vicious circle to me.
16 - Kenn Jacobine
I was in the Smokey Mountain National Forest tonight. Contractors were there repaving a road that was perfectly fine. Your tax dollars wasted.
Glenn,
Did Americans who worked during WWII spend their money on consumer goods? No. There was rationing and a wartime economy. People saved their money and this is what was needed all along to spur recovery. What was produced during the war was a bubble. It was called armaments. But people saved their money and thus capital was available to expand the economy after the war.
BTW - we could do the same thing today without war. Its called market based (higher) interest rates, and allowing the malinvestment to be liquidated. In this way people would have incentives to save more money to rebuild the economy and businesses and investments that are bogging balance sheets down would be brushed aside thus allowing winner businesses to hire again. To believe that we can solve our problems by comtinuing with the same policies that got us into trouble in the firat place is insanity.
17 - roger nowosielski
Was that the only source which energized American economy after the war, just individual savings?
Just asking.
18 - Kenn Jacobine
Why don't any of you liberals scream out about the practices of the Fed? I mean because of Ron Paul the Fed is now divulging the extent of its corruption. $1.2 trillion additonally was given to Geithner's buddies on Wall Street.
19 - roger nowosielski
Don't count me among that illustrious group. I was always opposed to Obama's appointments of the Wall Street guys on general principle.
And insofar as Greenspan and Bernanke are concerned, I've always seen then as engaging in Orwellian doublespeak.
20 - Kenn Jacobine
Well, New Deal programs which fixed prices artificially high like the NRA and AAA were long gone.
Keynesians believed a mammoth stimulus was needed after the war in order to employ all the returning soldiers. Instead government spending was slashed and the economy took off. The exact opposite happened.
21 - roger nowosielski
After the war? Aren't you stretching it a bit? Why would Keynesian economics be of any use when it's been specifically designed to to deal with crises?
22 - Glenn Contrarian
Roger -
Wasn't there a dire need in the immediate aftermath of the war for industrial production in all sectors to rebuild the war-devastated nations (and the corresponding demand)? And which country but America could better fill the need?
This is actually a quite common misconception - but Britain's industrial sector was anything but a shambles. While the Battle of Britain did some damage, overall, Britain's industrial center was hardly hampered at all, and all through the war they boosted their output as much as they were able.
While her northeastern quarter was devastated, the rest of France did not suffer too greatly - Paris and its surrounds, in particular, was also largely untouched - I strongly recommend a great historical book called "Is Paris Burning", which showed how Hitler was demanding that Paris be blown to bits before it was surrendered, but the German general in charge of Paris refused to do so...which was why the liberating troops still had their parade through the Arch de Triomphe.
After the first couple months of disaster in Operation Barbarossa, Stalin ordered the gargantuan task of moving all that was left of Soviet industry east of the Ural mountains...and they did it.
Even Italy and the rest of southern Europe didn't suffer that badly - yes, there was significant damage, but nothing like the devastation that stretched from the Rhine to the line that stretched from the outskirts of Leningrad to the outskirts of Moscow to the banks of the Volga.
While Europe's manufacturing sectors suffered greatly, those same sectors bounced back very quickly. The great German armaments maker Krupp is known today as Thyssen-Krupp (and you've probably ridden in many Thyssen-Krupp elevators). The Mitsubishi cars that go on our highways are direct descendants of the Mitsubishi Zero that shocked our ill-prepared pilots for the first several months of the war. And then there's the Volkswagen, the 'people's wagon' that was first manufactured in Nazi Germany.
The point?
The rest of the world had suffered greatly - but human beings show a great capacity for recovery. Indeed, the manufacturing sectors of nearly all the developed world recovered fairly quickly. We were the best off, of course, and we had the most prestige...although even by the end of the war we were still not always making the best of everything - our tanks really sucked, but we just had a lot more than Germany could field on the western front. Both Germany and Japan were just starting to produce submarines significantly better than ours. We all know that the ME-262, if Hitler had not meddled, might have changed the entire air war in Europe - we had nothing to compare, not even the P-51 Mustang.
Here's a site that shows the GDP's of the different nations from 1938-1945.
Yeah, WWII is my best subject - and Kenn is blowing Austrian-school smoke.
I'll end with a little history of the Marshall Plan:
The Marshall Plan was originally scheduled to end in 1953. Any effort to extend it was halted by the growing cost of the Korean War and rearmament. American Republicans hostile to the plan had also gained seats in the 1950 Congressional elections, and conservative opposition to the plan was revived. Thus the plan ended in 1951, though various other forms of American aid to Europe continued afterwards.
The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35%. Agricultural production substantially surpassed pre-war levels. The poverty and starvation of the immediate postwar years disappeared, and Western Europe embarked upon an unprecedented two decades of growth that saw standards of living increase dramatically. There is some debate among historians over how much this should be credited to the Marshall Plan. Most reject the idea that it alone miraculously revived Europe, as evidence shows that a general recovery was already underway. Most believe that the Marshall Plan sped this recovery, but did not initiate it.
Who opposed the Marshall Plan? The Republicans. I guess Kenn will now claim that the economic stimulus called the Marshall Plan actually hindered growth in Europe.
23 - Glenn Contrarian
Kenn -
Keynesians believed a mammoth stimulus was needed after the war in order to employ all the returning soldiers. Instead government spending was slashed and the economy took off. The exact opposite happened.
Yes, spending was slashed in the several years following WWII, from 1956-1951, and in 1952 the government started to significantly increase spending once more. Funny thing is, during the years of government austerity our GDP was ALSO slashed.
So...Kenn - if our GDP also dropped greatly - as it did - how, exactly, can you say that our economy "took off"?
Hm?
This is from a chart showing the GDP per capita from 1940-1970:
1942 11,999.11
1943 13,771.49
1944 14,705.52
1945 14,381.68
1946 12,675.67
1947 12,323.25
1948 12,645.35
1949 12,364.94
1950 13,224.86
1951 14,007.01
1952 14,296.55
1953 14,709.99
And here's the GDP from those same years, in millions:
1942 1,618,200
1943 1,883,100
1944 2,035,200
1945 2,012,400
1946 1,792,200
1947 1,776,100
1948 1,854,200
1949 1,844,700
1950 2,006,000
1951 2,161,100
1952 2,243,900
1953 2,347,200
And here is a chart of our government's budgets for those years.
Yep - government spending dropped dramatically from 1946-1951...and so did our GDP. But I guess in Kenn's world, this is known as an economy "taking off".
24 - roger nowosielski
You're being flippant, Glenn. Neither Germany, France or Japan could possibly compete. US had a monopoly on markets in terms of resources, labor pool, not to mentioned having suffered no devastation to speak of. Britain was no match either, because oil had become the major source of energy, while the UK's energy economy was coal-based, not only inefficient but quickly becoming obsolete. If you want me to provide you with sources, I certainly can, but I don't think you're that ignorant
25 - roger nowosielski
Cont'd
It wasn't until mid seventies that US hegemony in markets was seriously challenged, by Japan and Germany, in electronics and automobile industries. Never mind France, because you bringing it up only displays your ideological bias. It was since then that workers wages started being frozen, which trend continues till the present -- way before Reagan time. American business enterprise could no longer afford to be "good corporate citizen" because it was dog-eat-dog time. The rest is history, mergers and acquisitions during the Reagan era being nothing else but an icing on the cake, culminating in what's commonly referred to nowadays as "global economy."
So get off your high horse, Glenn, and don't be giving me any history lessons. Furthermore, I don't appreciate at all you being disparaging to Kenn, however you may disagree. Kenn is not a dummy, and whatever view he brings to the table, it deserves consideration, to say the least.
You say you pride yourself on being a gentlemen and above board. Well, you haven't been living up to that credo of late. It's time for a change.