Louis Menand and New Deal Denialism in The New Yorker

by Eric on March 2, 2013

In the current New Yorker, Louis Menand says there is a puzzle about how Franklin Roosevelt got reëlected:

When Roosevelt ran for reëlection in 1936, the unemployment rate was 16.9 per cent, almost twice what it had been in 1930. Yet he won five hundred and twenty-three electoral votes, and his opponent Alf Landon, eight. When Roosevelt ran for the unprecedented third term, unemployment was 14.6 per cent. He carried thirty-eight states; Wendell Willkie carried ten.

When Menand says unemployment was 16.9 and 14.6 percent when FDR ran for reëlection, he is counting federal relief workers as unemployed. According to the economist who constructed the series Menand is using, people working for the WPA were morally the same as concentration camp workers in Germany in the 1930s. If Menand realized that, the puzzle would go away: FDR and his New Deal were popular because they gave people jobs and sparked a rapid recovery.

For more, please see here.

{ 174 comments }

1

BenK 03.02.13 at 8:05 pm

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

2

phosphorious 03.02.13 at 8:28 pm

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

. . .sparked a rapid recovery.

3

Alan Bostick 03.02.13 at 8:37 pm

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.

4

Hogan 03.02.13 at 8:51 pm

Why is he using 1930 as the benchmark, rather than 1932 or 1933?

5

Hogan 03.02.13 at 8:51 pm

Oh man, I swear that had a tag.

6

Hogan 03.02.13 at 8:52 pm

rhetorical question tag. fncking angle brackets, how do they work?

7

Ben Alpers 03.02.13 at 8:53 pm

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.

8

Ben Alpers 03.02.13 at 8:54 pm

“a lie can travel halfway around the world while the truth is putting its shoes on.”

Preview, please!

9

David Hobby 03.02.13 at 9:06 pm

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

10

Substance McGravitas 03.02.13 at 9:06 pm

It still works.

11

Ben Alpers 03.02.13 at 9:10 pm

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

12

P O'Neill 03.02.13 at 9:46 pm

And the one time the New Deal didn’t work was when FDR got taken in by the 1930s Austerions — after his 1936 election — and went for a fiscal contraction in the name of deficit cutting that turned out to be, er, contractionary.

13

novakant 03.02.13 at 10:30 pm

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?

14

Anderson 03.02.13 at 11:12 pm

That’s really disappointing coming from Menand.

15

Brett 03.02.13 at 11:22 pm

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.

16

ponce 03.03.13 at 2:18 am

@13

“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?”

The U.S. economy has never grown as fast as it did under FDR in the 1930s.

Except under FDR in the 1940s:

http://www.bogleheads.org/forum/viewtopic.php?p=770443

17

Bruce Wilder 03.03.13 at 3:39 am

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

18

Dr. Hilarius 03.03.13 at 4:22 am

Driving about in rural, and sometimes not-so-rural, areas I have stopped to take a photo from an old concrete bridge and noticed, stamped into the concrete, a note that this bridge was built by the WPA (Works Progress Administration). Not only did FDR put people to work, he put them to work building needed infrastructure, some of it in areas bypassed by the gifts of capitalism. We are still reaping the benefit from many of these “make work” projects.

19

Ben Alpers 03.03.13 at 4:51 am

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.

20

Ben Alpers 03.03.13 at 4:55 am

I meant to include the url that Katznelson footnotes:

http://www.bls.gov/cps/cpsaat1.pdf

21

Herschel 03.03.13 at 5:13 am

“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.

22

JP Stormcrow 03.03.13 at 5:17 am

With notably rare exceptions (the US federal government, for example) employers are completely represented in those numbers.

23

Ben Alpers 03.03.13 at 5:50 am

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).

24

Mitchell Freedman 03.03.13 at 5:58 am

This is a fairly lonely fight when dealing with the elite opinion in our nation. They “know” the New Deal failed and that only World War II saved our economy.

The elite opinionators of course don’t count the millions working for the WPA, PWA, CCC, etc. and somehow think one should be employed if one builds a strip mall on spec, but not a library or a courthouse–or clears a forest or dams a waterway.

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

And Menand is acting like a putz because he is starting his analysis from 1930 rather than 1933, when FDR faced over 30% unemployment. So cutting in half in the “official” stats that don’t include the millions working is still a deeply impressive achievement. Obama couldn’t reduce further from 10.5% to 7.5% unemployment, and he was re-elected….

25

andrew 03.03.13 at 6:10 am

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

26

floopmeister 03.03.13 at 7:23 am

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

Not that late for WW2, considering it started in 1939…

27

mud man 03.03.13 at 7:40 am

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.

28

Neil Levy 03.03.13 at 10:45 am

As late as 2013, floopmeister was failing to get jokes.

29

novakant 03.03.13 at 11:03 am

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.”

30

novakant 03.03.13 at 11:13 am

31

Alex 03.03.13 at 11:47 am

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

32

floopmeister 03.03.13 at 12:26 pm

Neil – yes. It’s never too late to be embarrassed on the internet…

33

LFC 03.03.13 at 1:54 pm

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?

34

P O'Neill 03.03.13 at 2:28 pm

There’s a lot more to that Krugman quote than you’d get from the one sentence above (#29), leaving aside the point in Eric’s links about the distinction between “level” and “growth” in discussing when the Depression ended.

35

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.

36

roger gathman 03.03.13 at 3:46 pm

Yes, use the word economically. That will bring out the absurdity of Darby’s claim quite sufficiently.

37

Eric 03.03.13 at 4:25 pm

Tyler, if you’d follow the link, you’d see, or possibly remember, that it’s Darby with whom I agree. It’s Lebergott to whose usage I object. I’ll quote him again here:

These estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930′s this concept, however, does include one large group of persons who had both work and income from work—those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930′s when persons in the labor-force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment.

38

Harold 03.03.13 at 4:54 pm

But Eric Rauchway thinks that FDR’s farm policies were misguided because reviving the family farm was a utopian 19th c. dream and the future of farming lay in the giant agribusinesses we have today.

39

LFC 03.03.13 at 4:55 pm

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.

40

Anderson 03.03.13 at 4:57 pm

“Menand probably found the 14.6% figure in the Ira Katznelson book, Fear Itself,”

Damn, and I was just looking at that book last night thinking it seemed worth a read. Less so now.

41

Barry 03.03.13 at 4:58 pm

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.

42

Eric 03.03.13 at 5:01 pm

LFC, it does seem to me that in discussing the US with the Soviet Union and Nazi Germany, Lebergott is making a moral distinction. It’s very hard to read comparisons with those countries as devoid of moral content; there’s a reason we have Godwin’s Law.

It seems to me that if he were making an economic distinction, he would say something like, workers for the WPA did not dox or y, unlike workers in regular work – i.e., they couldn’t switch jobs or join a union, or something like that.

43

Barry 03.03.13 at 5:01 pm

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.

44

LFC 03.03.13 at 5:02 pm

First, the quote is not Darby, it’s Lebergott. Second, if you read the quote carefully, the one Rauchway reproduces above, it does not do that equating.

45

Barry 03.03.13 at 5:03 pm

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.

46

Barry 03.03.13 at 5:05 pm

“First, the quote is not Darby, it’s Lebergott. Second, if you read the quote carefully, the one Rauchway reproduces above, it does not do that equating.”

Good point.

47

LFC 03.03.13 at 5:05 pm

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.

48

Mao Cheng Ji 03.03.13 at 5:08 pm

“it does not do that equating”

It states clearly that both German “labor-force camps” work and US “emergency work” are not “regular work”. In this sense it does.

49

Ben Alpers 03.03.13 at 5:08 pm

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.

50

Eric 03.03.13 at 5:12 pm

LFC, ok. I would point out that I am drawing on Darby (contrary to what Tyler evidently thinks).

51

Eric 03.03.13 at 5:15 pm

And fwiw I agree with Ben. I’m not condemning Menand or Katznelson here. I’m simply pointing out that Menand is setting up a puzzle-that-is-not-a-puzzle if you know what the data are counting. I hope very much Katznelson isn’t hanging too much of his interpretation on this point, but I haven’t read his book so I can’t say.

52

Anderson 03.03.13 at 5:21 pm

I take your point, but this number seems to be one that’s controversial, hence well-known to experts in the field, and thus difficult to see as a mere slip. The best case may be that he farmed out stat-hunting to a research assistant.

53

LFC 03.03.13 at 6:32 pm

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.

54

bob mcmanus 03.03.13 at 8:27 pm

53: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.

I think I could guess from the title of the book, or ask an RBC or Neo-classical or Chicago School or other right-wing economist. Or a center-left economist who understands supply-side arguments. Gov’t spending subtracts from productivity and output, and never adds, and crowds out private investment. “Helping people” is a demand-side analysis, from an economic perspective.

Even at this time, I will ask whoever shows up if say the Forest Service and even the Navy add to overall US economic productivity.

It relates to recent righty arguments against the 2009 stimulus and anti-Keynesianism and multipliers.

I think, IIRC, Rauchway did deal with this sometime over at the ole Edge.

55

bob mcmanus 03.03.13 at 8:37 pm

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. …”

56

x.trapnel 03.03.13 at 8:48 pm

Just chiming in to say that it would have been nice to have the corrected numbers front-and-center in the post, for those of us who’ve don’t know. It’s on p. 22 of the linked paper in 50: 10.1% in 1936, versus 16.9% when counting emergency workers as unemployed, and 9.6% versus 14.6% in 1940. That’s a very big difference indeed.

57

bob mcmanus 03.03.13 at 8:50 pm

Solow Growth Model …Wikipedia

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

58

bob mcmanus 03.03.13 at 9:16 pm

Scrolling through the thread quickly, I don’t see any economists. I am not your guy, I am wholly ignorant and so far to the left I have to teleport to be generous to Lerner and Kalecki. In my Kaleckian hat, I tend to think that wage-share of national income is overwhelmingly the determinant of output and growth.

But surely the New Keynesians like Quiggin could do a better job of explaining where Liebergott was coming from and going to in 1964. I don’t respect him, but I suspect he is respected. It’s about productivity and growth, not jobs and the starving.

59

x.trapnel 03.03.13 at 9:33 pm

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.

60

clew 03.03.13 at 9:53 pm

I don’t have much of a sense how much of the WPA infrastructure was overdue at the time — I imagine we under-invested during the Depression proper, but did the high times in the 1920s build infrastructure to support the growth, or was it all kicked down the road for later?

61

P O'Neill 03.03.13 at 10:37 pm

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?

62

Henry 03.03.13 at 10:52 pm

There’s some back-history here, which Eric is presumably too gentlemanly to bring up. Back in 2008, Tyler’s co-blogger, Alex Tabarrok wrote a piece accusing Eric of playing fast and loose with the statistics of how to count unemployment during the New Deal era. To be precise, Alex claimed that Eric, in full knowledge of what the official statistics actually said, preferred to use an alternative series with a lower unemployment figure. This series supported Eric’s purported belief that “counting people on work-relief as unemployed is a right-wing plot.” The clear implication of Tabarrok’s piece was that Eric was accusing other people of being liars, but was himself behaving with a lack of scholarly integrity, and that he (Alex) was there to deliver some righteous correction. See the follow up in this post by Megan McArdle, which asserted :

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”.

However, unfortunately for both Tabarrok and McArdle, the former’s critique of Eric was based on a basic lack of familiarity with the statistical series he was pontificating off. I am reasonably sure that Tabarrok never responded in any even faintly satisfactory fashion (he tried to sidle away from his offensive claims in the comments to Eric’s post, but has never apologized for what was a clear accusation of scholarly sharp practice). Megan McArdle promised a response but never actually delivered. So in short, if Tyler wants to complain that Eric is unfairly maligning a colleague in the battle over 1930s unemployment statistics, he can do so. However, it would be nice to see him speaking publicly and directly to his own co-blogger’s unfortunate behavior in this regard while he’s at it (perhaps he hasn’t done so to date because some variety of ‘mood affiliation’ is blinding him to the parallel).

63

Barry 03.03.13 at 11:37 pm

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.

64

floopmeister 03.03.13 at 11:57 pm

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.

And yet given the chance, thousands of Americans did just that – they immigrated to the USSR: http://www.lootedart.com/N7EVN0284841

Can’t find the figure to verify it but do remember reading that during one year of the Great Depression more Americans immigrated to the USSR than other people immigrated to the US.

65

Barry 03.04.13 at 12:07 am

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?

66

Barry 03.04.13 at 12:09 am

floopmeister: “And yet given the chance, thousands of Americans did just that – they immigrated to the USSR:”

Please reread my comment; I was talking about people in the Gulag and the concentration camps, who knew what things were like. People blithely ignorant of what it was like in the USSR (until they got there) were just that – blithely ignorant.

67

LFC 03.04.13 at 12:41 am

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.

68

floopmeister 03.04.13 at 12:42 am

Barry – not disagreeing with you per se – just thought that was an interesting factoid.

69

LFC 03.04.13 at 1:02 am

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

70

Tom Hurka 03.04.13 at 1:03 am

@ “Menand is not an economist”

No kidding. Which raises the question: why is The New Yorker having an English professor express opinions about economic history?

71

Harold 03.04.13 at 1:10 am

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.

72

rf 03.04.13 at 1:20 am

It’s not an economic history either, afaik.

73

bob mcmanus 03.04.13 at 1:35 am

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

74

david 03.04.13 at 2:05 am

Henry,

Thanks for the reminder, it’s really very useful to have someone around with a long memory for egregious crap.

The link to the McArdle promise to respond when she’s not on the run is just brilliant. It’s like the rock at the end of time bandits.

75

rootless (@root_e) 03.04.13 at 2:12 am

“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.

76

rootless (@root_e) 03.04.13 at 2:22 am

The fact that Shales is an ideological hack does not mean that criticism of Roosevelt is a right wing smear ( Shales work is a right wing smear tho). For example

Suffice it to say, unemployment went from 4.2 percent of the labor force in 1928 to 23.6 percent in 1932, the worst point in the Depression, fell back down to 16.0 percent in 1936 and shot back up to 19.0 in 1938. The Roosevelt Administration also introduced the Works Projects Administration (WPA), and while it employed some labor up to 30-hours a week, it could not teach these men and women skills until 1940 because some unions opposed doing so. Until the war had begun. WPA or not, unemployment remained very high. By 1939 the New Deal’s social technology was exhausted and there was only a confused debate between Democrats about the virtues–or lack of them–of laissez faire and competition versus the panoply of ideas behind “planning“ and control of competition. Only the Second World War, not the New Deal or Hoover’s efforts, ended the depression.

That’s Gabriel Kolko in Counterspin.
http://www.counterpunch.org/2012/08/29/the-new-deal-illusion/

77

cagliaritana 03.04.13 at 3:21 am

The umlaut is really annoying and unnecesarily precious.

78

cagliaritana 03.04.13 at 3:25 am

And my ipad spellchecker is clearly not working.

79

rootless (@root_e) 03.04.13 at 4:05 am

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.

80

ponce 03.04.13 at 6:04 am

Going by this report, Canada has similar unemployment rates to the U.S. during the 1930s.

And it looks like its New Deal was ruled unconstitutional.

http://www.statcan.gc.ca/studies-etudes/75-001/archive/e-pdf/87-eng.pdf

81

Anderson 03.04.13 at 12:49 pm

“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.)

82

rf 03.04.13 at 12:55 pm

He made one quite common mistake that doesn’t seem to be central to his overall argument? Meh indeed

83

Barry 03.04.13 at 1:03 pm

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.

84

Barry 03.04.13 at 1:55 pm

ponce 03.04.13 at 6:04 am

” Going by this report, Canada has similar unemployment rates to the U.S. during the 1930s.

And it looks like its New Deal was ruled unconstitutional.”

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

85

rf 03.04.13 at 1:56 pm

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.

86

JW Mason 03.04.13 at 2:40 pm

People keep repeating the same myths about Midway and Stalingrad, for ex, instead of noticing any of the recent work.

Just curious, which myths are those? Don’t want to end up repeating them myself…

87

James 03.04.13 at 2:54 pm

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.

88

Barry 03.04.13 at 3:52 pm

rf, if you meant my comment @85, what I meant is that Canada has an economy (IIRC) about one-tenth the size of the US economy. Canada’s biggest trading partner is (again, IIRC), the USA. Therefore, the Canadian economy will get dragged up (down) by the US economy. If the US economy was growing rapidly from 1933 onward, then the Canadian economy was getting a strong boost, and vice versa for 1930-33. This means that any ‘V’ in the US economy should be reflected in the Canadian economy.

In addition, I believe that the Canadian banking system was much better run, and did much better than the US banking system. Putting these together means that it’s not surprising that Canada would have done well in the mid/late 1930’s, even if its equivalent of the New Deal was not passed.

If you mean any of my other comments, then I’d appreciate it if you would have said which one.

89

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

90

Tim Wilkinson 03.04.13 at 4:30 pm

It’s not an umlaut, it’s a diaeresis. But I agree its use here where one would expect a hyphen is pretty odd to the point of jarring – I’d thought it obsolescent at best. Apparently the New Yorker has other ideas.

91

Barry 03.04.13 at 4:39 pm

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.

92

mpowell 03.04.13 at 4:42 pm


Why is he using 1930 as the benchmark, rather than 1932 or 1933?

Hogan already said anything that needed to be said about Menand’s commentary. Using the wrong dataset is an understandable mistake. Choosing a baseline for the FDR presidency 3 years before his presidency began and well before the full collapse had been realized? Then you’re just being a dishonest asshole.

93

Journalmalist 03.04.13 at 4:45 pm

@rootless #75

“Only”?

94

William Berry 03.04.13 at 4:48 pm

Just a tad confused by some of this thread.

I didn’t know that keynsian liberals didn’t so much disagree with the idea that the war ended the depression as observe that it was, in fact, a special form of the keynsian stimulus they argue for, and that right-wingers, recognizing that the stimulus of war spending was what ended the depression, were hypocrites in arguing against keynsianism.

Maybe, in the heat of the reaction to the Menand piece, it is just that the emphases are a bit off.

95

William Berry 03.04.13 at 4:52 pm

@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.

96

Mao Cheng Ji 03.04.13 at 5:05 pm

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. And whether, under similar global conditions, enormous public spending alone can do the trick, that remains to be seen.

97

David 03.04.13 at 5:09 pm

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

98

C.L. Ball 03.04.13 at 5:42 pm

I’m with Brett @15 . The trend is the same. Between 1932 and 1936, unemployment declines. So where is the puzzle? If you were a voter in 1936, FDR would have reduced unemployment from when you voted for him in 1932. (It is worth noting that FDR’s margin against Wilkie in 1940 is much smaller, about 10%, than against Landon.)

I’m not sure how “moral equivalence” is drawn from Lebergott’s footnote. The emergency work under the WPA was intended to reduce unemployment rapidly, but Lebergott thinks the US government artificially reduced the true unemployment rate because the workers were not expected to be regular government employees. He makes an accounting equivalence when he compares this to how Nazi and Soviet governments artificially reduced their unemployment numbers by counting forced labor as government employment. Lebergott’s reasoning was rejected because it makes explaining the real wage growth difficult.

It’s worth considering the skew in current US unemployment numbers. The prison population is excluded, which is reasonable to do if that number did not vary much. But given the incarceration rate in the US has roughly doubled between the 1980s and today, the unemployment data is skewed in historical terms.

99

ponce 03.04.13 at 5:51 pm

@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.

100

LFC 03.04.13 at 6:13 pm

C.L. Ball:
It’s worth considering the skew in current US unemployment numbers. The prison population is excluded, which is reasonable to do if that number did not vary much. But given the incarceration rate in the US has roughly doubled between the 1980s and today, the unemployment data is skewed in historical terms.

Seconding this point.

101

Barry 03.04.13 at 6:22 pm

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.

102

Barry 03.04.13 at 6:31 pm

William Berry 03.04.13 at 4:52 pm

” @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.”

A liberal is somebody who won’t take his own side in an argument, or so the saying goes.

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).

103

rootless (@root_e) 03.04.13 at 7:29 pm

“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.

104

Brad DeLong 03.04.13 at 7:39 pm

Re: ‘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.’

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)…

105

pjm 03.04.13 at 7:52 pm

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.

106

Pat 03.04.13 at 8:06 pm

Is the deejay taking requests? If so, next play “Roger Farmer and New Deal Denialism in Crooked Timber”! (ctrl+F “new deal” to search the comments)

http://crookedtimber.org/2013/01/08/how-effective-is-fiscal-policy-guest-post-from-roger-farmer/

107

Harold 03.04.13 at 9:15 pm

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?

108

rf 03.04.13 at 9:38 pm

“Southern Democratic alliance with northern conservative republicans that later took shape as Nixon’s “Southern Strategy.””

Yeah Katznelson’s previous books on this topic are pretty interesting, and I’d imagine this one is no differen’t. The lack of generosity being given to the man is astonishing. I guess one should not attack American liberal icons

109

Harold 03.04.13 at 9:48 pm

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.

110

ponce 03.04.13 at 10:01 pm

@105

“…and that in the US the Depression was deeper and lasted longer than most countries.”

pjm,

The U.S. depression bottomed out before FDR took office.

Once he took office, the U.S. economy grew faster than it ever has before or since(except for during WWII).

111

LFC 03.04.13 at 10:03 pm

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.

112

LFC 03.04.13 at 10:06 pm

Correction: The exact phrase used by Eric R. in the OP is “concentration camp workers.”

113

David 03.04.13 at 10:17 pm

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.

114

LFC 03.04.13 at 10:24 pm

I also think, on this same (Lebergott) point, that James @87, whose comment I just saw, seems right on the mark.

@Harold: well, you know the Original Post wasn’t about what Eric Rauchway has written about FDR’s agricultural policies, which is probably why that hasn’t figured much in the thread. FWIW, I agree w you on the ugliness of sprawl etc.

115

LFC 03.04.13 at 10:39 pm

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.”

116

Harold 03.04.13 at 10:46 pm

It seems to me a pretty substantial criticism of a New Deal policy — one that Rauchway then goes on to concede in the next breath was ultimately popular at the time with 90 percent of farmers (if I remember correctly). By coincidence I happened to be reading his book on the subway last Thursday couldn’t help but be struck by it.

117

Harold 03.04.13 at 10:56 pm

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.

118

Harold 03.04.13 at 10:56 pm

handymen – pardon my fingers.

119

Carl Weetabix 03.04.13 at 11:21 pm

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

120

Carl Weetabix 03.04.13 at 11:22 pm

Seriously, I think a lot of our problem today is that there are fewer and fewer people who lived through the Great Depression. It is much easier to have collective amnesia in that case…

121

Eric 03.04.13 at 11:27 pm

For the record, though I think it should be unnecessary to note, I did not condemn Menand’s essay or Katznelson’s book. I would happily review Katznelson’s book in its entirety if someone were kindly to send it to me to review. This blog post simply points out the unfortunate perpetuation of a problem which is clearly endemic in the field of New Deal writing – that of citing these unemployment figures without realizing what it is they mean.

As for the diaeresis, it is New Yorker house style, and I thought it would be awkward to spell re-elected in my own way.

122

novakant 03.05.13 at 12:04 am

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

No, but he ran his own concentration camps, so I wouldn’t want to put him with the angels either.

123

bob mcmanus 03.05.13 at 12:13 am

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

124

rootless (@root_e) 03.05.13 at 12:31 am

Journalmalist

Zinn’s words.

125

LFC 03.05.13 at 1:00 am

mcmanus @123

The link looks interesting.

126

Barry 03.05.13 at 2:15 am

David 03.04.13 at 10:17 pm

” 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.”

Good point. And this book undoubtedly went through multiple hands in the editorial process, which makes it unlikely that he chose that phrase on a whim and pressed ‘post’ before he had time to reconsider.

127

Tim Wilkinson 03.05.13 at 9:30 am

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′)

128

Mao Cheng Ji 03.05.13 at 10:19 am

Yes, really. This concept of “regular work” reminds me (only in a sense, don’t gang up on me, please) of “legitimate rape”…

129

ajay 03.05.13 at 10:25 am

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.

130

Zach 03.05.13 at 10:58 am

I disagree with the interpretation that the note morally equates WPA work with forced labor, but it does morally equate those economists who fail to separate WPA from non-WPA labor with Nazi and Stalinist propagandists.

131

Mao Cheng Ji 03.05.13 at 1:02 pm

“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.

132

ajay 03.05.13 at 1:33 pm

You have to be a bit careful about generalising from the US to the rest of the world, though. The UK had a very bad time in the 1920s, as did much of Continental Europe.

But if you look at GDP numbers, for example, some nations barely seem to notice the Great Depression that looms so large in US history. Japan doesn’t even stop growing. The UK dips a bit and then recovers (once it gets rid of the gold standard, and then starts rearmament). Only in France did the Great Depression last as long as in the US, and even in France it wasn’t as deep (and there were demographic factors to deal with as well).

133

pjm 03.05.13 at 1:55 pm

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).

134

Bruce Wilder 03.05.13 at 4:13 pm

Using Keynesian stimulus policy as a standard of evaluation is a bit of an anachronism. To contempories, the GD was a mystery, with many competing, compounding explanations. Structural issues were considered acute by many, and they were not necessarily wrong. Keynes’ General Theory was published in 1936, and he was in some respects rather desperate in his argument, sometimes seemingly throwing everything and the kitchen sink at the GD. That contemporary fog translates forward into 21st arrogance about knowing what they didn’t, making the GD into a distant mirror, in which we see our pet theories confirmed, without the inconvenience of having to be circumspect about the continuing vast disagreements about economics that mire politics of our present crisis, without anyone admitting they disagree in ways that demand reconciling arguments or measurement, before claims on meaning make sense.

The WWII as Keynesian stimulus of sufficient magnitude story is, in its way, as barren and misleading as Cole & Ohanian blaming Hoover for being too pro-labor, or Friedman ignoring the gold-exchange standard to tell his counter-factual fable of Fed policy incompetence, or Christina Romer’s tale of refugee Jews (and their gold) forming a pseudo-monetary stimulus. If Amity Shlaes can lecture the Council on Foreign Relations, and Robert Lucas is the father of modern macro (see his recent Millaman lecture notes for a narrative of the GD), our understanding of past & present is in much deeper trouble than being unable to reconstruct the context in which Lebergott labored.

135

John 03.05.13 at 5:03 pm

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.

136

ponce 03.05.13 at 9:25 pm

@133

“I thought was a commonplace (but I and the idea could be wrong).”

Pjm,

It’s odd we have so many known unknowns about the 1930s 70+ years on.

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

137

Barry 03.06.13 at 1:48 pm

“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.

138

Barry 03.06.13 at 1:49 pm

(sorry, hit ‘post)

So they’ve been a denialist binge about the Great Depression since the New Deal started producing results.

139

John 03.06.13 at 2:19 pm

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.

140

Harold 03.06.13 at 2:21 pm

Liberal dominance? Ha!

141

Barry 03.06.13 at 2:30 pm

“… 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.

142

MPAVictoria 03.06.13 at 2:32 pm

“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.”
Yeah. I mean check out how well austerity is working in Europe!

143

John 03.06.13 at 3:21 pm

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.

144

John 03.06.13 at 3:36 pm

MPAVictoria, Europe has other problems. The epicentre of the banking crisis was mid Atlantic between New York and the City of London and the UK tax payer has taken a vast hit. Borrowing to escape a debt crisis would not seem very clever. The rational choice for the UK is a brief spell of inflation to get rid of sterling debt but any government that does this will not be re-elected.

The Eurozone has its own problems, Germany has a very low debt and deficit but most of the southern countries do not. The Germans really suffered to get a well run economy and don’t want to give it up for a bunch of idiots in the south.

145

rf 03.06.13 at 3:50 pm

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

146

John 03.06.13 at 4:20 pm

rf, no, the Eurozone is about European political union, a project that is very dear to the Germans, they might eventually bend. The Germans are hoping for sufficient global economic recovery to lessen the problem before this is necessary.

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rf 03.06.13 at 4:23 pm

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?

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ciaran 03.06.13 at 4:24 pm

As a proportion of GDP public sector spending will invariably rise in a recession, for reasons too obvious to elucidate .

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rf 03.06.13 at 4:39 pm

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.

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JW Mason 03.06.13 at 4:40 pm

Sydenham’s Law

Back when I was in school, they were writing it “Say’s.” Old fallacies never die, they just get rebranded, I guess.

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Samr 03.06.13 at 4:44 pm

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

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ajay 03.06.13 at 4:52 pm

Germany has a very low debt and deficit but most of the southern countries do not. The Germans really suffered to get a well run economy and don’t want to give it up for a bunch of idiots in the south.

An interesting theory, but one sadly destined to be severely dented by its imminent collision with the real world.
http://www.economicsinpictures.com/2011/12/overview-of-deficit-and-debt-for-euro.html

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John 03.06.13 at 5:27 pm

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.

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rf 03.06.13 at 5:37 pm

Since this thread has gone of topic, does anyone know anything about what happened to Detroit or have any reading recommendations ?

155

Bruce Wilder 03.06.13 at 5:54 pm

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.

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js. 03.06.13 at 6:21 pm

By the way, the links in #143 are coming from someone who’s also responsible for this disaster!

157

rf 03.06.13 at 6:56 pm

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

158

Tim Wilkinson 03.06.13 at 8:01 pm

Talking of Hugo Chavez’s death (in the title of the latest post on the blog rf links to), I was rather hoping there might be a CT thread about him, whether it be open or whatever the opposite of open is.

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rf 03.06.13 at 10:36 pm

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)..

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Bruce Wilder 03.06.13 at 11:12 pm

js. @ 156

There was a time, when we might have marginalized John @ 143 as somewhat nutty, a gadfly or loon. Unfortunately, his economic reasoning is not easily distinguished in kind or quality from what comes from more “reputable” sources, dressed up in academic flatulence and pointless math.

Here are a couple of papers, under the imprimatur of the Federal Reserve Bank of Minneapolis. The President of that particular regional Federal Reserve Bank is the allegedly distinguished economist, Narayana Kocherlakota.

Atkeson & Kehoe, Deflation and Depression: Is There an Empirical Link?
http://www.minneapolisfed.org/research/sr/sr331.pdf

Cole & Ohanian, Re-Examining the Contributions of Money and
Banking Shocks to the U.S. Great Depression

http://www.minneapolisfed.org/research/sr/sr270.pdf

When it comes to the Great Depression and New Deal denialism, crazy has multiple post-graduate degrees.

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js. 03.07.13 at 12:23 am

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.

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js. 03.07.13 at 3:18 am

TW @158 & rf @159:

I quite liked this piece on Chavez: from The Nation.

Ok, I’m done derailing threads.

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rf 03.07.13 at 3:32 am

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!

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LFC 03.07.13 at 4:42 am

John @153
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.

1. The Holy Roman Empire formally went out of existence in 1806 (iirc). Though by then of course it was a shell of what it had been.

2. 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.

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Harold 03.07.13 at 6:13 am

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.

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Tim Wilkinson 03.07.13 at 8:35 am

rf – Yes we’re clearly in the sandbox section between the main discussion petering out amd the closure of comments, so it’s not even really a derail at this point. A fairly quick response before bed: [update - now submitted in the morning; cheers js., will look at the Nation piece later.]

Basically, I’d say HC was a pretty good guy, and I was sad to hear he’d gone. I don’t have much time for Juan Cole since I noted him making what appeared heavily biased comments which provided cover for the Libya regime-removal. (And I recall being pilloried by all the usual sober suspects for making what seemed to me obvious remarks about that, including, very early on, that Gaddafi was clearly a dead man walking and unlike Saddam wouldn’t get a show trial.)

Venezuela’s Middle East ‘policy’ seems an irrelevance to me. Complaining about someone being too ‘friendly’ with pariah regimes is typical bottom of the barrel stuff, esp. whem you consider the company that those who have a choice of friends keep (Saud, Bahrain, etc etc etc). Besides which this stuff is – as usual – almost entirely a matter of speak-crime (cf. George Galloway), as if that in any way compares with bomb-crime. A good rule of thumb is that when the combined might of the US government and corporate media can’t come up with anything worse (besides outright lies at one extreme and near-contentless innuendo at the other), that is almost certainly because there isn’t anything worse to find.

A non-doctrinaire socialist who revolutionised the corrupt political system by democratic means (note no-one seems able to fault his electorally-democratic credentials – he even tolerated a very hostile press despite its being a private oligopoly), immeasurably improved the lot of the poor in his country, was remarkably – amazingly? – unauthoritarian given the onslaught of opposition he faced (e.g. the usual US-backed coup attempt) – what’s not to like?

Well, I suppose you can debate whether his coup attempts before gaining office through the electoral system were entirely polite, and there was a general militarism at a very low level which I’m not tremendously keen on, but then was anything less robust really going to see off the IMF/CIA/etc axis? I still say: a pretty good guy, very interesting and rather inspiring. Still, as you suggest, this is not a Very Serious position to take, for obvious reasons.

(I may as well state now that I’m not going to put in the time and effort it would take to field any third-party allegations, denunciations, canards, trollery etc. unless we get a dedicated thread to do it in, so that I might at least have 2 or 3 allies to share the work with.)

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John 03.07.13 at 9:07 am

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.

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Mao Cheng Ji 03.07.13 at 9:13 am

‘Friendly with ME dictators’ reminds me of ‘Hoffa in bed with the Mob’, while the employers being in bed with the cops, state militia, the pinkertons and such is okay, nothing to see there. When cops start shooting, lay down and die, or you’re a bad, bad person.

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John 03.07.13 at 12:43 pm

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.

170

Bruce Wilder 03.07.13 at 5:18 pm

Ah, yes, the “inflation-adjusted” figures — or, rather, deflation-adjusted, since the country was in the grip of one of the most massive deflation spirals in history — as you say, tell a different story, but that’s a story of the deflation, itself, and its causes and collateral damage.

Consider the information content extracted by this “inflation-adjusted” technique in the abstract, setting aside any considerations of what we might think about cause-and-effect in the political economy. 1930-33, both business activity and the price level are dropping like stones. Taking a delta on both for periods of a year (a year!), is going to make for two very noisy statistics representing a continuous process, and, now, you want to combine them. Noise x noise. Even a slight lag in the pace of prices falling relative to output falling may appear in the “inflation-adjusted” figures, year-over-year, as an increase in output, but it will be a phantom increase, an artifact. The underlying, continuous series for both output and prices are plummeting continuously.

Now, consider cause-and-effect, on the most primitive level for political economy, for a moment, and realize that a race condition exists in a deflationary spiral. No, “race condition” is not a concept entailing ethnic heritage. A race condition is a problem in a system of control, in which an information signal, systematically, arrives too late, for the control system to adjust properly, preventing the re-establishing of control. Prices falling lag output falling, so the fall in prices never arrests the fall in output through their effect on demand. A race condition. And, your crude statistics mistake it for something else entirely.

There was no hint of recovery in 1931 or 1932, just devastation and panic. The first of four seasons of bank runs began in the U.S. in November and December of 1930. In May 1931 the failure of the Austrian Rothschild bank, Creditanstalt, triggered worldwide crisis and the gold-exchange standard, governing world trade and finance, went into its death throes.

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Harold 03.07.13 at 6:29 pm

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.

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Tim Wilkinson 03.07.13 at 8:15 pm

I’d add that much of the data on spending is ‘interpolated’ – i.e. made up. See http://www.usgovernmentspending.com/spending_chart_1930_1940USk_13s1li011mcn_F0t#view .

In particular, a key data point on which John is relying is made up – not that it would make his point anyway. I’d be interested to know on what basis the value ‘interpolated’ for 1933 was arrived at:

1932 - 153.78 - actual
1933 - 160.33 - interpolated
1934 - 154.15 - actual

Likewise,

1936 - 195.56 - actual
1937 - 192.59 - interpolated
1938 - 203.77 - actual

In each case, the ‘interpolated’ value lies well outside the range delimited by the two adjacent actual values. In each case too, the GDP figures for these years (all GDP figures appear to be actual) move in the opposite direction, creating (to use the econometric jargon) ‘diamond shapes’ which of course prove Sydenham’s Iron Law of the Negative Fiscal Multiplier.

If one were draw a graph using data only for years (in the range under discussion) in which actual spending data is available, one would get two lines that move in tandem. This, like everything else, proves Wilkinson’s Law, which is null.

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C.L. Ball 03.07.13 at 10:25 pm

@ 113 @ 126

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

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John 03.08.13 at 3:37 pm

@170 @172 OK, you are raising doubts about the data, the analysis etc., in fact doing the classic, comedy, academic, demolition job: “I believe there are grounds to doubt the sources, some people would disagree with the analysis, subsidiary factors have not been taken into account and there are uncertainties in the statistics which, along with the absence of proper peer review mean that this article is not thought to be credible by those who understand the subject fully”.

Take a look at the post WWII data for the UK. In this period the UK had fairly rigorous national statistics and also had a succession of “Keynesian” governments, some of which would have been regarded as near communist by US observers. There is no deflation or dubious data to make the analysis murky. There is really no sign at all of public spending being accompanied by increased private sector growth, the opposite always happens. The Labour governments of the 1960s and 70s were determined to spend their way to prosperity and ended up with double digit inflation and IMF loans.

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