We are getting tired of economists citing the Great Depression to support their ideologies with scant attention to facts. Here Marshall Auerback clarifies the debate with references to what actually happened. His story (the real story) supports the Job Guarantee approach that Smart Taxes also advocates.
..But the other lesson of the Great Depression is that properly targeted fiscal policy which focuses on job creation can work. The Great Depression was indeed a disastrous human calamity but FDR’s New Deal (including the high wage policies) attenuated the disaster. There is nothing to the claims that the interventions made things worse, other than when Roosevelt himself capitulated to the tired old forces of financial conservatism and fiscal austerianism, and the economy paid the price. Thankfully, FDR was not ideologically wed to the ideas of fiscal austerity and quickly reversed course. It helped, of course, that his Cabinet was well represented by progressive figures such as Frances Perkins, Henry Wallace, Harold Ickes and Harry Hopkins, who overcame the forces of economic conservatism embodied by FDR’s Treasury Secretary, Henry Morgenthau. We need these kinds of progressive forces in current Administration, especially given the recent resignation of CEA head, Christina Romer. It’s time to let go of the old ideology, which created today’s crisis. Here’s hoping that President Obama, like FDR before him, changes course quickly. America is ready for a new New Deal. (link to full article)
