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

[thefringecenter]

As Krugman spoke, I could hear Will's panties getting tighter.

[alieninvader]

I didn't think that was possible.

[Donzi9]

Are you kidding me? Schooling George Will? Will is brilliant Krugman is clueless. Unfortunately Krugman didn't learn from "uncle Milt" as in Milton Friedman, then again, Krugman probably couldn't pass the academic credentials of Friedman and his gang. This guy is a complete lightweight! Long on utopia and short on facts and the fact they gave him a Nobel prize has diminshed the prize for all economists into the future. I bet Milt turned over a few times when he heard Krugman had won. What a joke. I wonder what newspaper he will attempt to use once the NY Times goes bankrupt? Mindless dribble.

[AbdulScarface]

John Meynard Keynes was the key to the end of the great depression, not Friedman. Friedman unquestionable belief in the freed market is partly why we are in such a mess at this time. Keynesian economics is more of what we need right now not the free market dogma we've heard the past 40 years.

[gnorrfa]

dribble? i know what drivel is, and you write it.

[PimpOmega]

Yeah, go back to Drudge. Maybe someone there will take you seriously. :P

[mitaka]

You are judging Paul Krugman's economics credentials based on which one of your credentials? You got a PhD in economics from Chicago, MIT, or Princeton? Oh wait. You couldn't have gotten a PhD from Princeton because the man you are disparaging is a tenured professor there.

[Rothgar]

Sorry but evidence in his book proves that Uncle Miltie was wrong about the Depression. It is clear from the data that Dr. Miltie provides in "A Monetary History ..." that his claims about the economic forces in action during the Great Contraction (his term) was wrong. Looks to me like Dr. Miltie was the hack.
One of Dr. Miltie's fundamental conclusions was that monetary flows dictate the course of real markets. Yet in the 1920s the real goods economy was shrinking for years BEFORE October 1929 Stock Market meltdown. This shrinkage accelerated then continued on a relatively stable downard slope until New Deal deficit spending and the jobs that went with this spending increased consumer demand. The financial meltdown may have persuaded the ownership class to acknowlege their real economic losses but the loses were already in motion well BEFORE the financial markets imploded.

[rowzeer]

Friedman placed the full blame on the government and their policies..­..mostly the Federal Reserve, but he never mentions that the Federal Reserve is a quasi governmental entity...i­t is run by private bankers. So he really meant that privatization was the accelerant.

He never mentioned stagnant wages, the wide gap b/t rich and poor, rampant speculation, etc., etc. because it didn't fit his ideology.

[vedder110]

Milton Friedman, despite being a very accomplished economist just like Krugman, was also "long on utopia". The support of Pinochet in Chile in order to create a Chicago School paradise was responsible for a long list of human atrocities.

[KAOS13AL]

THE REPUGS BELIEVE IN A GOVT OF "US" PEOPLE, BY "US" PEOPLE & FOR "US" PEOPLE...
WHAT'S FUNNY ARE THE MIDDLE CLASS PEASANTS WHO MAKE LESS THAN $250K, SHOOT, $50K OR LESS A YEAR & CALL THEMSELVES REPUBLICAN­S...NOTHIN­G ABOUT THE REPUGLICAN PARTY & ITS PLATFORMS THRU THE YEARS HAS EVER HAD ANYTHING TO DO WITH THEM, ABOUT THEM OR FOR THEM...WHA­T TAX CUT DID McCAIN HAVE PLANNED FOR THEM????? ALL HE RANTED & SPIT ABOUT WAS OBAMA WAS GOING TO RAISE TAXES, BUT HE NEVER SAID ON WHO EXACTLY, VAGUELY INFERRING IT WAS GOING TO BE ON THEM.
BUT, HEY, GALLEY SLAVES ALWAYS ROOT FOR THEIR OWNERS, ALWAYS HAPPY WITH WHAT THEY ABOVE LET "TRICKLE DOWN". THE ONLY THING GOOD THE REPUGS HAVE EVER DONE WAS FREEING THE SLAVES...B­UT THEY'VE BEEN TRYING TO REPEAL THAT SINCE THEY DID IT BECAUSE THEY CONSIDER THE WORKING CLASS THEIR CHATTEL, NOTHING MORE, AND ACTUALLY A LOT LESS.

[kjstjohn]

As a result of the "Southern Strategy" many low-income Southerners vote Republican because they think Republicans will keep brown and black people down.

Racism is such a powerful motivator that some people would rather sacrifice their own economic interests than benefit the people whom they wish to oppress.

[chillybew]

The depiction of "Southerners" as primarily race-oriented voters is a whitewash of so much history and cultural reality that I won't bother to address that. But as someone who lives in Birmingham, AL, I'll tell you that the GOP's propaganda machine is a lot more powerful down here than the superficial proposition of holding "brown and black people down" suggests. The GOP has entrenched itself in the economics and religion of the South so strongly that you'd be hard pressed to dislodge the idea of a Republican from that of a Christian. Essentially, what I wanted to say, it's not just race that motivates people to "sacrifice their own economic interests" -- it's a great deal more complicated than that.

Also, the ratio of blue to red in Alabama was the same as red to blue in Massachusetts. Keep that in mind when thinking of the South as oppressively Republican/racist -- New England, by the same token, could be seen as oppressively Democratic/elitist.

[jian1312]

I can't agree more there! Not just 'some', apparently A LOT of people would, have voted against their own economic interests, because they don't want blacks to benefit from certain policies, without realizing (with conservatives happily helping to misinform them) they themselves would benefit too. Think of universal health care.

I not long ago asked a co-worker who's Caucasian American (I'm an immigrant) how come the US chose, decades ago, to NOT have universal health care or some version of it, like most of the industrialized countries did? He said, quite simply, because they didn't want black people to share that health care system! They feared that they'd be forced to share the same hospitals with blacks. Yep, that simple.

I guess it won't be very helpful to lament and complain how STUPID some people, or lots of people can be. What needs to be done is to find ways to educate and convince them where their economic interests are, and what policies are actually in their better interests. For example, Obama's tax policy will actually reduce Joe Plumber's tax burden, IF only Joe was smart enough to realize that. I believe Obama will educate the public on these fronts. Hopefully, by the end of his 1st term, we won't be hearing any more of the stupid claim that the US is a 'center-right' nation. If the public get better educated, they'll know 'center-right' means you're on your own, if you get struck by bad luck.

[bonbk]

My husband and I cheered when Krugman corrected Will.

ps to the poster who said PG was a hack......­.......are you KIDDING?!?

[schatsie]

I love Krugman! I hope Obama meets with him on a weekly basis...It is so horrible to hear these KNOW NOTHINGS still spouting the Republican myths that Robert Reich debunked years ago..

WHAT IS THE MATTER WITH THE MEDIA????

[beebst]

ooo hot damn! in your face!

[toymaker]

Krugman is more correct. Who would want to invest in the middle of
the Great Depression.
History may repeat itself, but not economics.
This is a new ball game with new rules broken.
Loaning money with no risk, did the mortgage bankers know the
difference in fantasy football and fantasy banking?
Next up, one can send unwanted and unasked for credit cards out
with no risk. Why?, the new bankrupcy laws.
Again, there is always risk, and watch these boys except the
reality of uncollectability.

[IncredulousGeezer]

Two comments in a row snuffed, I guess in favor of some of the tripe I see here...
or did I demean someone (who actually deserved) it?
I notice Mil.ton Fried.man got by. I tried him here without disguise and Bern.ie Ker.ik elsewhere.
could that be it?

[instarx]

who cares?

[IncredulousGeezer]

Just in the way of warning about how things are flagged here these days, that's all. Some may care even tho it's too pedestrian for you, apparently :)

[JBS]

Content mostly has little to do with which comments get posted and which don't. The software that runs this thing is a mess.

[Blackberry826]

Dear adamsmith3,

Please contact committee that just awarded Krugman the Nobel Prize in economics and straighten them out. And don't forget to explain to Princeton why he shouldn't be allowed to remain on their faculty.

[HatingTheGame]

"Enormous public works program known as World War II to bring us out of the depression­..."

This is what Bush did with the War of Error. In 2001 with the internet bubble bursting, and all his cronies like Ken Lay heading to the dock, massive government spending on military, spurring on spending in high-tech (security, surveillance, etc) helped pull us out of that recession. Unfortunately, it was all done through borrowing from the Chinese (and others), and feeding the housing bubble. All of which eventually collapsed into itself.

Ultimately, you got to pay the piper.

[JBS]

There were no "public works", no mobilization in the traditional sense of putting the economy on a "war footing". Less than 1% of the national population has anything to do with the Iraq misadventure

There was only a massive transfer of taxpayer's money to a favored few corporations with no strings attached; nothing like actual requirements for contract performance.

Although it did provide a distraction from Enron, that wasn't it's purpose. It was contrived to give an excuse for George W. Bush's screw-ball reading of the Constitution that the President's unilateral power is UNLIMITED when he's acting as Commander-in-Chief.

Remember "I'm the decider"?

[adamsmith3]

Krugman WAS an economist. Now he's a hack political writer for a newspaper with consistent­ly-shrinki­ng circulation. Krugman is the reason that fact-check editors were hired for the editorial page of the NYT. He used to just throw random, made-up facts into his columns until the NYT became so annoyed with having to post corrections the next day, they started fact-checking the guy. My point is, the guy is a political hack, clinging to Keynesianism (which encourages massive deficit spending). His point in this video doesn't even relate to what George Will was saying, so I don't know what this "smackdown" business is about. By the way, go read the work for which he won his Nobel Prize for. It advocates free-market, low-regulation, low-taxes capitalism. He hasn't won squat for the ideas he espouses today.

[theilian]

How are things going at Corner these days?

[Gasparilla]

Krugman was exactly right on the mortgage crisis. He started saying over three years ago that this was coming. And he said then it was because of too little regulation, of mortgages being handed out to people who could not afford them, so the mortgage brokers could make money for writing them.

[vedder110]

Peter Schiff also masterfully predicted the mortgage crises, and actually Peter Schiff also better predicted the NASDAQ bubble than Paul Krugman. Of course Peter Schiff doesn't have a Nobel Prize or teach at Princeton, the apparent threshold for being taken seriously. So his dire warnings that deficit spending that will cause the dollar to collapse and the US economy to implode should just be ignored.

Peter Schiff - June 2005

http://www.youtube.com/watch?v=Y8922EPkzjw

[Tommygun2146]

Krugman won the Nobel Prize THIS YEAR for economics, not for writing articles or opinion pieces. Your right-wing propaganda argument falls flat. But as long as we are investigating what people really do and what their qualifications are, how about you tell us where George Will got his degree in Journalism? How about where he studied Political Science? Economics? Gee, for someone who pontificates on all these subjects with such authority, Mr. Will is certainly lacking in qualifications. But you knew that already, didn't you?

[Tommygun2146]

So the Nobel Prize people awarded the prize for economics to a former economist? Get your facts straight.

[guajiro]

You might have your Krugman's mixed up. Here's a comment from the Associated Press:
"Krugman's work looked at on how economies of scale -- the idea that as the volume of production increases, the cost of making each unit falls -- worked alongside population levels and transportation costs to affect global trade. Krugman's theory was that because consumers want a diversity of products, and because economies of scale make production cheaper, multiple countries can build similar products, such as cars. Sweden builds its own car brands for export and to sell at home, for example, while also importing cars from other countries.­"
http://biz.yahoo.com/ap/081013/eu_sweden_nobel_economics.html?.v=1
Not to say Krugman doesn't believe in capitalism, just that he won the nobel laureate for the reason stated above.
Will said the investment was poor because "the government had the fidgets, and would not let rules and markets work". Krugman responded, saying that with 20% unemployment and factories idling still, who would want to invest in factories. The government "works" program, the war, is what he says got the depression turned around. I completely disagree of course, since getting a bomb is like seeing a firecracker pop; there isn't anything for anyone but memories. I agree with government works programs, but more domestic oriented.

[Tommygun2146]

I had the good fortune of hearing Paul Krugman speak a couple of times during the Air America Radio cruise back in February. Unlike George Will, who has made a career out of nothing more than voicing his opinion in a manner that he and some others consider clever, Mr. Krugman has actually studied economics and excelled in his career. Push your right-wing agenda when you have another gas bag pundit to advocate for the opposition, George, not when you have an actual economist sitting next to you.

[canucklivinginUSA]

I have his book, International Trade and Finance, and its inspiring. Love me some Krugman

[TimmySlagle]

That's a Schooling?

Krugman tells Will he's wrong, and then refuses to offer an alternative.

The simple truth: Investors thought Roosevelt was a Socialist, and might nationalize Industry. So they didn't invest.

Hence the recession turned into a recession, and lasted well over a decade.

[Gasparilla]

I think you mean the recession turned into a depression. You're still wrong. The depression had been under way at least three years before FDR took over.

[TimmySlagle]

you are correct.

then the depression turned into the Great Depression. Why? If Roosevelt was such an economic genius, why did it require a war to get us out of it?

[Tommygun2146]

And do unicorns exist in your alternative, revisionist reality? The Great Depression was started under a Republican and already in full swing when FDR was elected and he brought this country out of it with his policies. I'm guessing you think that Social Security, which brought 2/3 of our nation's elderly and disabled - people who were literally starving to death in their homes and in back alleys - out of abject poverty, was also a failed socialist policy.

[TimmySlagle]

"The Great Depression was started under a Republican and already in full swing when FDR was elected"

Yeah, but you (like Krugman) have failed to explain why the Depression lasted over a decade. Most recessions only last a couple years. Besides Roosevelt's New Deal, what was so unique about this one?

[vontrapp]

George Will masks his rather pedestrian intellect with a large vocabulary.

I love watching him tap his fingers in frustration at being immediately corrected by a far superior (and Liberal) mind, as opposed to the sycophantic behaviour he usually receives from the other media mouthpieces.

Paul Krugman should be Obama's Treasury Secretary.

[water57]

Look, this was just a case of George Will's dreadful bow tie to tight, which cut off oxygen to his head. Remember, he was for Sarah before he was against her. On that matter, he had to loose up his bow tight and save his reputation.

[cinemabon]

Notice Cokie Roberts quick comment of support for George Will at the end of that piece after Krugman showed him up. Do they love each other or what?