Roosevelt vs Reagan

[AENeuman]

I was listening to my buddy Rush today. He said right now there is a battle over which economic model to follow, that of Roosevelt or Reagan. Of course he said Reagan's was for more successful, that FDR's approach kept the US in the Depression for an extra 7 years.

I guess by FDR Rush means little, if any tax breaks, and massive government spending of social programs. For Reagan big tax cuts, especially for the rich and less government spending on social programs.

Do you think Obama is more or less faced with choosing between these two approaches? Is it reasonable to equate the political and social climate of the 30's and 80's with today? (Seems military spending alone makes these 2 choices obsolete)

[albionmoonlight]

Too simplistic. Economics is a science, and it has advanced since the 30s and the 80s. If anything, we have the 30s and the 80s as models.

But, there is no reason that this has to be an either/or.

[rowech]

Very interesting article about this by Pat Buchannon on MSNBC this weekend. Basic belief is that the only thing that stoped the Depression was WWII. It wasn't all the New Deal stuff, etc. although that made it a little better. His premise was that by doing what FDR did, nothing good is going to come out of it.

[JPhillips]

Not everything FDR did worked, but look at growth rates during FDR's first two terms. Except for a recession in 37-38, brought about in part by cutting spending, the economy grew rapidly pre-WWII under FDR. Growth rates, though, are only a small part of the picture. Many of the regulatory changes during FDR, especially the FDIC, did a great deal to stabilize the economy.

That being said, I don't think it's an either/or proposition. We'll need to spend a lot, but there's only so much "shovel ready" so some tax cuts will also be a part of the package. The key should be finding proposals with a high chance of working regardless of whether or not they are Reagan policies or FDR policies.

[ISiddiqui]

The current crisis is more like 1932 than 1980, of course. Though it isn't nearly as bad as 1932 yet (and probably won't be due to protections that have been built into the system and the law). There is also, of course, the vast differences in the underlying financial system in 1932 and today. A lot of the protections for people who lost their jobs weren't around back in 1932 and had to be created by FDR. One can argue that no where near that level of added protection for the unemployed is needed these days (as they have quite substantial protections already).

[SteveMax58]

While I think it is important to understand the past financial problems and find the correlation of how prosperity was brought about...I dont think it is completely relevant to say everything that was done in situation A is better than B.

I think there are fundamendal factors and actions that must be taken(or not taken) in order to bring about a climate which is ready to grow and profit. When and how to use those, coupled with the myriads of geo-political, cultural, and environmental factors...is the key IMHO.

[Greyroofoo]

Given that Roosevelt had Polio, I think the outcome is Reagan in 6.

[kcchief19]

Too simplistic. Economics is a science, and it has advanced since the 30s and the 80s. If anything, we have the 30s and the 80s as models.

But, there is no reason that this has to be an either/or.
Winner on all counts. Given our knowledge today, I'd like to think neither FDR or Reagan would do things the same way all over again.

That said, in general terms we know exactly how the Regan philosophy would have fared during the great depression -- it's called the Hoover Administration.

[ISiddiqui]

You mean the administration that started programs that became the precursor to the New Deal (as even some of the Brain Trust admitted)? ;)

[M GO BLUE!!!]

Very interesting article about this by Pat Buchannon on MSNBC this weekend. Basic belief is that the only thing that stoped the Depression was WWII. It wasn't all the New Deal stuff, etc. although that made it a little better. His premise was that by doing what FDR did, nothing good is going to come out of it.

This is one of the things that scares me... We have a growing recession with all the money being spent on a war. If WW2 lifted our economy, we certainly can't count on a similar bailout. WW2 did show us how to filter money into certain areas that a wise President did warn us about in his farewell address.

Guess I need to invest int eh one company that is doing well these days: Haliburton.

[ISiddiqui]

As far as complete mobilization of the populace to war production, Iraq is a hill of beans compared to WW2.

[flere-imsaho]

Plus, the war money's being spent differently. The war spend for WWII involved putting money directly into American ventures, putting millions of Americans into factories using raw materials from North America to churn out equipment and supplies.

A lot of the war spend for Iraq/Afghanistan goes to companies that are multinational and the diffusion of that money (spent on raw materials, distributed to employees/shareholders, etc...) is diffused on a global scale, so the impact isn't as direct.

Plus, there's the whole issue of scale, as ISiddiqui points out.

Guys like Rush & Buchanon are blinkered Reaganites/Friedmanites feeling threatened by speculation that we'll move back to a more Keynesian economic philosophy. Of course, given that Keynes gave us the 50s and 60s, you'd think they'd be all for that, but the truth is that both of their careers are based on the praise of Reagan, and anything that chips away at that chips away at their own raison d'etre.

[ISiddiqui]

Keynes also gave us the 70s ;).

[flere-imsaho]

As I've said previously, no great economic idea should be left to run unchecked indefinitely.

[Dutch]

As I've said previously, no great economic idea should be left to run unchecked indefinitely.

For instance, Auto Labor Unions.