Yet More New Deal and the Great Depression Blogging

PGL at Angry Bear receives an email from David Gross:

Angry Bear: Update: Daniel Gross reads my comment on what Bryan Caplan wrote and emails me this:

Is the sheer a-historicity of it. Roosevelt scared investors and businessmen? Did he scare them as much as, oh, Stalin, who controlled one of the world's largest economies and was expanding his influence? or as much as Mussolini? Or as much as the fascist government of Japan? Or as much as Hitler, who was buys confiscating property of Jewish investors and businessmen? On a comparative basis, the U.S. was certainly the country in the 1930s that was the most hospitable to private investment and capital formation. Economic history unfolds in real history, not in some imagined world. The New Deal was a success if only because it kept the U.S. from sliding into the type of horrific fascism that infected half of Europe and the pathetic weakness that affected the other half.

As we noted, investment demand increased substantially from 1932 to 1937. Daniel Gross mocks the idea that FDR scared investors -- at least relative to the fear investors may have had seeing what was going on in Germany, Italy, Japan, and/or Russia.

Comments

[Barkley Rosser]

Hitler and Stalin may have scared investors more than FDR did (and in fact they could not even function in the USSR), but it is a historical fact that Germany got out of the Great Depression more quickly than did the US, and the USSR never got into it, although with its collectivization famine it had its own problems.

[Chris]

Yeah, I'd say Germany had other problems as well.

If you're grading on a curve, and you should, FDR at worst gets an A-.

[shah8]

Germany was suffering from increasing economic problems in the couple of years leading up to WWII.

What fascism was about was getting people to sell labor at rock bottom prices, and using the ability to get people to become more "evil" so as to blind them to the realities of being gypped (irony intended). I.E. doesn't matter how dirty the jews are, you still gotta make enough to eat...

In 1937-1939, the limitations of such a system were becoming pretty damn evident, and it was threatening Hitler's, and his business supporters' dream of more money and power. Expansion and looting was a solution to this dilemma.

[digamma]

The argument isn't between FDR, Hitler, Stalin. That's like the Special Olympics of Public Policy. The argument is between FDR and what some people think FDR should have done.

Have Bush's policies had a bad effect on the US economy? Well then, I guess you'd prefer the economic policies of the Taliban! See how much sense that makes?

[John Doe]

The New Deal was a success if only because it kept the U.S. from sliding into the type of horrific fascism that infected half of Europe and the pathetic weakness that affected the other half.

You think there was a danger of America sliding into Naziism? And that's why Roosevelt is to be preferred? That's a mighty low bar for success.

Also, the notion that Roosevelt kept the country from sliding into "fascism" is a risible way of putting things. Roosevelt actively tried to push the country into literal fascism (NIRA = combination of government power and corporate cartels), and when the Supreme Court (thank God!) got in the way, Roosevelt threatened to expand the Court's roster so that he could pack in his cronies.

[wkwillis]

The choice wasn't FDR or the communists, it was FDR or Huey Long.
With an unemployment rate of 25% and a 'related to unemployed person' rate of 95%, it certainly wasn't going to be the Republicans.
Would Huey Long have been so bad? He would certainly have been more Keynsian.

[dale]

Sheri Berman talks about the similarities between facism and social democracy in her recent book, The Primacy of Politics. She also points out the obvious deep level difference- the committment to democracy and human rights vrs the authoritarian facist program.

The similarities are in their both placing political intervention over the self working of the economy (against the theory of both orthodox Marxists and orthodox capitalists); both stressing social solidarity and the national context.

But it's pretty easy to see the fundamental differences. The committment to democratic process- the primacy of democratic politics-over laissez-faire economic theory and practice, over authoritarianism of both the communist and facist type.

[andres]

"The argument isn't between FDR, Hitler, Stalin. That's like the Special Olympics of Public Policy. The argument is between FDR and what some people think FDR should have done.

Have Bush's policies had a bad effect on the US economy? Well then, I guess you'd prefer the economic policies of the Taliban! See how much sense that makes?"

digamma: fair enough. But what "some people" wanted FDR to do was to stay the Hoover course, namely (a) stay on the gold standard and defend the dollar's parity to gold, (b) balance the Federal budget, (c) let the economy purge itself of its inefficiencies, and (d) let US corporations stay friends with and do business with Hitler and Mussolini.

Compared to that sort of program, the Taliban look rather attractive by comparison.