Wednesday, February 4, 2009

FDR Bashing

"But we don't have to repeat the New Deal stimulus experiments, because we know they didn't work."

Amity Shlaes, "FDR Was a Great Leader, But His Economic Plan Isn't One to Follow," The Washington Post, February 2009.

FDR certainly had his share of economic policy and political blunders -- NRA, AAA, currency meddling, and budget retrenchment, to name a few. But he put a lot of folks to work with FERA, CWA,CCC, PWA, and WPA -- a host of initials that all spelled public jobs -- mostly for infrastructure. Again, not without some mistakes, but probably no more than the 1 percent projected for the current stimulus. Reducing unemployment from 24 to 14 percent was no small accomplishment even recognizing that there was still a long way to go.

Shlaes dismisses the economic impact of FDR's infrastructure investments. But: "WPA built 85 percent of all the new airports in the country...It's work on army,navy, and coast guard facilities...had already contributed to national defense..." Didn't air travel have something to do with our long-term growth. Remember Alexander Hamilton's advocacy for public investment in infrastructure.

Nick Taylor, American-Made: When FDR Put the Nation to Work

Instead of infrastructure and spending, Shlaes argues, "The president has already put foward a big tax cut for lower earners. He might offer a commensurate one for higher earners."

Didn't Bush try that? Did the forgotten entrepreneur rise to the occasion? But Shlaes is right that we need market reform, not just spending.

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