Wall Street Journal and Council on Foreign Relations Crashed-and-Burned Watch (Yet Another Amity Shlaes Edition)

Mr. Murdoch, your intellectual capital is depreciating rapidly. Call your office.

Paul Krugman writes that expansionary fiscal policy was not tried on a sufficiently large scale during the Great Depression--spending boosts were insufficient, and undermined by tax increases while unemployment was still high. Hence, he argues, recovery remained far from complete and unemployment remained high--until World War II came, and expansionary fiscal policy was tried on a sufficiently large scale, and unemployment dropped to 2%.

Amity Shlaes responds by arguing something... completely incoherent--flunking the Turing Test territory. And so Wall Street Journal publishers who give her space and Council on Foreign Affairs staffers who give her fellowships lose credibility, influence, and reputation.

Shlaes:

The Krugman Recipe for Depression: Paul Krugman['s]... new book "The Return of Depression Economics," emphasizes the importance of New Deal-style spending. He has said the trouble with the New Deal was that it didn't spend enough.... The New Deal is Mr. Obama's context.... If he proposes FDR-style recovery programs, then it is useful to establish whether those original programs actually brought recovery.... New Deal spending provided jobs but did not get the country back to where it was before....

Stanley Lebergott helped the Bureau of Labor Statistics in Washington compile systematic unemployment data.... He intentionally did not include temporary jobs in emergency programs.... Michael Darby of UCLA has argued that make-work jobs should be counted. Even so, his chart shows that from 1931 to 1940, New Deal joblessness ranges as high as 16% (1934) but never gets below 9%. Nine percent or above is hardly a jobless target to which the Obama administration would aspire....

New Dealers raised taxes again and again to fund spending.... We know that the new administration is going to spend... it can just spend, Krugman-wise, and risk repeating the very depression we seek to avoid...

Comments

[Ken Houghton]

That doesn't just fail the Turing Test--it fails the Palin Test.

Let's see: got unemployment down from ca. 25% to ca. 9%. Per the Trust Fund Baby, that's not enough.

Therefore any economic policy that does not result in more than a 64% decrease in unemployment is unacceptable.

At the very least, Shlaes has declared the profession of Labour Economist irrelevant. (Whether that is a good thing is left as an exercise.) Is the WSJ revoked its publication of any of, say, Harvey S. Rosen's pieces?

[Tomas]

Shorter Shlaes:
"Krugman says new deal too timid. I disagree, because whtgjklæhaåøta2y¨3049u8ipæwejr¨12å3e0io"

[Robert Waldmann]

Remarkable.

Krugman says that the New Deal spending programs were too small. He is wrong because they didn't get the unemployment down as far as it could go .. which shows they were too large.

Unemployment during the new deal ranged as high as 14 % in the first full year of the new deal (It was higher in 1933 but Shlaes evidently doesn't count that as part of the New Deal). 1934 is the first point in her series. The fact that unemployment was high at the very beginning of the New Dealis the reason that people think the New Deal was better than Hoovernomics. According to the figures which Shlaes claims to be summarizing, every New Deal year had lower unemployment than 32 or 33.

I agree with Ken. I don't think that saying how bad things were at what you count as the beginning of policy intervention as part of an argument that the intervention was a failure fails the Turing test. Failing the Turing test is acting like a computer. As far as I know, no computer has yet been programmed to generate an argument so stupid.

I mean sure it would be possible to insert a reverse conclusion operator in a text generation program. Oh and a "two small"/"too big" toggle (a response of the right sign but too small means there was too large an intervention of the wrong type), but Shlaes is a human being with a degree of sophistication and flexibility far beyond any existing computer so she will be able to come up with two equally howling fallacies as soon as you program those up. I think that AI (artificial idiocy) is just not up to the Shlaes level yet.

[Rob]

Thank God then for Amity Shales! When the robots come to take over the earth we just need to feed them a healthy dose of Shales' work and they sputter at the illogic of it all and will burn out ala Star Trek. Amity Shales will save us all!

[Robert Waldmann]

update: I stand corrected. A computer has failed the Amity Shlaes test

http://www.strangedoctrines.com/2008/11/this-blog-is-written-by-a-man.html

"We have strong indicators that http://www.strangedoctrines.com/2008/11/this-blog-is-written-by-a-man.html is written by a woman (97%)."

I for one, now think that we have strong indications that Amity Shlaes's columns are written by the same script they use at http://www.genderanalyzer.com.

[pgl]

"New Dealers raised taxes again and again to fund spending". Huh? Where is her evidence for this claim? The following posts do provide evidence in terms of spending and taxes as shares of GDP:

econospeak.blogspot.com/2008/11/government-purchases-1932-to-1941.html

econospeak.blogspot.com/2008/11/statelocal-fiscal-policy-during-great.html

As I look at the evidence - there was not some massive movement towards spend&spend and tax&tax. Yet Schlaes claims there was. Might she be required to provide actual historical data?

[Chris]

You are too kind. A less kind headline would be Amity Shlaes adopts the Chewbacca defense.

[MaryCh]

Is Amity Schlaes cribbing commentators who call Iraq a success because the Surge worked? - Every dishonest chartist and many of the rest of us know how to tell Twainian lies by fudging the endpoints.

And thank you to Tomas for interpreting!