Choosing depression: both kinds

Even David Frum "worries" over this--"Depression is a choice"--from the blog Interfluidity:

We are in a depression, but not because we don’t know how to remedy the problem. We are in a depression because it is our revealed preference, as a polity, not to remedy the problem. We are choosing continued depression because we prefer it to the alternatives.

Defining "we" may be a bit problematic, but there's no question that the writer is correct in saying our economic funk is a choice. President Obama knows it, you and I know it, every Keynesian economist knows it: we could have spent our way out of this Hooverian nightmare long ago, and we still could--if only this country were absent its organized obstructionists and malevolent Party-Firsters, the Republicans.

That would seem to be the principal distinction between this Great Recession and FDR's Great Depression. Keynesianism was little known during, and of course never tried before, the 1930s; pumping massive amounts of government dollars into the economy to cure a depression essentially constituted a leap of faith by Franklin Roosevelt, whose faith was limited by an obsession with balanced budgets and whose leap, accordingly, was reserved. To the extent Roosevelt did exercise Keynesian pump-priming with considerable political support, it worked. The extent can be measured, verified, and best of all, duplicated in a more expansive manner.

In brief, we know how to short-circuit recessions. Even Republican President Dwight Eisenhower embraced the federal interstate highway program in large part as a federal works project to short-circuit his recession. He never doubted its effectiveness. By then, there was no economic reason to doubt it and even less reason to politically fear trying; his party's Allen Wests and Joe Walshes did not yet comprise its majority.

But they sure as hell do now. And because of them, here we are, barely crawling our way out of this GOP-induced mess. I can't imagine Obama's frustration, knowing as he does that the mess is indeed fixable, and we don't need to imagine our own.

Comments

[Murr Brewster]

I've got a notion recessions and depressions will be with us forever as long as we persist in thinking we can grow forever.

[mdblanche]

Hoover at least had the decency to hand over a country whose accounts weren't a total mess. Passing a major stimulus when a massive deficit already existed was always going to be politically difficult and costly. It was also less effective economically than it would have been if we had been in less of a hole to start with.