The View From 1776
Sunday, March 20, 2011
The Daily Socialist Worker - March 20, 2011
Paul Krugman, still lost in liberal limbo.
Economist William L. Anderson discusses Paul Krugman’s continually reasserted thesis that reducing unemployment can be effectuated only by yet more massive government deficit spending.
Krugman’s views are a re-run of the thesis expounded in the 1930s Great Depression by Harvard economist Alvin Hansen. Professor Hansen, the leading American acolyte of Keynesian macroeconomic materialism, theorized that capitalism had failed and private enterprise would never again be able to lift the economy sufficiently to reduce unemployment to acceptable levels. His Keynesian conclusion was that the Federal government would be required forever to inject sufficient deficit funding into the economy to fill the gap left by reduced spending by private enterprises.
The exact reverse proved to be the result. Business remained mired at very low levels throughout FDR’s New Deal high tax, heavy spending, and strangling regulatory binge. Only after the end of World War II, when FDR was in his grave, did business and employment revive. And when it did, the rate of expansion was phenomenal, without any assistance from the government.