In2 America,the economy and history…

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Lesser panics continued to strike—the John F. Kennedy recession, the double-digit inflation of the Jimmy Carter years, and the crash of 1987 during Ronald Reagan’s presidency, when the stock market suffered the largest one-day loss in its history. Wall Street, and the economy as a whole, rebounded every time. So before President Barack Obama completely “remakes” America, as he has promised, he might benefit from a long look in the rearview mirror. Our system has proven remarkably resilient.

That’s the closing of an article found at CityJournal

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2 Comments

  1. Marc says:

    A. Jesus Christ, there is nothing empirical about Amity Schlaes’s book, she just burns through a bunch of anecdotes about individuals. And if there really is so much doubt about the efficacy of the New Deal it’d probably be better for journalists and conservatives to do better than citing a single book, the same book, that doubts the New Deal over the time period since the new deal. As proof of their economic ignorance:

    It wasn’t until 1940, when the nation’s factories began to retool for the imminent war in Europe and Asia, that the economy truly revived and the U.S. came close to full employment.

    With what money did these supposedly broke factories retool with? The U.S. government, WWII represented the largest single government expenditure per the national GDP in history. Still a government spending program, just in a different sector.

    The other “lessons” really don’t go any farther towards proving their point. The recession of 1907 was only saved via a “bail-out” from a man whose firm had a wealth equal to all the property values in the 22 states surrounding the Mississippi. Keynesian economics goes for government spending because it’s assumed the government is the only entity large enough to pay for a bail-out of the economy, but when you have an individual with such ridiculous personal wealth, well, then you don’t need the government. But that doesn’t make it non-Keynesian bail-out. Now name me someone today capable of doing what J.P Morgan did through both his connections and amassed wealth. Our richest American has bout $50 billion, which is less than a quarter of the total losses of Citibank alone. Also, he’s in the computer biz.

    The 1873 crisis was deflation without a corresponding decrease in the GDP growth rate, so it wasn’t a true recession, which kind of makes it a piss poor example. Anyways, the reason it was a deflationary period is because technology had actually outpaced economic expansion. Output per laborer increased, allowing for large scale layoffs without corresponding drops in output, and the whole thing was happening faster than they could build new factories and take advantage of the huge unemployed labor force. Don’t take my word on it, Milton Friedman wrote the defining history of this recession, more commonly known as “the long depression.”

    It’s convenient too how the author doesn’t explore those crises with the most in common with this one. The author explores the Great Depression, kind of, citing on dissenting opinion. The next closest example is the Savings and Loan Crisis – silence. Why? government intervention.

  2. Alfie says:

    Your Keynesian passions are a showing Marc. I offered the article link out of interest and by no means submitted it as the quintessential piece on the matter. I do however disagree with your comparisons. I think the silver/gold standard crisis fits better than the S&L scandal. but that’s just me. Thanks for taking the time to offer an opinion/viewpoint.

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