Louis Menand and New Deal Denialism in The New Yorker

In short, FDR was popular because he handed out money. And started US involvement in a major war.

BenK @ 1: In short, FDR was popular because he handed out money. And started US involvement in a major war one year into his unprecedented third term.
Fixed your comment.

Oh man, I swear that had a tag.

Thanks (again), Eric for continuing to fight the good fight on this one. The problem is that those numbers, which reflect the ridiculous assumption that a job provided by the government isn’t a job, get repeated ad nauseum both by people, like Menand, who presumably don’t know better, and by dedicated, conscious agents of the New Deal denialist conspiracy, like Amity Shlaes, and then get read and repeated, ad infinitum, by other people, most of whom don’t know any better. As Mark Twain said, a like can travel halfway around the world while the truth is putting its shoes on.

BenK@1: FDR was popular, in part because, under his leadership, the federal government provided jobs for millions of Americans (it’s worth noting that Congress played a key role, too). I’m sure we all await your astute observations about how this was somehow a moral abomination.

I thought “like” might be intentional, as the term is used on Facebook. : )

There’s such a fine line between typo and clever!

I have no dog in this fight, but weren’t the war economy and the subsequent reshuffling of the international balance of powers to the advantage of the US the major factors in the economic recovery, rather than the New Deal?

Even with the uncorrected data set, the employment situation was still a lot better than what it had been in 1932-33. 14.6% is a lot lower than 25% unemployment (and the 9% unemployment rate in the corrected set was lower still).

It’s a pity Roosevelt and the Democrats briefly lost their nerve for it in 1937-38, causing unemployment to go back up again. Krugman talked about it, and it was the same problem that the Japanese fiscal spending had in the 1990s – they’d start spending, it would cause a little boomlet, but then they’d back off and things would drop back into stagnation.

The runaway downward spiral, which occurred from 1930 until FDR took the country off the gold standard upon coming into office in 1933 was unbelievably frightening. The 25% unemployment statistic scarcely conveys the fear. 25% was also the rate of full-time employment — 50% of the non-farm labor force was part-time, many of them held on by employers because firing someone was a death sentence. The farm labor force was mired in often hopeless poverty by dysfunctional markets and rapid technological advance, which advance was proving to be immiserating. The New Deal was no great shakes as a Keynesian reflation of the economy, but it was stupendous as a restructuring of the “deal” ordinary Americans got from gov’t, from banks, from employers and big business. Industrial wages rose during the New Deal years of the GD. Farm incomes stabilized and began growing. FDR was popular, because he was successful in restructuring the economy to be less predatory and hazardous. A minimum wage. Fair labor standards. Respect for unions. Protections for farmers. Etc. lots of reforms

Menand probably found the 14.6% figure in the Ira Katznelson book, Fear Itself, which he was reviewing (full disclosure: I have the Katznelson book, but I’ve let my New Yorker subscription lapse, so I don’t have access to the Menand review). The figure appears on p. 346 of the book (thanks, Amazon.com for your look inside this book feature…you beat Google books on this one). Katznelson footnotes a .pdf from the Bureau of Labor Statistics, which seems to have changed the url for this file (once one knows what one is looking for, it’s easily searchable on the BLS webpage). It’s also available using the old url from the internet archive (http://www.archive.org). It’s a table of “Employment status of the civilian noninstitutional population, 1940 to date.” And the first figure is that infamous 14.6%. The table says very little about how the number was calculated (though it presents some breakdown of how employed people were employed). But it’s the BLS, which gives it an air of objectivity.

At any rate, the reappearance of these bad numbers in Katznelson and Menand is a great example of the problem. Once bad numbers appear in credible sources, they are very hard to root out of the scholarly conversation, let alone broader public discourse. Many more serious historians are likely to repeat the 14.6% unemployment figure because Katznelson mentions it in passing than will do so because idealogues like Amity Shlaes spend entire careers actively promoting crap like this.

“I have no dog in this fight, but weren’t the war economy and the subsequent reshuffling of the international balance of powers to the advantage of the US the major factors in the economic recovery, rather than the New Deal?”

Remarkably, the events of the 1940s had very little effect on the US economy in the 1930s.

I also meant to add: as far as I can tell, the 16.9% figure doesn’t occur in the Katznelson book (so Menand must be getting it from some other source).

As late as 1938, the second world war had failed to generate growth in the American economy.

Keynesian economics works whether building a school house or a tank, so the WWII saved the economy argument is a non sequitur.

Equating building schoolhouses in Appalachia with building artillery to knock down school houses in Europe overlooks something very important.

Ok, here is Paul Krugman:

“What actually brought the Great Depression to an end was the enormous public spending program otherwise known as World War II.”

I wonder if Menard or Shlaes would consider themselves unemployed if they were to join the Council of Economic Advisors?

Speaking of unemployment and employment, maybe Menand should resign his job as staff writer at The New Yorker and just do his day job as a professor in the Harvard English department. In an era when good jobs are scarce, isn’t it maybe a teeny bit selfish to hog two good jobs for oneself?

The use of the word “morally” is really quite unfair to Darby here, it is indefensible and should be amended.

Contrary to your characterization, that quote from Lebergott does not indicate that he thinks that people who painted murals for the WPA are in the same category as concentration camp inmates. He’s simply distinguishing, whether you agree with this or not, “regular work” from “emergency work.”

Although I’m not an economist, it so happens I was personally acquainted with Stanley Lebergott, though I haven’t spoken with him in many years and I don’t even know for certain whether he’s still alive (the last I knew, he was in poor health and had retired from his academic post). His politics became conservative, yes, but I am certain he would never intend to make a moral comparison between the New Deal and the Nazi concentration camps.

Tyler Cowen 03.03.13 at 3:26 pm

“The use of the word “morally” is really quite unfair to Darby here, it is indefensible and should be amended.”

Bullshit. He does do that equating, and furthermore pretends quite fraudulently that a very large number of people who were helped by government program were in fact not helped, and probably hurt.

LFC:

“Although I’m not an economist, it so happens I was personally acquainted with Stanley Lebergott, though I haven’t spoken with him in many years and I don’t even know for certain whether he’s still alive (the last I knew, he was in poor health and had retired from his academic post). His politics became conservative, yes, but I am certain he would never intend to make a moral comparison between the New Deal and the Nazi concentration camps.”

I don’t mean to harsh on you, but there *nothing* less reliable than a personal testimony, when the subject’s writing is available. If somebody wrote nasty things, then they are nasty, despite a vast army of friends and colleagues who will swear otherwise.

One of the things that I find interesting is that people look at the election results, which were incredibly overwhelming, hand-wave them away. And I don’t mean ‘interesting’ as a compliment, here.

Eric R.: Well, we will have to agree to disagree on how to interpret that quotation.

Barry: “There’s nothing less reliable than personal testimony…”
With all due respect, that’s a lot of crap. I not only knew Lebergott, I knew people who knew him very well. You may not think that has anything to do with how to interpret a passage of writing, but I do.

Anderson @40: No work of scholarship is perfect. The use of a single, questionable number from a generally reputable source (the Bureau of Labor Statistics) doesn’t prove that Katznelson’s book isn’t worth reading.

Just to clarify my position:
I’ve now read Eric R’s October 2008 post which he linked. I see the point that counting people in WPA or other similar programs as unemployed creates a misleading picture, understating the degree to which New Deal programs helped people, specifically by giving unemployed people work.

When Lebergott published Manpower in Economic Growth (1964) — a book I don’t have on my shelves and so don’t have access to right now — I don’t know exactly why he decided to count people who were getting paychecks from New Deal programs as unemployed. According to the reproduced quotation, Lebergott seems to have thought the distinction between “regular work” and he what he calls “made work” or “emergency work” is significant, but his decision to count things in this way does end up understating the beneficial effects of the New Deal programs. It does not seem to be the most helpful way to construct the series, not if one wants to know what effect the New Deal actually had on people’s lives. (Again, I haven’t read Manpower in Economic Growth and I’m just going on the quotation and Eric’s post.)

Lebergott’s reference to the German “labor-force camps” and Soviet
“labor camps” in the quotation is, I would say, unfortunate, inasmuch as it could perhaps be read as drawing or implying some kind of ‘moral equivalence’ between those labor camps and the “made work” or “emergency work” of the New Deal. All I can say is I very much doubt that Lebergott intended to suggest or assert, as the OP puts it, that “people working for the WPA were morally the same as concentration camp workers in Germany in the 1930s.” But the quote is, at best, inartfully worded and is open to more than one interpretation.

Here for instance, just this weekend I think, is Christina Romer on the minimum wage increase. And she is supposedly on the side of the angels. (But she also has views that differ from Rauchway’s on the Great Depression…monetarist mostly.)

“Rather, economic analysis raises questions about whether a higher minimum wage will achieve better outcomes for the economy and reduce poverty. …”

Solow Growth Model …Wikipedia

Don’t see any PWA-building-parks-labor factor in there anywhere.

Bob: from the link in 50 (the paper “discovering” the 3 million misclassified workers), it sounds like the reason for it was that those originally responsible for the national accounts methodology–the practice predated Liebergott’s work–were interested in knowing how many jobs need to be created to get back to “normal,” where normal meant no emergency worker corps:

Besides bureaucratic inertia which carried forward the earlier treatment of state work-relief recipients, the misclassification of emergency workers can be attributed to an implicit definition of unemployment as the difference between the normal labor force and those employed in normal jobs. The pioneering estimates by the National Industrial Conference Board (NTCB) aimed at estimating how many jobs would have to be created in order to get back to a normal situation of no depression and therefore no emergency government labor force. Measuring jobs-to-be-created leads to different treatment than measuring people without work who are seeking it.

Interesting–I didn’t know that about the Conference Board.

Solow Growth Model …Wikipedia

Don’t see any PWA-building-parks-labor factor in there anywhere.

What specific forms of capital or labor do you see in there?

LFC: “All I can say is I very much doubt that Lebergott intended to suggest or assert, as the OP puts it, that “people working for the WPA were morally the same as concentration camp workers in Germany in the 1930s.” But the quote is, at best, inartfully worded and is open to more than one interpretation.”

I would say *very* inartfully worded. At the least. Given a choice, I can’t see too many such ‘government workers’ from the Reich and the USSR deciding to stay there, if offered the ‘morally equivalent’ choice of working for the US govt.

Megan McArdle: “Alex Tabarrok takes Eric Rauchway to the woodshed and spanks him so hard my butt hurts. As a general rule, it is a bad idea to title an exceptionally misleading and/or ignorant post “Stop lying”. ”

Somebody quipped that if *your* butt hurts, then *you* have been spanked.

And additional comment, which Brett @15 pointed out: “Even with the uncorrected data set, the employment situation was still a lot better than what it had been in 1932-33. 14.6% is a lot lower than 25% unemployment (and the 9% unemployment rate in the corrected set was lower still). ”

Quote from the article: “When Roosevelt ran for reelection in 1936, the unemployment rate was 16.9 per cent, almost twice what it had been in 1930.”

This is a rather interesting quote. Why would an honest man use 1930 as the baseline?
This reminds me of a very dishonest commenter on another blog dissing Obama with a series of comparisons – Jan 2008 vs. Jan 2013.

If Menand was honestly taking the stats at their face value, and not coming in with a standard right-wing-economist-disses-the-New-Deal hack piece, that he *still* manages to ignore the ‘fact’ that unemployment had decreased quite a bit, after 3 years years of a horrible increase resulting from a trashed global economy. Which, of course, would have put massive obstacles in the path of reconstruction. That’d be a sweet piece of work for any president. And Menand (possibly) doesn’t honestly see that while wondering about a blowout election – IIRC, the most blowout election ever seen, in terms of raw vote percentages.

The deal with the unending series of right-wing economists reminds me of a quote from a poster here once about John Lott: ‘he’s not been caught lying, but an awful lot of dogs had to eat an awful lot of homework for him to be telling the truth’.

Similarly, a whole bunch of people in a field have had to remain awe-inspiringly ignorant of the basic facts of the matter. Just a simple sketch of GNP by year would reveal that Roosevelt did something, dramatic and effective.

I wonder how many of these economists could draw such a sketch?

I’d like to thank x trapnel for looking at the Darby paper — which I didn’t do — and for pointing out @59 that the counting of emergency workers as unemployed comes from a method that predated Lebergott and was not something he devised (which is not to defend the method, just noting).

Lebergott was an economist but really an economic historian. He worked in govt, at the civil servant level, before moving to academia, so he did not have the typical career trajectory of an academic economist today. He published a lot, including an elegant set of essays Wealth and Want (1975) , which I had my disagreements with; The Americans: An Economic Record (1984); and Pursuing Happiness: American Consumers in the Twentieth Century (1993). His political views moved to the right and I certainly disagreed with him on various things but his work (as mcmanus guesses in the course of his rather rude remarks) was respected. (Lebergott and I are not at all the same generation [I was a child in ’64 when the bk in question came out], but I knew him a bit because he was in my parents’ circle of friends/acquaintances/etc — before he moved to academia.)

Btw Barry @65 — Menand is not an economist.

p.s. Not excusing what Menand wrote, just a factual correction since you (Barry) referred to him as a right-wing economist.

Menand is a cultural historian whose work deserves the greatest respect. There is no reason whatsoever he shouldn’t review a book about the Depression.

I am disheartened that no one here has addressed the Katznelson book as a whole.

as mcmanus guesses in the course of his rather rude remarks

Rotfl. My “pale” starts somewhere around Christina Romer, and I try not to indulge the sordid vice of “disagreeing” with anyone to her right. I am told it makes you blind, grows hair on your palms, and causes insomnia.

I was hoping to bait a New Keynesian to come around and discuss gov’t spending, infrastructure, and public capital.

The Politics of Incivility

“The New Deal had succeeded only in reducing unemployment from 13 million to 9 million. It was the war that put almost everyone to work,”

Well known right winger Howard Zinn, in the people’s history.

The umlaut is really annoying and unnecesarily precious.

Much of what annoys me about the FDR hagiography is how the union movement is turned into a secondary actor. Without the CIO, the 30s would have looked different.

“It’s not an economic history either, afaik.”

Meh. You write a book on the politics of the New Deal, you’d better learn some economic history. Same as you’d better acquire some military history before you write about FDR’s 3d term.

(But they don’t do that either. People keep repeating the same myths about Midway and Stalingrad, for ex, instead of noticing any of the recent work.)

LFC: “Btw Barry @65 — Menand is not an economist.”

OK ; my comments about right-wing economists were really general.

Seconding Anderson here, and repeating the fact that using 1930 as a baseline to judge FDR is dishonest. Unless cultural historians are exempt from mere chronological responsibility.

Barry, I’m not sure what you’re arguing here. Point is it’s difficult to dismiss Katznelson’s book on the back of one minor mistake. It’s even more problematic if you’re going to do that without having read the book.

FWIW what I think that what Lebergott is saying is that people on government programs should not be counted as employed because that’s the sort of sleight of hand that totalitarian regimes pull. While it’s not a compelling argument, with an obvious logical fallacy, it’s also not fair to extend it to say that he thought that government programs were morally equivalent to labour camps. It’s also worth bearing in mind that this was written in 1964, at a time when only the fruitiest of fruit loops would think of using words like “tyranny” about US government, or imply that gun controls would clearly lead to the enslavement of the population, labour camps etc.

It was in response to your comment @83 seconding Anderson . Your Canada comment was posted at the same time as mine so got in between..it doesnt really matter though

rf 03.04.13 at 3:57 pm

” It was in response to your comment @83 seconding Anderson . Your Canada comment was posted at the same time as mine so got in between..it doesnt really matter though”

Ah. Well, when one is considering why FDR was reelected given that conditions in year X compared to year Y, the fact that FDR was elected after year Y, and after years of disaster, is not a minor mistake. Second, he already breezed over the fact that, even given the bad sources, the unemployment rate was already substantially reduced.

@rootless #75

“Only”?

@Mpowell, 91:

Right; and I don’t get it. Have always read his stuff in the NYer, and would have guessed that he was, himself, a New Deal Liberal.

I am disappoint.

In May of 2007, the unemployment rate was 4.4. Now, it’s 7.9. That Obama guy has just made things worse!

http://data.bls.gov/timeseries/LNS14000000

@84

“Please meditate upon the proximity and relative sizes of the US and Canadian economies, and you will achieve enlightenment.”

Barry,

My enlightenment was simply that a seperate study of unemployment in Canada during the 1930s would be a helpful check on studies of US unemployment during the 1930s.

As you pointed out later, the US and Canadian economies were and are closely linked.

Agreeing with LFC @100. And adding that (at a guess) the people in prison are very likely to be unemployed if not imprisoned, so that this is a serious trim.

And as others have pointed out, a higher percentage of the population incarcerated means a higher percentage of the population engaged in the prison-industrial complex.

“Personally, I’ve noticed that too many liberals will take the other side in an argument, so long as that ‘other side’ is to the right (hit them with an actual leftist argument, and they’re staunch defenders of anything which is less left).”

Until recently, the left critique of the New Deal was that it was too weak, too business friendly, and did not produce full employment until the war. It was also uncontroversial in left and labor-left circles that much of what is called the New Deal was not Roosevelt legislation, but labor insurrection – which produced a rapid increase in wages. However, such caveats appear to be now considered Shalesian Rightism.

Though in no way counter-evidence to Keynesian-ism, the New Deal was not always a “success”. In some ways , it eerily parallels the Obama stimulus. There is an analysis that Keynesian-ism was tried and found successful in a number of places under different ideological guises (British Conservative, Nazi, Social Democratic) and that in the US the Depression was deeper and lasted longer than most countries. The problem with the New Deal is that is wasn’t enough stimulus to actually end the Depression (key pieces of the early phase were blocked by SCOTUS*) and then there was the retrenchment in ’36. And though while TND was necessary Keynesian medicine, the doses were too low and sufficient stimulus did not arrive until WWII. It is perhaps the ultimate testimony to the inherently dysfunctional nature of the US state that it couldn’t get it’s act together even to save Capitalism – even when the “reform” party was getting near 70% majorities in Congress. (And the fact that TND is touted by American liberals as a rosy success story just underlines a general cluelessness about the difficulties of reform here.)
*There also seems to be a popular misconception that the FDR “court packing” challenge to SCOTUS resulted in a legal victory when instead it was largely a tacit one – something conservative jurists don’t forget – i.e., that there is nothing in irrevocable in law (and certainly no amendments) that prevents the US from reverting to a pre-FDR interpretation of the Commerce Clause.

As I read the quite long and detailed review by Louis Menand, one of the main arguments of Katznelson’s book is that the Fair Labor Standards Act of 1938 and the attempted soldier-voting legislation of 1942 marked the beginning of the Southern Democratic alliance with northern conservative republicans that later took shape as Nixon’s “Southern Strategy.” Do Eric Rauchway or any of Menand and Katznelson’s other detractors here disagree with that? Or do they just stop at the initial paragraphs?

I don’t see an attack on liberal icons. I see a myopic territoriality. Also, Eric Rauchway states in his little Oxford guide to the Depression that FDR’s agricultural policies were misguided in not forseeing that the future lay in industrial farming and that farm states had excessive representation in congress anyway.

When I was young there were small farms all over in what is now suburban NY and LI , NJ and Penna. I had lots of opportunity to jump in haylofts and see cows being milked and sheep being sheared. In the North (unike the on the Southern latifundia), where farmers had cooperative associations and some slight protection against crooked landgrabbers and greedy bankers, farming offered a semblance of a dignified life for the families of the kids I went to school with. Frankly, I don’t prefer the suburban sprawl and huge agribusiness that replaced them are all that great (or humane). This seems to me a larger and more debatable proposition than the gloating and handrubbing over a few percentage points that I see going on here. Yet no one seems to find it worth wasting their breath on it.

Brad DeLong @104
It might not be wise for me to point out that the people actually in the camps found very important differences between being in a Nazi Labor Camp (Masurian Lakes), a Nazi Concentration Camp (Dachau), and a Nazi Extermination Camp (Auschwitz)…

Yes, something like this point had also occurred to me. But it was Eric Rauchway in the OP who used the phrase “concentration camps,” so I thought it best, in the context of the point I was trying to make, not to get into the admittedly very significant differences between concentration camp, labor camp, and extermination camp. The question I was trying to address was did Lebergott in that footnote intend to compare the New Deal, in moral terms, to anything Nazi or Soviet, and as I indicated, I strongly suspect the answer to that question is no.

The question I was trying to address was did Lebergott in that footnote intend to compare the New Deal, in moral terms, to anything Nazi or Soviet, and as I indicated, I strongly suspect the answer to that question is no.

He had a choice about what comparisons to use, a choice from a wide range of examples (e.g. British poor houses, etc) and he chose to use the two most odious examples he could.

I think Lebergott at one point was a New Dealer himself. (When I have more time I will try to check on this definitively). As I mentioned upthread, he worked in the US government, I think the Labor Dept, before becoming an academic (at Wesleyan in Ct.). It’s vanishingly unlikely that in 1964 he had become an adherent of the views of the John Birch Society. And as James says @87: “It’s … worth bearing in mind that this was written in 1964, at a time when only the fruitiest of fruit loops would think of using words like ‘tyranny’ about US government, or imply that gun controls would clearly lead to the enslavement of the population, labour camps etc.”

What can the descendants of these same farmers look forward to except dealing meth or working as prison guards — or as shift workers cleaning motels – or as “handumen” and part-time gun dealers — our “industrial” future.

Clearly he was re-elected because he was an agent of Satan.

Manpower and Economic Growth After Fifty Years an extended review in context by Robert Margo, Eh.net

mcmanus @123

The link looks interesting.

emergency government labor force

Glossary:

Emergency (adj.) – inherently un-American, excusable only in an emergency (an emergency such as the American capitalist system having collapsed again and needing to be nursed back to some semblance of health)

Government labour force (n.) – state-funded non-governmental labour force (this can only ever be an ’emergency’ labour force at best).

Emergency government labour force (n.) – a group of people who are forced to work on pain of starvation. These differ from so-called ‘wage slaves’ under capitalism since the offer of work comes from teh State. They are thus much like the inmates of GULAG labour camps or Nazi concentration camps. An informal corollary is that the work done (such as building bridges and roads) is not really valuable or part of the True Economy. (See also: ‘Fiscal Multiplier >1’)

96: Krugman said that World War II brought the Great Depression to an end, and that’s true, but a bit too parochial. World War II ended a major world’s recession, and not just as an enormous public spending program, but also by depletion and destruction of stock and industrial capacity

No, this isn’t true. The UK, for example, grew every year from 1931 to the outbreak of the war. Then it dropped back into recession from 1944-1947 – entirely understandably, given how much production had been turned over to the war effort, how much capital had been destroyed and how many men and women had been mobilised. Continental Europe was an economic disaster area under German occupation.

“The UK, for example, grew every year from 1931 to the outbreak of the war.”

Right. Not a recession is the technical sense, but you know what I mean… A general glut, a depression.

ponce @110 – not a contradiction and I am not sure of the point. That the New Deal was fairly inadequate stimulus (both in terms of what was needed and relative to other places it was tried) I thought was a commonplace (but I and the idea could be wrong).

There was a private sector recovery in the USA starting in 1931, before the New Deal. Roosevelt was lucky. There are some charts at Sydenham’s Law of public expenditure and economic growth.

“This successful, purposeful confuson about FDR’s economic policies certainly calls into question the supposed liberal dominance of the press and academia…”

Al Gore summed up global warming denial quite nicely: ‘if there were hundreds of billions of dollars riding on whether or not we went to the moon, that would still be in doubt’.

Right wing economists have been on a crusade against the New Deal since it started, and the Great Depression is a slap in the face to ‘self-correcting markets’ theory.

Barry, the economic history is clear, there was a recovery before the New Deal – see Sydenham’s Law. This does not mean that the social programs and many other aspects of the New Deal were without value, it just means the government cannot spend our way out of a recession.

“… it just means the government cannot spend our way out of a recession.”

No, it doesn’t; your logic is not flawed, it’s missing.

BTW, first that website is incredibly hard to read; let the guy who set it up know that. Second, I can’t find anything on a quick pass which proves your point, and third – there is no ‘law’ here except what some guy says.

Barry, look at graph 4. The red line for private sector growth starts rising in 1931, it starts falling as the blue line for public spending rises. So there was a recovery before the New Deal and this was reduced by public spending.

MPA Victoria and Barry, you can check the data against any public spending website – try http://www.usgovernmentspending.com.

Spending increases in 1934 See: http://www.usgovernmentspending.com/spending_chart_1930_1940USb_13s1li011mcn_F0t
GDP increases in 1933 See: http://www.usgovernmentspending.com/spending_chart_1930_1940USb_13s1li011mcn__US_Gross_Domestic_Product_GDP_History

Private sector part of GDP increases even earlier when inflation is taken into account. See graph 4 in the linked article above.

But by the logic of your argument John, they wouldn’t have to give it up?

Really though, what part of their economic miracle would the Germans have to give up for the south? Or is this just another chapter in economics and international politics as a morality play?

Or to put another way, if you could put aside ideological, political etc factors, how would you begin to resolve the Euro crisis and what affect would that potentially have on the German economy? That’s a genuine question, I’m curious.

“Sydenham’s law”.
@John,
Is this this ‘law’ widely cited by anyone other than yourself?

ajay, German deficit was 0.8% of GDP in 2011 http://countryeconomy.com/deficit/germany A deficit to die for as Obama or Cameron might say.

Samr, check the links to public spending data @143 and use a spreadsheet to check the results yourself using the data given in the main article Sydenham’s Law

rf, the key to the Euro crisis is in the paper Europe: common money – political union?:

“So what does the future hold? Anyone who believes in the role of a single currency as a pace-setter in achieving political unity (Europe will be created by means of a single currency or not at all (Jacques Rueff 1950)) will regard the decisive step as has having already been taken. This does not provide an answer as to how the “rest” of the journey should be approached. ”

The paper also foresees the current dilemma:

“There can be no turning back, as the failure of Monetary Union would not only be extremely costly from an economic point of view, but the political fallout would be unimaginable and would be tantamount to a catastrophe. The brightest and most respected former sceptics have conceded this much and now share the conviction that, once it has been set in motion, European Economic and Monetary Union must not fail.”

The formation of the United States of Europe is in progress, this has little to do with economics, it is the rebirth of the Holy Roman Empire which died in the 17th century. Given that background I would just duck and hope we Brits are not buried by it – we can probably provide offshore financial services.

John @ 135: “There was a private sector recovery in the USA starting in 1931, before the New Deal. @143: “. . . there was a recovery before the New Deal and this was reduced by public spending.”

John, get a grip on yourself. Look at the raw data, presented at the bottom of the webpage you linked to, “Sydenham’s Law of Public Expenditure and Economic Growth”. From 1929 to 1933, total GDP and private sector spending declined by huge increments from year to year, with turnaround only beginning in 1933, with the FDR coming into office and the end of the gold-standard.

Here are the numbers, for “private-sector” spending, from the webpage:
1929 91.92
1930 79.28
1931 64.33
1932 46.26
1933 43.78

If there was even a hint of private sector recovery in 1931’s freefall in private sector spending, I cannot see it in the annual data.

From 1934-37, both public and private spending increase from year-to-year, in tandem.

If you were to look very, very closely at events over the period, 1929-33, — more closely than the website data you cited permit — you’d be able to pick out three or four very tentative “breathing spells” of false hope in the accelerating downward plunge of the business cycle roller coaster. What’s driving the business cycle roller coaster on its downward plunges, 1929-33, is the collapse of the banking and financial system in an extremely rapid deflation. Waves of bank runs and loan foreclosures were driving a private sector credit collapse and debt-deflation began to feed on itself from 1930, in a downward spiral of employment and business. Total government spending increases over the period, driven by the need to respond to the collateral damage.

Taking a delta from annual data, and treating it as a derivative from continuous data, is, frankly, a nonsense technique. All you get is noise. There isn’t that much information in annual GDP statistics to begin with, and looking for correlations to prove broad theses, while ignoring the vast, rich panoply of the historical record, is bound to be crazy-making. So-called economists of all ideological stripes do it all the time, and all it proves is the degeneracy of the economics profession.

That ‘Road to the middle class’ test from the link is bizzare.. although I ‘m happy with my 22%

Why what’s your view on him Tim? (I’m sure another thread derail wouldn’t be minded?).. He seems a bit of a mixed bag no? I know little of his politics really, but agree with Juan Cole’s take on his FP towards the Middle East..would lead me to be sceptical of him in general..having said that it’s good to see the ‘cold eyed sober realism’ pose of the US FP establishment/academic nexus once again dissolve into hysterical, hyperbolic nonsense..it seems to be only maintainable when someone else’s village is burning (see also 9/11, Iraq, the EU technocracy)..

rf @157:

Bizarre is right. The Doge of Venice!?

BW @160:

No disagreement here. But the Road to the Middle Class site was so obviously unhinged, I figured I’d pass along a link.

Yeah it’s a nice take..in fact it inspired my above mini rant after professor Dan Drezner wrote Grandin off as a useful idiot..last time I heard him call someone such a thing was Mike Moore in 2003..food for thought..fwiw, imo regional experts and people who actually come from/live in the countries being talked about generally have a more nuanced and interesting perspective than DC policy heads and global governance experts..a shocking conclusion I know!

One reason why the GD was “mysteriously” so much worse in the USA than in other industrialized countries ( re @132 & 134) was that the US was the only industrialized country to go into the GD with no form of social insurance in place. And we are still lacking, especially with regard to children.

Its a very simple point. Recovery occurred before the New Deal.

http://pol-check.blogspot.com/2013/01/sydenhams-law-of-public-expenditure-and.html
Spending increases in 1934 See: http://www.usgovernmentspending.com/spending_chart_1930_1940USb_13s1li011mcn_F0t
GDP increases in 1933 See: http://www.usgovernmentspending.com/spending_chart_1930_1940USb_13s1li011mcn__US_Gross_Domestic_Product_GDP_History

Look at these references again. They are all near enough raw data, not some theory. Its a fact, Roosevelt made some very welcome social changes but he was lucky on the economy, it had already got better and he took the credit.

Bruce Wilder, the inflation adjusted figures tell a different story, take another look at the webpage.

LFC: ” I don’t think analogies between post-WW2 European integration and the Holy Roman Empire are illuminating on any level except maybe the purely rhetorical.” . Then you would fail to understand the breakup of Yugoslavia, the Czechoslovak breakup, Basque, Welsh, Catalan, Corsican, Walloon, Scottish separatism and Irish nationalism, to name a few. The Holy Roman (Germanic) cultural zone is as obvious in Europe as the Bosnian was in Yugoslavia.

I think John must mean the Austro-Hungarian Empire. Not that the rest of what he says follows from that. Maybe it has something to do with the Thirty-Years’ War.

@ 113 @ 126

Did the British government include poor-house residents in national employment numbers? That is the issue.