Believe those who are seeking the truth. Doubt those who find it. Andre Gide


Monday, February 2, 2009

A New Look at the New Deal

In my previous post, I made note of Paul Krugman's statement that "Everyone's looking back to the 1930s for policy guidance-and that's a good thing."

I think what he likely meant by this is that it is a good thing that everyone appears to acknowledge the self-evident fact of how FDR's New Deal policies lifted an unwilling American private sector out of what would otherwise have been a state of permanent stagnation; and how current policy should be designed with the knowledge of this experience firmly engrained in our minds.

It is certainly true that many people are looking back to the 1930s for current-day parallels. But obviously, not everyone shares Krugman's religion on this matter. Consider, for example, this recent piece by Professor Hal Cole (University of Pennsylvania) and Lee Ohanian (UCLA) in the Wall Street Journal:

How Government Prolonged the Depression

Pop quiz: Which U.S. president made a speech in which he acknowledged that the American economy had become a "concealed cartel system like Europe"? Hint: the speech was made in 1938.

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