The New York Times isn’t keeping it a secret that it wants President-elect Barack Obama to follow in the footsteps of progressive icon Franklin Delano Roosevelt. Two recent columns have called for Obama to promote a new New Deal.
New York Times columnist and recent Nobel Prize winner Paul Krugman has been advocating a new New Deal for months and did again on Nov. 10. Krugman’s column “Franklin Delano Obama?” claimed that the
Joe Nocera’s Nov. 8 “Talking Business” column “75 Years Later, a Nation is Hoping It Has Another F.D.R.” also called for Obama to “do the
Nocera’s column primarily focused on FDR’s powerful rhetoric, but also praised
Krugman dismissed research suggesting the New Deal failed to bring about economic recovery claiming “fiscal stimulus was unsuccessful ‘not because it does not work, but because it was not tried.’” According to Krugman the New Deal was “inadequate.”
The Times columnist even gave Obama’s economic team some advice: “figure out how much help they think the economy needs, then add 50 percent.” Ultimately, according to Krugman, “Mr. Obama’s chances of leading a new New Deal depend largely on whether his short-run economic plans are sufficiently bold. Progressives can only hope that he has the necessary audacity.”
Krugman openly attacked economists who blame FDR’s New Deal for prolonging the Depression. “Now, there’s a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse,” Krugman wrote.
Most people wouldn’t consider University of California Los Angeles (UCLA) a “right-wing think tank,” yet a pair of economists from that university published a study in the August 2004 Journal of Political Economy concluding that FDR’s New Deal policies restricted the economy’s ability to rebound from that crisis.
According to Harold L. Cole and Lee E. Ohanian, “Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump.”
Tom Cooley, Dean of the NYC Stern School of Business agreed in an Oct. 13 Newsweek web exclusive. Cooley said, “[M]ost economists and economic historians now realize that FDR’s experimentation and interference with markets probably prolonged the depression considerably.”
The Times may continue to prod Obama to institute a new New Deal but economist Robert Higgs told the Business & Media Institute such a course of action would be a very bad idea.
“I cannot imagine a worse course of action, short of outright socialization of the entire economy. The measures comprised in a new New Deal will not hasten general economic recovery, but will only bulk up the power of government and transfer income to privileged interest groups at the expense of taxpayers and consumers,” Higgs said.