Paul Krugman Schools George Will On The Great Depression

On ABC's This Week, conservative pundit George Will took up the case against Franklin Roosevelt's New Deal, arguing that it sent confusing signals to capitalists (who apparently might otherwise have pursued lucrative deals in the 1930s market place) and turned a depression into the Great Depression.

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.

Watch:

Comments

[mamacat]

Just throwing this in: the vast public works projects of FDR were not throw-away, make work jobs. Without the investment in our infrastructure that created the hydroelectric dams around the country, we probably would not have been able to power the factories that built the materials with which to fight World War II.

If Obama carries through on his plan to expand our energy infrastructure, it will both create jobs (helping people and the economy) and remove the need to import as much foreign oil as we do now.

[DuganS1]

There were some worthwhile projects during that period, but the majority of workers were involved in projects that weren't.

[truthmachine]

Even if that lie were true, it wouldn't relevant to mamacat's point.

[scottarino]

It takes a lot of small "non important jobs" to complete the monumental task of building a hydroelectric dam. The most important point is, however, that people during the New Deal began to receive a steady paycheck so they could SPEND, and then employe others who could offer good and services with all these workers receiving regular, steady, reliable, paychecks.

[Over50WhiteWoman]

It's economics 101--a contracting economy requires huge inputs of money from the government to both employ people and provide for them (the 'dole') to stop the deadly cycle.

This is why the government should not overspend during the good times, because then there may be nothing left when the bad times come--and they always do come eventually.

Government borrowing reduces the amount of funds available for the rest of us to borrow, forcing interest rates up, causing inflation and eventually contracting the economy further. That is why it is bad for everybody.

But now, because of Bush and Cheney's cavalier spending ways--they never even put the Iraq War into the budget--we have a fool's choice here. Which is no choice. We have to spend now not just to save the economy, but to save the planet. Global Warming keeps coming and oil is getting used up. We have no choice but to raid the cookie jar again--but, thanks to those two, it's almost empty! They talked a lot about traitors to America--but their actions were the most destructive in some ways.

[PhilLaw]

Please.

Will and Krugman made the same point. WWII pulled us out. Will called it the Japanese attack and Krugman called it a public works program. Who is more accurate?

I voted Obama and I'll be in DC on Jan 20th. But I'm a converted Rep. / Libertarian. Don't let BS titles rule the day here.

[research]

we were already getting 14% gnp growth and increasing employment by 1934 and from 1938 till the war started. check out the timeline posted below.

[DuganS1]

Real GDP was only a hair greater in 1938 than in 1929. The GNP "growth rate" isn't very telling because total GNP was recovering from the very low cyclical bottom set in 1932, but still below 1929 levels every year in the 1930s (except 1937, 38 'by a hair' and 39 'still not by much'). Unemployment never dipped below 14.3% during FDRs years in the 30s and went as high as 19% as late as 1938, mostly because of colossal policy errors.

[truthmachine]

You seem to have had earplugs in while listening to that. The public works programs that pulled us out preceded the war -- and they are the sort of programs that people like Will are attacking.

[bayviking]

Milton Freidman won a noble prize in economics while being the chief spokesman for the shock doctrine. His Chicago school philosophy, which justifies deregulation and jungle law with the word freedom, has made a train wreck of Bolivia, Brazil, Chile, Ecuador, Russia and now the USA (partial list only).

We saw it in Greenspan's plan to create wealth on paper by inflating real estate and debt. Its the same kind of plan as Bush running the dollar printing presses 24/7. Now Bush is emptying the National Treasury as fast as he can, like a deposed Dictator leaving a colony.

Fortunately Krugman isn't that crazy, his Keynsian solutions have been used by Nixon and China with success. But conservative think tank double speak still rules the academic world of economics, particularly in the USA.

[IslandPress]

The U.S. needs clean energy jobs to help rebuild the economy. And possibly a cap-and-dividend climate policy? So suggests Jon Isham, Professor of International Environmental Economics at Middlebury College in Vermont:

http://blog.islandpress.org/246/jon-isham-what-comes-after-yes-we-can

Is that progressive fiscal oolicy?

[Clayton139]

Paul Krugman is a smart economist ! He saw this financial crisis coming !
(Bill OReilly was SO WRONG) going against Paul Krugmans view of the economy !

http://www.youtube.com/watch?v=MUOFTPbxuWA&feature=related

[jhoughton1]

Do we need any more proof that Bill O is a very articulate horse's hind end?

[chin075]

Isn't Paul Krugman a Nobel-prize winner? And George Will a conservative? Case closed, I thought so.

[Patton]

Will was distracted, Cokie Roberts had her hand on his thigh.

[Patton]

Will was distracted, Cokie Roberts had her hand on his thigh.

[chendri887]

Thanks for that, Mr. Krugman. George Will is an irritating little gnat.

[Erdgeist]

Sorry, but Krugman knows his history -- Will lives on conservative fantasy island. There were two great recessions. The first was 1929 to 1933. This was due to a failure of the commercial banking system (which is today's problem). When FDR became President, he made the right moves. His government was proactive. Then in 1937 he got stupid and went conservative. This brought on the second recession that lasted until 1938. World War II then saw a very proactive government under Roosevelt. And this is what government has to do when faced with a deep recession or war! It has the power to move the economy and move it, it must.

[ROWAnne]

We Canadians were in the war from 1939. Roosevelt was getting a lot of pressure from Republicans to stay out. Pearl Harbour resolved his dilemma.

[SeaBlood]

World War 2 was an "enormous public works project"? I never thought of it like that but it seems to make sense. The Iraq war would have worked too, except Bush told the populace to keep spending like normal.Thank goodness that crowd is going away.

[ObjectiveRealist]

Don't you believe it. World War 2 was a war and the economic boom that followed was ONLY a result of the pent-up economic demands that World War 2 retarded. That includes the Baby Boom, absolutely.

[oxygen]

yabut - it's apples and oranges no? china, oil, russia, 6 billion people, intense moral decay due to baby boomers using cannabis

"we can't afford to lose another generation of americans" Scott Harshberger ex AG of Massachusetts (speaking out about the need to prosecute college students for cannabis use - even though he himslef admitted to doing so while in college and had said prosecution befallen him he would not have been...... the AG)

so you see O.R. the baby boom generation doesn't really exist
check out the we generation http://www.gen-we.com/

[Jody2167]

I always remeber people saying that war creates jobs. However, with the Iraq war this did not happen. It was only the WW 1 & 2 that created jobs in the defense market.

[LeslieM]

Iraq did create jobs...for Halliburton, that is. You didn't expect those jobs to be in the public sector did you?

We should have been encouraged to buy war bonds and finance our own war. That may have made people think about the costs more.

[machivellianX]

Paul K. is an honest man. The economy tanked again after FDR raised taxes and cut spending significantly, this is what prolonged the suffering...and to right this ship we are on now, because of the excesses of the last 30-40 years we will have to do the same thing again. Instead of allowing the markets to adjust normally, and allow free enterprise to take over the garbage for pennies on the dollar the government intervened.
There is no way Obama can move forward with his proposals. We will need to cut, cut, cut, and raise taxes to get out of this mess, and that process will be the most painful thing the Americans have ever seen.

[USBrit]

So FDR raising taxes and cutting spending prolonged the Great Depression, which I agree with as the evidence is quite clear on that, but Obama will need to raise taxes and cut spending in order to prolong the current mess? The US has no choice over the next few years but to engage in even more deficit spending both by tax cuts and increased spending in order to try to stabilize the economy - which as the debt builds up will in my view inevitably end or sharply reduce US world power. If Obama does as you suggest the US will collapse even more swiftly and more profoundly than I currently expect. The US empire is quite simply in decline. The US has for the last 30 years steadily let cowboy capitalism run completely a muck, and now we have the heroes of Wall Street lining up for government handouts, so the statement that 'allowing the markets to adjust normally' is a falsehood in that the markets naturally produce excessive boom followed by catastrophic collapse, a very undesirable state of affairs.

[machivellianX]

taxes will have to be raised significantly if we are to balance the budget. The reason it will have to be done is because the congress left no alternative with the trillions of dollars of liquidity pumped into the market. Through their actions they guarantee another great depression. Now we are left with the same path that FDR followed to get us out of the mess, save what P.K. mentioned as the biggest public work's project ever, add on top of that Paul Volcker raising interest rates to 13.5%, that might be surpassed. We will be left with misery, very necessary misery. What is happening now is more sadistic than I ever would have imagined, and unfortunately it could have been much less painful if we let the markets adjust on their own 8 years ago.

[machivellianX]

another point, increasing spending, stimulating spending is why we are in this mess to begin with. Excessive credit and low interest rates created by the likes of gramm and greenspan are why we are in this mess. We spent ourselves into oblivion and you suggest we need more of that? It's rather insane, it has never worked, and it won't work now. People need to start saving again. The problem is debt, the problem is that the avg family has over 20k in credit card debt. This system has engorged itself and it is now a dying star. We should allow the big three to fail, only free markets can restore normalcy through competition. We can no longer prop up inferior products at the tax payers expense thinking it will solve the problem. Only private industry can fix this problem, no banker, broker, or politician will fix our deficit spending, our trade deficits, and our inability to compete against foreign products. If the politicians cared about the people they would repeal nafta, and give incentives for manufacturing business to return to the US, otherwise goodbye to the US, farewell, it was nice while it lasted.

[chronicler]

Yes, and that stupid Cokey Roberts rudely interrupted just as Krugman was about to make his point. Why they let that supercillious holier than thou woman anywhere near serious journalists is beyond me.

[Jody2167]

Remember when she said that Obama should have vacationed in Mytle Beach, S.C.? She said I know his grandmother lives in Hawii but it is so exotic! What an idiot. I used to like her-- but now WTF?

[TCPITS]

Cokie Roberts, ha! You don't get more "to the manor born". She can't begin to spit the silver spoon out of her mouth. And how embarrassing for NPR to have constantly hired her husband Steve. No talent just nepotism. When I hear either of them I race to turn off the radio.

[bluedemons]

George Will did not get 'schooled' by Krugman here. The two of them agreed on all the basic points. Growth was slow throughout the 30s. The problems did not end until the war came.

It seems clear that Krugman was anticipating, wrongly, that Will was going to say the New Deal did nothing to help. Read his colums. He's never said anything of the sort. Notice too that Krugman, like Will, understands that some of FDR's programs helped but that not all of them were effective.

Dumb article.

[dartagnan]

George Will would like to repeal the New Deal. In fact he would like to roll the clock back to the 19th century. He said that in so many words in a column he wrote shortly after the Republicans took over Congress in 1994. Guys like Will and Grover Norquist believe the presidency of William McKinley was the Golden Age of America.

[noradunn]

Yeah. Guys like George Will talk the talk but have never walked the walked. They don't run the bases, either. Roosevelt didn't have all the answers, but by 1937 the economy was stronger, and a middle class was emerging.

[LisaO8]

Will is a condescending, pompous elitist. It's just nice when someone smarter than him let's him know it.

[MarkBoston]

What would happen IF EVERYONE made a pact NEVER to appear with Bill o'R Ever !! He would be out to sea... Boycott Bo'R !!!!!!!

[peppermint]

I admit O'Reilly is great but what's he got to do with this? Boycott? That's the lib answer to anything they don't like ---muzzle them.

[LaurenMarie984]

To put your comment in perspective: us "horrible Liberals" change the channel when someone they hate is on TV. Repubs, on the other hand, lash out with false allegations and fear mongering.

[USBrit]

His greatness is of such extreme quality that it remains deeply obscured by his trite and largely irrational 'analysis' on his TV show. Glad to see you are a fan.

[dartagnan]

Boycotting is not "muzzling." Nobody is saying O'Reilly should be prohibited from spewing his garbage. It is his right to spew it, and it is the right of those who don't like it to protest it by, among other things, boycotting him.

[TKDuff]

O'Reilly has called for many boycotts before. Pepsi is the one I can think of on top of my head because they want an upcoming rap star Ludacris to be their spokesperson back then. O'Reilly thinks that Rap is pretty much the devil's music therefore should not be even around. Pepsi pulled out of their sponsorship. Personally I do not buy products that are shown on Fox News I flip the channel to O'Reilly when commercials are showing so I know which products not to buy. You should try it it saves you a lot of money. What these corporate capitalists do not understand is that us young, Obama voting, organic tea drinking, iPhone carrying, biodynamic, organic, fair trade seeking liberals have more spending power than those gun loving, bible thumping, christian worshipping, uneducated rednecks that watch their show.