Kuttner: The New Deal Worked, It Was Just Called WWII

By November 24, 2008Economy

New Deal analogies were being thrown around by the Roundtable panelists on ABC’s “This Week” on Sunday, starting with the useful reminder from George Will, “Before we go into a ‘New New Deal’ we can we at first acknowledge the New Deal didn’t work? That is, the biggest collapse in industrial production in history occurred in 1937, eight years after the stock market collapsed in 1929 and five years after the New Deal.”

A few minutes later (at the 7 minute mark) Robert Kuttner of The American Prospect responded:

Robert Kuttner: Now, on the question of whether the New Deal worked, Doris Goodwin said to me the other day, don’t look at the Roosevelt of 1933, look at the Roosevelt of 1941, 1942.

The New Deal got us halfway out of the Depression, and it was Roosevelt’s effort to balance the budget in 1937 that caused the downturn. But in 1941-42, we converted to a wartime footing and unemployment disappeared. And the deficit went as high as 28 percent of GDP. Now, I’m not saying the deficit has to go that high.

But Doris’ point was, look at the auto conversion in 1941, 1942, when they shut the lines, they retooled, they started making planes and tanks and produced aircraft and weaponry at a rate the world had never seen. We could do that with fuel-efficient cars as the price of the auto bailout.

Rarely does a self-styled progressive like Kuttner so clearly state the view of how the economy should be managed, that is, that it should be a government-directed, wartime economy — just without the war. So 1942 was the halcyon instance of the American economy, Kuttner suggests. What else was common in 1942?

  • Rationing of gas, meat, tires, butter, sugar, coffee, on and on.
  • Travel restrictions. A maximum “Victory Speed” of 35 mph.
  • Mass civilian mobilization for everything from buying War Bonds to collecting scrap metal and cooking grease.
  • The military draft. Ultimately, more than 16 million Americans served in WWII.

Bring it all back. Only this time make global warming the enemy and “public service” the equivalent of the draft. That’s the “progressive” prescription for the New New Deal.

(The photo of the rationing coupon comes from the American Historical Society’s website devoted to WWII rationing.)



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