Tuesday, June 2, 2009
Missing the Point
This is something that occurred to me a month or so ago but I never got around to writing anything about it. Back when the Republicans were busy casting about for reasons to make us fear and hate Obama. Wait. Let me put that in a tighter context. Back when the Republicans were trying to convince us that Obama is a sociali… Okay, I’ve got it now: right after the stimulus package when the Republicans were busy teabagging each other and otherwise making a complete mockery of their once fine party, they decided to go after that one horrible bogeyman who looms large over all of American history and is single-handedly responsible for our imminent descent to Communism: Franklin Delano Roosevelt. The ultra-conservative Republicans hate FDR and hate the New Deal. I’m not entirely sure, but I think they hate them because all anyone has to do who wants to support programs wherein the government actually helps people who are in trouble instead of playing the role of the boot stamping on the human face forever has to do is say, “Hey, New Deal.” The Republicans don’t have a comeback against the New Deal with someone who is educated. Things got better for the economy during every year of the New Deal save one. That was the year FDR’s non-Keynesian economists managed to convince him to roll back the programs. So they retreat to their final line of defense. “The New Deal didn’t end the Great Depression,” they’ll say, “World War II did.” This might be the case. It’s hard to say what factors did what to end the Great Depression. But it doesn’t matter whether World War II was the end or not, since this doesn’t help their argument, it destroys it. World War II was a massive expenditure of government money. The Free Market did not reach out its invisible hand and say, “Hey, let’s go to war with Germany and Japan.” Soldiers did not buy their own M1 Garands and kayak out to the South Pacific. The government spent the money. In fact, and here’s the realization that leads to this post, claiming that World War II was a massive expenditure of government money doesn’t go far enough. People have pointed this out. Hell, I think I pointed it out back in March or April. No, there’s one additional step that must be taken: During World War II the reality is that the economy of the United States of America was a centralized, planned economy. The government went in to one factory and said, “Make B-17 bombers until we tell you to stop.” It went to another and said, “Make M4 Sherman tanks until we tell you to stop.” It went to a shipyard and said, “Make Liberty Ships until we tell you to stop.” The government then purchased all of the bombers, tanks, and Liberty Ships that were manufactured. While that was happening no company was manufacturing Buicks or refrigerators because, y’know, wartime necessity and all. The Free Market economy was not in effect. Yes, there was still a secondary market for used cars and whatnot, but the secondary market would have been artificially changed by the lack of a primary market for manufactured goods. Meanwhile, the government also drastically increased the size of its bureaucracy and, in doing so, took the country above full employment. This requires two assumptions. One, previous to World War II adult, married women by and large were not considered part of the work force. Two, you understand that the armed forces are actually bureaucracies. Yes, they are bureaucracies which in part carry guns or pointy sticks, but a standing army is a bureaucratic organization from the highest general to the lowliest recruit. Everyone in the Army or Navy in World War II was a government employee (as they are today, but today we also count the Air Force, which was a part of the Army during WWII) and as such received their paycheck from Uncle Sam. Since so many able-bodied men were overseas or otherwise unable to work in factories or on farms, those who were not traditionally employed filled those positions. This is, in effect, an artificial situation almost exactly analogous to FDR founding the Civilian Conservation Corps and hiring people to plant trees. The only real difference from an economic standpoint is that in WWII there wasn’t an attempt to give make-work to idle hands. Every position needed to be filled. So just remember this. And the next time somebody tries to tell you the New Deal didn’t work and that it was a good, old fashioned war that brought us out of the doldrums, smile, nod, and say, “Yep. Nothing like a good war to make a centralized, command economy a necessity.” And if they don’t get it…well, don’t be surprised… ----------------------- Note: This doesn't change the fact that there's plenty of reason to be worried about the fact that the government now owns 60% of General Motors. But if we're going to discuss the involvement of the government in the market, it's best to do so with a clear understanding of what's going on. Ideological blinders and half-considered catch phrases add nothing to the conversation.