Sunday, December 14, 2008

The New Deal Provides No Support for Obama's Big Govt. Plan

From the
Independent Institute: 
    President-elect Barack Obama is looking to FDR as a model in battling the recession. Yet, as Independent Institute Senior Fellow and historian Robert Higgs has shown, FDR’s policies never ended the Depression—which in fact lasted until 1945—and thus the New Deal should only be seen as a foolish model for extending economic malaise for more than a decade. Higgs’s analysis of the bailouts and other economic troubles has been cited by everyone from the Christian Science Monitor to John Stossel to the New York Times to Rush Limbaugh
    Also, even if the New Deal in a small way helped boost the U.S. economy, that's little evidence the help today would outweight its liabilities. Then, the U.S. was hegemonic. Today, China and India are competing with us, and winning. We can't afford to spend huge percentages of GDP on schemes that the private sector deemed unprofitable. That is likely to accelerate the U.S.'s decline. 


Anonymous said...

Our future president is comparing himself or being compared to a few different presidents before he has done any work. I've heard Kennedy and Lincoln as well.

If this new administration is to represent "change we can believe in," if he's not going to conduct "business as usual," shouldn't he stop comparing himself to the past presidents and focus on his own work and legacy? Or is he, I naively hope, studying and learning his history so we're not all doomed to repeat it?

Anonymous said...

The tags on this one are fascinating:

$8.5 trillion, auto industry bailout, big government, Keynes, new new deal, Obama

Where is "bush?" where is "republican deregulation?"

The 8.5 T is bush administration funds being looted from the national treasury and handed out to his friends.

You and commentators like you generally disliked the main bulk of the bailout, but reserved your venom for the tiny auto industry funds - funds which, dollar for dollar, probably help keep more people out of poverty in the US than the financial industry bailout.

Of the financial industry, you are comfortable only with "light regulation," despite it being the financial industry, not the auto industry and not the energy industry which put the cart into the ditch.

By 'light regulation,' it sounds as if you feel that Roosevelt-era levels of regulation (dismantle interstate banks; dismantle companies which sell stocks *and* insurance *and* mortgages) would be too much. But those regulations helped prevent banks from growing too big to fail.

Marty Nemko said...

Let me be clear, I would NOT have bailed out the financial institutions.

I do NOT believe that deregulation was a serious cause of the financial problems, but as I wrote, I do call for lightly increasing regulation of the financial industry.

Anonymous said...

You do not believe that deregulation was a serious cause of the financial crisis?

Even Greenspan's admitted as much - that telling people not to regulate the derivatives market was nuts.

End of the day, the bankruptcy and delinquent mortgage and credit card rates haven't changed much from historic values - they were driven down briefly by the changes in bankruptcy law, and they jumped up when enough people tried and failed to keep up and finally gave up and filed under the new law.

but a five year average for consumer credit falling into arrears doesn't look much different lately than it did in the mid 90s.

What looks different is the size of the loans people were sold, the practice of turning the loans into bonds, and the ability to sell insurance policies on those bonds.

The first was driven equally by idiot borrowers and idiot lenders; the second was driven purely by idiot investors, abetted by idiot auditors, and the third was driven Greenspan and his followers arguing strongly against regulating the markets.

It was a big experiment - a whole "new" kind of investment, one where the invisible hand could dance unimpeded.

Well, kind of a new investment. Except that state laws prohibiting practices deemed illegal after the crashes at the turn of the 20th century were set aside by new Federal regs.

It amazes me that you're ready to cite a young earth creationist (Inhofe) on science, but not lok into Warren Buffett and George Soros' reads on financial instruments?

Marty Nemko said...

The Left dishonestly takes Greenspan's lament about not advocating one particular regulation as evidence he'd advocate massive regulation. Simply untrue.

And Imhofe is not the basis of my belief that the science behind global warming is so conflictual and speculative that, in these tight times, there are better uses for the hundreds of billions of dollars--e.g., curing cancer, stopping hunger, immunizing African kids against malaria.

These bases for my agnosticism about global warming existing, being man-made, and realistically slowable are summarized in the 231-page report just released by the US Senate (the highlights of which I present in a recent post) and charts such as these, which indicate global cooling or at most, very slow global warming, and where the changes are very possibly natural variation and/or caused by sunspot changes. Here are some charts of average global temperature changes:

From the most recent year:

30-year charts, plus sunspot charts suggesting any changes are not manmade:

Here are 2000-year charts showing that the changes are very small and probably natural variation.

Here are charts suggesting that global cooling is likely for the next 30 years:

Again, my point is not that these charts dispositively prove that the earth is cooling or even that it's not warming. It is that it is a VERY open question, and Gore appears to be dead wrong about his statements that to save life as we know it, we MUST act NOW and MASSIVELY to avoid the rapid earth heating that will be devastating.

Especially with our very weak economy, we must prioritize spending on that with the highest probability of paying off. And it is hard to argue that the Obama spending plan for alternative energy/climate change meets that criterion.

As I also said, part of my antipathy toward massive expenditure to stop what well may not be a problem is the large and growing number of true experts who are screaming that the global warming "consensus" is politically trumped up and is belied by the science--yes, the global temp charts, but many other research findings as well, e.g., the sunspot hypothesis, the natural variation hypotheses, and the remarkably wild, shoot-from-the-hip assumptions upon which the Gore-cited computer models are based.

Anonymous said...

"Poverty is like punishment for a crime you didn't commit." ~Eli Khamarov

I just read this quote this morning. Reportedly it hangs in an elementary school. What would that make wealth? A reward you didn't earn?

This quote seems to be the US government's attitude. If you're poor, it can never be your fault, and if you're rich, it can never be because you put forth more effort. It can only, only be greed.

This "big government" approach of trying to be all things to all people at all times is not going to help anybody. It will hurt most the people that need the most help.


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