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4 comments on “Paul Krugman and the New Deal”

1. “By 1937 things were better somewhat, then he was persuaded to balance the budget…”

   This is the exact argument I made on air. 1933 – 37, New Deal was making improvements (slowly). 37-38, under pressure from conservatives, FDR tries to balance the budget, reversing the growth resultant of the New Deal, driving us back into a mini-recession (key point here: it happened when he went against the New Deal apparatus in order to balance the budget). WWII allowed a return to the New Deal (in an even more aggressive manor), and we saw faster growth. It gave license to give the New Deal the teeth it always needed without objection from conservatives.

   This in no way proves, or even remotely implies that it was the war instead of the New Deal. Krugman’s words imply that the New Deal was the right direction, and in fact if FDR had made the New Deal a larger, more sweeping plan, it would have worked faster.

   And Krugman has been making the same argument at the NYT for many months now (see also here, here, and here), and his book The Conscience of a Liberal dedicates nearly four chapters to the restorative effects of the New Deal that were “amplified” by the war. His entire book The Return of Depression Economics is built around recreating the New Deal to repair our current crisis. I’m not trying to make the argument that Krugman is the one reliable source here (although I think he’s pretty clever), only that you’ve made one really shakey argument by posting this video to justify your claim it was WWII, not the principles of the New Deal that turned the economy around. Krugman is one of the most avid supporters of the New Deal and all of it’s glory out there in the econo-punditry circuit.

   You can’t argue with one youtube clip that he didn’t mean all that he has written previously in order to support your argument. In fact, from the very description of the video you have linked to:
   

   Thankfully, Nobel laureate Paul Krugman was around to remind Will of some history — that the economy improved after the New Deal, and that it was FDR’s attempt to balance the budget in 1937 (a move favored now by many conservatives) that then cut into that progress.

   Who’s side are you on here Marc? Heh.

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2. Jason, I have no disagreement with you about FDR’s mistake to attempt to balance the budget during the Great Depression. Yet that has nothing to do with the point that I am trying to make (and I never attempted to challenge the New Deal by using FDR’s attempt to balance the budget) I am a little confused as to why you have latched onto that particular point.

   “Roosevelt got the economy moving somewhat.” – This is pretty much the only mention of the New Deal which Krugman makes during this panel discussion, aside from the balancing of the budget talk.

   Then he says, “And then it took an enormous public works program known as World War II to bring the economy out of the Depression.” How much more blatant does he have to be to convince you that he was attributing the departure from the Great Depression to the War and not simply to the New Deal.

   To be honest, Jason, I have NEVER said that the New Deal extended the Great Depression. That was assumed, I believe, because some who say that the War was reponsible also claim that the New Deal did more harm than good. Again, I have NEVER made that claim. I believe that parts of the New Deal were successful, yet I will always believe that it was WWII which really changed things; essentially, the New Deal helped us along and then the War changed everything.

   If New Deal policies became more successful on account of the War, I will agree with that. But again, it was the WAR which brought this economy out of the Depression. Even Krugman, while defending the New Deal, would agree to that, as he has here.

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3. I don’t believe it has to be The New Deal vs. WWII. I think that most reasonable people would agree that it was a combination of the two, and yet the War was the thing which served as the true game-changer. Afterall, many other world nations left economic depressions on account of their entry into World War II. The United States continued down this road while previously depressed countries experienced tremendous economic stimulation. When the US joined the War it experienced a similar economic acceleration.

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