An addendum to the post below about ABC’s “This Week” and a New New Deal. Following Robert Kuttner’s argument for a WWII-type economy to produce “green” vehicles, David Brooks had an accurate retort:

George Stephanopolous: We keep hearing President-elect Obama talk about green jobs.

David Brooks: Yeah, that’s my fear actually. That’s not a New Deal, that’s a Five Year Plan.
In fixing the auto industry, if we’re going to have an auto czar who apparently is smart to know how to reorganize these companies, is apparently smart enough to know which “green” technology, I guess he’s going to be designing carburetors. That is the danger, that we somehow start running the economy from Washington.
 

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.)

That’s Bobby Bare there, singing “Detroit City.” Can imagine any number of people testifying before Congress last week recalling the line, “Oh, how I wanna go home.”

USA Today, “Officials say auto CEOs must be specific on bailout plans”

Auto executives need to provide more specifics about how they plan to spend taxpayers’ money and crimp their highflying lifestyles if they hope to get aid from the federal government, congressional leaders and key members of the incoming Obama administration said Sunday.
“What we can’t give is a blank check for an industry that isn’t prepared to retool itself,” David Axelrod, a senior adviser to President-elect Barack Obama, said on Fox News Sunday.

“I would hope they will come back to Washington in early December on commercial flights with a plan to do that.”

Milwaukie Journal-Sentinel, “Detroit’s fight hits home in Wisconsin“:

If Congress cannot agree soon on a plan to provide taxpayer-funded loans to the auto industry, the effects will be felt far beyond Detroit, Kenosha car dealer Andy Palmen said Thursday. …[snip]

Palmen, president of Palmen Motors, spent two days in Washington talking to members of the Wisconsin congressional delegation and attending hearings at which chief executives of auto companies testified.

“I felt it was imperative to go because I didn’t want the face of this situation to be misrepresented,” he said. “It was all about the auto executives and top union officials. I wanted to make sure our congressmen and senators saw the ripple effect across the nation would be far greater than their (auto) plants.”

Frank Beckman, WJR, in the Detroit News, “Members of Congress, not auto execs, deserve grilling“:

[Auto] execs Rick Wagoner of General Motors, Alan Mulally of Ford and Robert Nardelli of Chrysler, along with United Auto Workers boss Ron Gettelfinger, were grilled by the ultimate second guessers, the politicians, most of whom don’t have education degrees in economic fields or experience in making decisions on private employment, inventory and global competition.

One wishes the four could have asked the questions instead this week.

Why did members of Congress — such as House Banking Chairman Barney Frank, Senate Banking Chairman Christoper Dodd and others — raise fuel economy standards, adding more than $85 billion in costs as the industry was restructuring itself?

If the reason was forcing automakers to deal with higher gasoline prices, perhaps the politicians could explain why they have made fuel more scarce by blocking domestic drilling for oil and preventing new refineries from being built during the past three decades.

And more…

• New York Times, “Big Three’s Troubles May Touch Financial Sector”
  Detroit Free Press, “Detroit’s new plan: Drive point to Congress“
• Detroit News, “Distressed carmakers bank on lobbying“
• Los Angeles Times, The auto industry hits home for American families“

A light news week but heavy meals, it being Thanksgiving on Thursday. The NAM is also closed Friday.

President Bush has returned from South America and today meets with the 2008 recipients of the Nobel Prize. This evening he welcomes Prime Minister Ehud Olmert of Israel to the White House.

President-elect Obama announces his economic team at noon Eastern today. Markets will react.

The Senate meets in pro forma sessions today and Wednesday to thwart any recess appointments by President Bush. Otherwise, quiet and no hearings in Congress.

Economic reports? On Friday, the USDA’s National Agricultural Statistic Service releases the poultry slaughter report. Otherwise, AP reports: “Investors are also expected to pay close attention to a number of economic reports due to be released during the week, including readings on existing and new home sales for October, and weekly U.S. jobless claims data. But the most-watched reports are those focused on consumers, whose spending drives more than two-thirds of the U.S. economy.”

Finally, the annual story of post-Thanksgiving shopping will be beaten to debt, er, death this week, no matter what the actual news is. Look for one of these headlines:

• Black Friday sales woes add to recession fears
• Strong Black Friday sales belie weak economy

Have a wonderful Thanksgiving.

I recently had the pleasure of attending a book-signing event at Politics & Prose, a bookstore in Washington, where my friend Bob Samuelson was selling and signing his new work, “The Great Inflation and its Aftermath: The Past and Future of American Affluence.”All of us who read Bob’s columns in The Washington Post and Newsweek know him to be a prescient observer of the economic scene, and rarely if ever have his prescient observations been more needed than today. Bob took us on a journey back in time to the 60s and 70s when inflation ran riot, undermining everyone’s faith in the future. There really was something creepy about watching your money lose value year after year, but most of us have forgotten those times.

It was a deadly cycle fostered by big labor in concert with big business with their open-ended contracts that guaranteed steadily rising wages for labor and prices for products. The political class was committed to full employment and thus resisted efforts to squeeze inflation out of the system. Public opinion polls showed people were more concerned about inflation than the Vietnam War or the Iranian hostage crisis.

Along came Fed Chairman Paul Volcker determined to squeeze inflation out of the system and President Ronald Reagan who, Samuelson contends, was the only political leader of either party with the fortitude to support the Fed through that tough passage. Inflation, unemployment and interest rates were in double digits. The people were in distress and the politicians were beside themselves.

But we saw it through and got inflation under control, setting off a generation of steady economic growth interrupted by a few brief, shallow recessions. Until now, that is. Now we’re into truly unfamiliar territory.

Bob says he does not foresee another Great Depression, but he does see two similarities between the 1930s and today. One, no one knew what was going on back then and no one knows now. Two, there was no single nation willing and able to assume the leadership then or now to needed to wring order out of chaos.

It’s a good book. I recommend it.

(Editor’s note: Samuelson wrote a Washington Post column touching on the book’s themes in June, “Return of Inflation?“)

From The Sunday New York Times, “We Found the W.M.D.“:

If I had my druthers right now we would convene a special session of Congress, amend the Constitution and move up the inauguration from Jan. 20 to Thanksgiving Day.

From Comedy Central, the Colbert Report, November 20:

COLBERT: So you say that for one day we should have a totalitarian government where some ‘benign person at the top’ [He makes quotation-mark fingers] says this is what we do?

FRIEDMAN: No. Basically what I’m saying is if only our government could get its act together and launch a green revolution with the same persistence, focus, stick-to-it-iveness and direction that China does through authoritarian means. If we could only do that through democratic means –

(Hat tip: Newsbusters.)

MSNBC’s Tom Curry reviews one aspect of the debate over federal aid to the domestic auto industry, “‘Card check’ best hope for auto workers union?” The answer is surely no, of course not, are you serious? Mickey Kaus at Slate rebuts one argument by supporters of the Employee Free Choice Act:

The New Plan? Cripple Honda! Save Detroit with Card Check! Eliminating the secret ballot and making it easier to organize U.S. Honda and Toyota workers (and imposing contract terms via binding arbitration) would “level the playing field,” says Dem. Congressman Tim Ryan. … Then when Honda and Toyota responded by importing more cars from abroad, we could have import quotas! Eventually the whole automotive sector could be planned by Congress in conjunction with existing business and labor interest groups. Red State has seen the future and it is corporatist. …12:21 P.M.

The answer to Detroit’s problem is not to make other automakers in the United States less competitive through passage of the anti-democratic Employee Free Choice Act, forcing unwilling employees into unions that would impose rigid, costly work rules.

The story features another argument:

UAW ally Rep. Dale Kildee, D- Mich., who was represents Flint, Mich., the city where GM was born, said that joining a union is only the first step.

“After you get recognized, you still have to bargain,” he pointed out. “You can get recognized under the Employee Free Choice method or the election method. It’s what happens afterwards in the bargaining that really determines the differences (in wages).”

Actually, passage of the Employee Free Choice Act would discourage good-faith bargaining by newly recognized unions. If the union can prevent completion of a first contract within a brief 120 days, a federal arbitrator imposes — imposes — binding arbitration on the parties for two years. No negotiation or renegotiation is possible, even if the contract proves to be completely unfair to one side or another, even if the contract destroys a company’s ability to compete.

These are among the many, many reasons that employers regard the Employee Free Choice Act not just as anti-democratic, but also disruptive and destructive. To reaffirm those arguments, the Coalition for a Democratic Workplace this week sent a letter to members of Congress reminding them of them of the strong, even passionate opposition to the card check legislation.

From the news release and letter:

The Coalition for a Democratic Workplace, a group of more than 500 organizations, is united in opposition to the Employee Free Choice Act because we believe this bill severely undermines long standing principles of balance and fairness in federal labor law. Make no mistake; the purpose of EFCA is not labor law reform. The legislation is a dramatic assault on the rights of employees and employers that threatens to severely undermine any chance at a constructive dialogue on labor law reform.

The key provisions in this legislation represent egregious attempts to limit the rights of employees and employers and will severely diminish the ability of U.S. business to succeed in our globally competitive market.

The letter lists the members of the Coalition, which includes the National Association of Manufacturers. 

Larry Kudlow says Geithner, Obama’s expected appointment to be Treasury secretary, is highly regarded and a new face, plus some more scuttlebutt.

The Latest NAM/Industry Week Manufacturing Index shows that confidence among large manufacturers eroded for a fifth consecutive quarter in the third quarter of 2008, with just 21% saying they had a positive business outlook. This marks the lowest confidence level in the history of the survey going back to the fourth quarter of 1997.

For small manufacturers, the business outlook moderated for a third consecutive quarter to its lowest level since the fourth quarter of 2002, but it remained significantly elevated compared to large survey respondents.

Asked if the U.S. economy would go through a recession, just 14% answered “no.” 

Respondents’ comments:

• “All of 2009 and first half of 2010.”
• “Because of the downturn in auto sales and housing we’ve experienced a 25% reduction in our backlog.”
• “There is a good chance that manufacturing will be spared the worst of it.”
• “Incoming orders are way down since August.”
• “It will if the U.S. implements protectionist trade policies that other nations retaliate against.”
• “We are already in a recession and worsening.”
• “Depends on the ultimate solution to the current credit”

Asked if tightening lending standards had limiting their company’s access to capital needed to finance domestic investment expenditures, nearly a fifth (18%) of survey respondents said “yes.”

Respondents’ comments:

• “Talking to more banks and alternate financing sources.”
• “Our capital improvements are based off of profits and cash, not borrowing.”
• “My biggest concern with tightening credit is the collection of accounts receivable.”
• “Hasn’t had a negative impact yet, but we’re not counting it out.”
• “Our bank terminated all of our loans and we almost could not find another bank who was taking new customers.”
• “We just had our bank not renew our line of credit even though we had not used it in over one year.”
• “Will find out in the next six months.”
• “We have great credit and we bank with small, home town bankers who know us.”

A few links to mark the Belgian-Brazilian company InBev completing its purchase of Anheuser-Busch earlier this week, letting the local media provide the reaction.

• St. Louis Post-Dispatch, “It’s official. Anheuser-Busch is no more“
• St. Louis Post-Dispatch, “InBev buys Anheuser-Busch. Now what?”
• St. Louis Post-Dispatch, “Beer distributors encounter a new world“
• The Nashua (N.H.) Telegraph, “Anheuser-Busch deal worth toasting“

The latter is indeed a local InBev/AB story because there’s a brewery in Merrimack, where a labor agreement has been reached. From The Telegraph:

Certainly, the creation of what will become the largest brewer in the world – one that will control about 25 percent of the international beer market – is a big story in the global business press, as well it should be.

But that was a distant second around here to more pressing matters: like whether the 500 workers at the Merrimack plant would be able to keep their jobs, their homes, their livelihoods.

For now, at least, that question appears to have been answered.

As “positive” “economic” “news” goes, that’s about as good as it gets these days.

And another toast…NAM President John Engler spoke in Belgium this October at a conference sponsored by VoKa, the Flemish Chamber of Commerce. With respect to the then-pending purchase,  he said:

I know we’ve got a royal family in Belgium, but America was born a democracy, and so the only royalty we’ve had has been “Budweiser - the King of Beers!” Well, at the NAM, I thought it was appropriate to come here and to wish the Royal House of InBev-Anheuser-Bush and long and happy life, full of global sales records and great success in the 2010 World Cup sponsorship in South Africa.