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Lessons from the Great Depression Blogging

Apropos of Krugman's evisceration of the underbriefed George F. Will

Path Finder

I have never been able to make any sense at all of the right-wing claim that the New Deal prolonged the Great Depression by creating a "crisis of confidence" that crippled private investment as American businessmen feared and hated "that Communist Roosevelt." The crisis of confidence was created by the stock market crash, the deflation, and the bank failures of 1929-1933. Private investment recovered in a very healthy fashion as Roosevelt's New Deal policies took effect.

The interruption of the Roosevelt Recovery in 1937-1938 is, I think, wel understood: Roosevelt's decision to adopt more "orthodox" economic policies and try to move the budget toward balance and the Federal Reserve's decision to contract the money supply by raising bank reserve requirements provide ample explanation of that downturn. And once those two factors had run its course the continuation of Roosevelt's policies was no obstacle to an investment recovery driven by war-related exports monetary expansion produced by capital flight from Europe.

You can argue--and I occasionally do--that had the Supreme Court not ruled the NIRA unconstitutional it would have exerted a significant drag on medium-run economic recovery. But the Supreme Court did rule the NIRA unconstitutional, 9-0, Brandeis voting alongside MacReynolds.

Sumner H. Slichter (1938), "The Downturn of 1937," Review of Economics and Statistics 20:3 (August), pp. 97-110.

UPDATE: Pro-Growth Liberal also weighs in:

And we have,,,,,,

And Debra Cooper emails:

Back in the bad ole days, not so long ago....George Will would have said his nonsense, looking and sounding professorial; Cokie Roberts would have seconded in her no nonsense kind of way (after all her parents were Democratic party icons) and the another lie would have sustained the right wing economic hegemony on elite opinion. Now we have a Nobel Prize winning economist to put away in a few quick, well chosen, well sourced progressive views that George Will just spouts crap.

Paul has had a column since 2000, but he hasn't had the impact he deserved. The internet has lent great support to that.

In addition to taking due credit for the election of a center left Democrat, the netroots should take an enormous and continuing bow for changing the media environment for the better.