Amity Shlaes: Clueless as Ever
By Barry Ritholtz - December 2nd, 2008, 3:00PM
Amity Shlaes “Rewrite history tour” continues apace. Recall that a few short months ago, Ms. Shlaes was insisting that we were not in a recession.
What is her solution to the current situation? Tax cuts.
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Why a Modern-Day New Deal Won’t Work 12/1/2008
Amity Shlaes, senior fellow at the Council on Foreign Relations, explains to Dow Jones Newswires’ Simon Constable why the New Deal didn’t work in the 1930s and why Nobel laureate Paul Krugman is wrong to think a similar stimulus will work this time.
December 2nd, 2008 at 3:33 pm
Speaking of Clueless:
http://finance.yahoo.com/focus-retirement/article/106224/Stocks-Are-Less-of-Your-Net-Worth-Than-You-Think?mod=retirement-post-spending
Stocks Are Less of Your Net Worth Than You Think
At first, I thought this article was written to those who had not opened their broker’s statement for the last quarter…but now I realize it is just to say, don’t worry, social security will help you more than you realized before you lost everything in the stock market…
How about: Your home is now less of your net worth than you think?
OR You recently lost job now contributes less of your net worth than you thought?
OR Your upside down mortgage makes you worth even less than you think..
and so on..:)
December 2nd, 2008 at 3:38 pm
So what? She didn’t see the recession coming, but that doesn’t mean she’s wrong about Krugman’s fantasy economics. The religious dogma that is taken as canon amongst the economics profession, including by Krugman, is that you can print your way out of a recession. This laughable religion is called Keynesianism.
Bob Murphy does a good job of eviscerating the superstitions and dogmas attendant of this religion.
December 2nd, 2008 at 3:56 pm
She didn’t see the recession coming while it was already well underway.
December 2nd, 2008 at 3:59 pm
And I am clueless…I look at these Goldman and Redbook sales numbers for November, and am still thinking this holiday season is very weak, as I would have expected.
“Both Redbook and ICSC-Goldman, despite the late-month improvement, show full-month year-on-year November sales contracting. ”
http://www.nasdaq.com/asp/EconodayFrame.asp
If this November was worse than last November…why is the MSM so happy?
I wish Cinefoz was still here to explain my lack of enthusiasm to me..maybe I just need to go buy a new car…
December 2nd, 2008 at 4:17 pm
Did Cinefoz go broke?
My market prediction for tomorrow. Green. I’m having one hell of a streak. It’s got to end soon, LOL.
December 2nd, 2008 at 4:34 pm
Is it just me or is corporate debt selling after hours again? I haven’t seen debt sell in so long I forgot what the news looks like.
December 2nd, 2008 at 4:52 pm
So, when do WSJ writers start making CNBC-like observations like “we’re off today’s lows”?
December 2nd, 2008 at 4:53 pm
vic,
“The religious dogma that is taken as canon amongst the economics profession, including by Krugman, is that you can print your way out of a recession. This laughable religion is called Keynesianism.”
…and I take that your view on other “religious dogma” such as the ‘Reagan Revolution’ and similar shams is the same?
There is overwhelming evidence that the New Deal worked back in the 30’s and built a society with many that many including “conservatives” enjoy and take for granted. Whether or Krugman’s and others (including oh-so conservative auto- and bank-CEOs) proposals will work is a totally different question.
Amity Shlaes is nothing more than history revisionist, blaming all ills on whatever programs and policies that she doesn’t happen to agree with. She just says what the big boys wants to hear. Just a way to make a living I guess. ‘Council on Foreign Relations’ - what a joke.
December 2nd, 2008 at 7:07 pm
Urkel: nope, I think Reagan was a big failure too. And you’re totally wrong that the New Deal “worked”. Even making such a claim would require a model to show how it causally “worked” (and a definition of what that even means). You just state it as fact, which is a joke.
The fact is that unemployment remained near 20% throughout the entire decade of the 30s. In my book that is a sign of failure, not success.
For students of the Depression, the history that I recommend is Rothbard’s classic America’s Great Depression, which is free online
December 2nd, 2008 at 8:03 pm
Unfortunately the CFR is not a joke, it’s a who’s who list of the monied powers of the country. Their yesterday’s dogma will likely become tommorrows reality. Of course tax money is better spent bailing the financial services industry than it could ever possibly be feeding people with wages earned in public works projects.
December 2nd, 2008 at 8:04 pm
http://au.youtube.com/watch?v=JPlvdSQ6cAM&eurl=
December 3rd, 2008 at 12:29 am
Repeating a misconception over and over doesn’t make it right. Why did the 1929 market crash and recession, which was not unlike the crash of 1907, last ten years instead of 18 months? The fact is that spending didn’t get us out of the depression. Ill-conceived policies of Hoover and the New Deal is what caused the depression. This blog keeps attacking Schlaes without any basis in fact, without any examination of the New Deal, and without an evidence that fiscal stimulus (a) works and (b) got us out of the Great Depression. Don’t bring up Krugman as the antidote, because his sloppy research on this topic perpetuates the New Deal myth.
December 3rd, 2008 at 8:15 am
Here is a suggestion:
Give everybody a substantial RAISE. It’s overdue anyway, right? Rescind revenue tax for a couple of year and give the amount to people. Let the financial and auto maker sectors fail, or collapse, and augment the support given to the unemployed, re-train who needs to retrain. That is where the bailout money should go.
As soon as people are done paying off some of their debt, which we know is too big, they will start spending again.
And no, they probably won’t want to buy a big SUV any more, because they remember $4/Gal gas. So whoever comes up first with an alternative will hit the jackpot. The race is on, no need for incentive on the supply side, we need confidence on the demand side. The incentive on the demand side is here, it’s always here, it’s called greed, also known as “me-first”
December 3rd, 2008 at 10:01 am
@vic: I’m not qualified to referee an Austrian/Keynesian fight, but it seems to me that Bob Murphy’s argument must be pretty weak on substance if he has to resort to so many personal insults.
December 3rd, 2008 at 10:47 am
You’re the one who is clueless: Shlaes knows how to get her face out there–and money in her pocket. If her answer is always “tax cuts”, there will always be a paying audience. Just because she says it doesn’t mean she believes it.
December 3rd, 2008 at 11:13 am
“The fact is that unemployment remained near 20% throughout the entire decade of the 30s. In my book that is a sign of failure, not success.”
Let’s see, according to “Historical Statistics of the United States” via Encarta, the unemployment rate by year was:
1932 22%
1933 25%
1934 19%
1935 18%
1936 14%
1937 12% <—-
1938 18%
1939 16%
(Numbers are approximate, due to Encarta geek not knowing how to scale an axis).
Note that the unemployment rate was dropping, until 1937. In ‘37, Roosevelt made the mistake of listening to those voices who advocated balancing the budget (via cuts), and the rate started back up.
So listen, before you start quoting “statistics”, you might want to do some actual research. There’s something call “The Google” which can help with that.
Krugman fantasy? Only in the eyes of the dead-enders.
December 3rd, 2008 at 1:00 pm
“Krugman fantasy? Only in the eyes of the dead-enders.”
Thanks PFL. Unfortunately, wingnuts and libertarians are impervious to facts.
December 3rd, 2008 at 2:24 pm
What I love is how close RP Murphy makes to the right answer. If we just reword his argument a tiny bit…
“Consumers Don’t Cause Recessions” –> Recessions Don’t Cause Consumers
Tada!
December 3rd, 2008 at 6:22 pm
Oh that is hilarious. Yes indeed, the one size fits all policy: cut taxes.
When you have ’surplus’ — cut taxes
When you have a war — cut taxes
When you are out of power, your rallying cry to get into power: cut taxes
When there is a recession — cut taxes
When there is a depression — cut taxes
When you are out of work, and looking to gain traction in the book market — cut taxes.
Sing it with me now:
‘we’re gonna cut taxes til there ain’t no more
we’re gonna cut taxes, we’re going to war
We’re gonna cut taxes, but we love to spend
We’re gonna cut taxes, that way we can lend
Oh and PS: cut regulation too, this makes your economy more ‘attractive’ to business.
That must be why all the businesses are folding — too much regulation.
I wonder when business is going to start being attractive to us…
December 3rd, 2008 at 8:12 pm
Paul,
Didn’t Keynesian policies result in fifteen years of recession/depression from 1930-1945? How exactly did government spending “work”?
From where I sit Keynesian policies over the past 38 years have resulted in massive imbalances in our economy (i.e. 70% of GDP is consumption) as well as huge misallocation of capital (e.g. hummers, disney trips, speculation in housing).
Government spending with money that is printed into existence will not produce prosperity anymore than I can dunk on a fifteen foot basketball rim. Simply does not happen logically.
Am I missing something?
Krugman makes no sense to me.
December 3rd, 2008 at 9:46 pm
The observation to make which I think would at least clear up confusedguy would be: “Keynesian” economics talks about “stimulating” the economy when we are entering a bad recession/depression. “Stimulating” the economy with low interest rates/deficit spending all the time creates more-or-less worse situation.
In other words “Keynesian” economists understand (we hope) that deficit spending year after year after year after year after… makes for bad policy. Even the wiki page manages to make this distinction:
“Keynes argued that the solution to depression was to stimulate the economy…”
The wiki page is actually pretty good reading, not sure if it’s right but check the page discussion and I’m sure you’ll get a bunch of sides of this story…
http://en.wikipedia.org/wiki/Keynesian
December 10th, 2008 at 10:07 am
Qualifications I Can Believe In
I hadn’t realized that Amity Shlaes is a “senior fellow in economic history at the Council on Foreign Relations.” I kind of wonder what it takes to get made a senior fellow in economic history at the Council on Foreign Relations. She’s got a bachelor’s degree in English and her columns once won a prize from a libertarian organization for some articles that “compared the failing economy of high-taxed and over-regulated US state of Maine to the success of the increasingly economically liberal Ireland; and showed that US workers benefit from taking responsibility for their own pensions.” That’s it.
I have a really, really, really hard time imagining the CFR doing something comparable for a liberal with so little in the way of relevant qualifications or track-record outside an ideological cocoon. Just saying. Where’s my fellowship?
http://yglesias.thinkprogress.org/archives/2008/12/qualifications_i_can_believe_in.php