Saturday, November 16, 2013

Krugman: European Economy Doing Worse Than In Corresponding Period Of The Great Depression

... and Krugman has a simple chart to prove it. The alacrity with which European "austerians" jumped on the first signs of recovery from today's Great Recession is in itself dismaying, but the fact that they may well be killing that recovery in their moralizing determination to apply austerity is downright depressing:

You may be able to fool Mother Nature, but you sure as hell can't fool John Maynard Keynes...


  1. Of course, the Europeans started up a giant stimulus program around 1934 or so when they started buying massive amounts of arms. So it's no real wonder that industrial production took off quickly. But WW2 probably isn't the stimulus program we aspire to today...

  2. FWIW, 'Tux, Robert Reich, in his book Beyond Outrage (2012, but I just read it this week), disagrees with you. Quoting from #3 on his list of great economic lies perpetrated by the right wing:

    ----- (start of R. Reich quote)
    3. We'd have more jobs and a better economy if we shrank the size of government.

    Wrong. Shrinking government results in fewer government workers— including teachers, firefighters, police officers, and social workers at the state and local levels, and safety inspectors and military personnel at the federal level. And it results in fewer government contractors, who therefore employ fewer private sector workers. This is the same claptrap regressives have been mouthing for decades. Their ultimate goal, in the words of regressive guru Grover Norquist, is to take government "down to the size where we can drown it in a bathtub."

    I recently debated a conservative Republican who insisted the best way to revive the American economy was to shrink government. When I asked him to explain his logic, he said simply, "Government is the source of all the problems." When I noted government spending had brought the economy out of the Great Depression, he disagreed. "The Depression ended because of World War II," he pronounced, as if government had played no part in World War II.
    ----- (end of R. Reich quote)

    (Steve again...)
    I'm not sure but I think it was Keynes who asserted that it doesn't matter what the work is... it could be digging holes with shovels, then filling them in again: as long as it puts people back to work and the government pays them to do it, it will contribute to pulling the economy out of a recession or depression. The war happened to come along at the right time to force America and FDR to do that, with no political pushback to speak of.

    Today, America has gigantic infrastructure problems that must be addressed if we don't want to face another kind of catastrophe in the next 20 years or so, and problems with physical plant integrity in schools... and the problems are perfectly timed for Obama to dedicate money and create jobs to address those infrastructure and school plant problems. Government money can address the problem as surely as money from a private source.

    But Obama faces two major problems:

    1) his opposition is a party full of utter ideologues who always insist government is the problem in all cases, and

    2) the GOP would rather see the US go to ground before it would see a Black Democratic president succeed by plying a "liberal" economic approach (who knew liberals could claim Keynes? but Keynes is anathema to today's Republicans).

    If Obama can overcome his own reluctance to shove this back down their throats (Mr. Play-nice is going to have to play nasty for a while), it should be possible to obtain a stimulus, not with a war, but with infrastructure and school plant programs. If he has the courage, and if we can somehow give him the votes in the House next year...

  3. Steve, the reason I say that WW2 is probably not the stimulus program we should aspire to today has something to more to do with 60 million or so dead bodies than its economic effects. Infrastructure, yes. War, no.

    Besides, mass war like WW2 will never happen again because it would go nuclear. We can employ every unemployed person in America either digging ditches or doing the accounting, cooking, etc. for those digging ditches without the necessity of putting a gun in their hands and sending them off to die for a line on a map.

    1. 'Tux, I'm certainly with you on that... IMHO, another world war would probably spell the end of humankind, no matter how much all that war would please Dick Cheney. In case you haven't noticed, I'm just barely this side of being a pacifist... in my lifetime, the US has been involved in exactly zero (0) necessary wars. People who relish wars may one day get us all killed, but with luck we'll find another way to vent everyone's hostilities.

      But contrary to what the GOPers are constantly preaching, government can indeed do a LOT to stave off the worst effects of a recession or depression... no war necessary for that.



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