New Deal/Big Deal

Crooks and Liars looked at the continued claims being made against the FDR era New Deal. It deals often with a claim that they spent all that money back then, and it did nothing.

But as noted it is not so. Roosevelt was convinced to cut back on spending, to our lament.

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You can read the mandatory rebuttal from Paul "Unlike Right-Wing Hacks, I Actually Won A Nobel Prize for Economics" Krugman here (I know, it's silly and old-fashioned of me to think Krugman might actually know more about the subject matter):

Net stimulus of around 3 percent of GDP — not much, when you’ve got a 42 percent output gap. FDR might have been more of a Keynesian if Keynesian economics had existed — The General Theory wasn’t published until 1936. Note in particular that in 1937-38 FDR was persuaded to do the “responsible” thing and cut back — and that’s what led to the bad year in 1938, which to the WSJ crowd defines the New Deal.

Implications for Obama: be inspired by FDR, but don’t imitate him slavishly. In particular, your economic policy should be bolder, not more cautious.

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Bothersome is that a number of skeptics agree with this misread of history. People like Michael Shermer, who I generally find myself in agreement with, have a certain strange streak that leads them to be critical here and more partial to an embrace of just stepping back and letting the invisible finger and the mysterious forces of mercantilism make things right. It is odd. Reminds me of hearing Hitchens talk wittily about the flaws of religion and then segue into Middle East politics, he just veers into madness.