Centerfield

After looking through the threads, I see a lot of folks taking the economic discussion on purely theoretical levels and removing it from the politics of the situation.

The New Deal likely did extend the Great Depression. However, it did it in a way that likely lessened the nadir's amplitude in favor of a longer recovery time that managed to avoid the political instability that would have allowed the fascists or the communists to thrive. To apply the policies that the economists now would have espoused would likely have ended the Great Depression quicker. However, those same policies could very easily lead to further political instability with dangerous results, IMHO.

That is not to say the New Deal was great. I think it did what it had to do. The bigger problem is that there is a legacy of items that needed to be updated or eliminate years ago. Primary in this is everyones favorite ponzi scheme, Social Security. Farm subsidies is another. Both had their place in the political and economic order of the time. Now they stink of old government cheese.

Jim M has got the nuts of it. It did extend the Depression, but it had other effects than could be reasonably considered as offsetting. It ain't up/down good/bad. To paraphrase Dorian Gray's line in League of Extraordinary Gentlemen, it's "complicated."

It's all too easy to view simply the monetary/economic aspects of policy decisions, but economies don't run in isolation. Everything affects everything else, and what may be sensible (or insensible) in a strictly economic view may well be justified from other angles.

Gross and DeLong both want to beat the drums for their hobbyhorses and cheerlead their own side. As do many on the other side. They want to debate on "good" or "bad," so they distort both the record and the theory. Heh. The facts and the theory are pretty unambiguous, it's the assignation of subjective value to them that's so eminently debateable.

IOW, Will's right on the basic facts of the minimum wage and even on the New Deal in a narrow sense, but once you step past that to the political value judgements, it's your own damn mileage. The Will-anti's such as DeLong and Gross fire back with strictly snark/subjective/ad hominem counters and subjective (even irrelevant) recastings of the facts. Gross, for example, goes straight into snark denial-land to discredit any actual, you know, economic analysis of the period, trying to shift it over to "serious historians." Yeah, right. DeLong uses such gems as "A normal person would not argue that the New Deal prolonged the Great Depression." Heh. If you don't agree with DeLong, you're abnormal! LMAO. Such a serious debate....

Bottom line: The New Deal certainly retarded economic recovery in some ways, but reduced variability in market reactions. It also had some stabilizing political effects. And it also had long-lingering effects that we still feel today. Minimum wage increases indisputably have an effect on employment. How much, and the good or bad of all those, is a value judgement.

"A normal person would not argue that the New Deal prolonged the Great Depression."

That is right in the sense that only a conservative/non-Keynesian economist with an interest in history would make such an agrument. A normal person wouldn't give a rip either way.

The conventional wisdom when I was studying econ in the late 70s and 80s was that the New Deal didn't solve the Depression, WWII did. Whether the New Deal helped is an open question; what it may well have done is to hold off more socialist politics, like that of Huey Long, which would have been worse in the long run. It did alieviate the suffering of a lot of people, which is a good thing.

That is right in the sense that only a conservative/non-Keynesian economist with an interest in history would make such an agrument.

Uh uh. Still contains DeLong's implicit assumption that an economist is only "normal" if they're a Keynesian. I'm sure that's somewhat true where DeLong is at (Berkeley) but it's not representative of the field in general at all.

Pure Keynesianism has been discredited as an overall operating model in all BUT socialist and big government circles. As with many previous (and subsequent) "grand unified theories," (GUTs) the inventor fooled himself (and a major part of the world) into believing that a special-case application was a universal model, only to have that "universal" model fall apart when the special cases no longer applied. Keynes himself admitted these shortcomings as early as 1944, in response to criticism from Hayek. Keynesianism as an academic GUT began a rapid implosion in the 1970's, and the Lucas critique drove the last nails in before 1980, ably assisted by the Nixon/Ford/Carter admin's Keynesian failures.

DeLong is saying that anyone who doesn't buy into his own political convictions re: statist/collectivist economics is not "normal," i.e., that only statist/collectivist economics GUTs are "normal" or applicable. Which is a load of fertilizer, and a generalized ad hominem aimed at non-Keynesianists.

Keynes' work where it has proved out in application has been incorporated into the special-case and general models, and the neo-classicists and monetarists and empiricists pretty much control the debate about working models nowadays. Mostly because they don't in general offer GUTs, but an empirical process approach that acknowledges that human action is not particle physics, that people are irrational actors with imperfect knowledge, and economies are not static closed systems, but open organic systems. The empiricists happily steal anything that proves out in practice, and add it to the mill.

Keynes met his long run, but some folks still worship at the GUT churches and argue about whose dogma is better. The empiricists are agnostic.