Sunday, January 18, 2009

FDR's Grandson: "New Deal Was Not Big Enough"


FDR's grandson is an economics professor at Sarah Lawrence College in Yonkers.

And the grandkid, Frank Roosevelt, now 70, doesn't think his grandfather went far enough to get the economy out of the Great Depression. The Gannett News Service reports:

"FDR never did get the Keynesian thing, and therefore the whole New Deal effort was not big enough," said Roosevelt, 70. "I mean, it didn't get us out of the Depression, really, until World War II came along, and then government spending really got big enough to really employ everybody and then some."

"I think Obama has to learn from that and forget about balancing the budget," Roosevelt said. "Spend, spend, spend until we've done enough to stop this decline.

"So if I could talk with him I would say go for broke," he said. "Literally, go for broke."

One has to wonder what Frank has been doing for the last few decades. He needs to catch up on the literature instead of reading his grandfathers scrapbooks. The Chicago Tribune reports:

John Cochrane, a professor at the University of Chicago Booth School of Business, says that among academics over the last 30 years, the idea of fiscal stimulus has been discredited and in graduate courses, it is "taught only for its fallacies."

New York University economist Thomas Sargent agrees: "The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research."
In an article in the August issue of the Journal of Political Economy, UCLA economists Harold L. Cole and Lee E. Ohanian blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933 for prolonging the Great Depression for 7 years.

"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," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."

And Robert Higgs in his book, Depression, War, and Cold War: Studies in Political Economy, has exposed the fallacy in the commonly held belief that World War II ended the depression. According to Higgs, the war gave only the appearance of recovery, when in reality private consumption and investment declined while Americans fought and died. A return to genuine prosperity did not occur until after the war ended.

Big, big, big spender Frank needs to chill. You don't "Literally go for broke" with the United States economy. That's an outrageous idea. We are not at a craps table in Vegas with the economy on the pass line. What needs to be done is that stability needs to be brought to the entire economy by stopping all these erratic interventions. Otherwise, we might as well mail the keys to the entire economy over to President Kim Il-sung of North Korea. He's about the only expert left on how to run a heavily regulated command economy.


  1. I agree. Kim Il Sung, having been dead 14 years, also has the added experience of running Hell.

  2. Actually, I should have been a bit clearer.

    Kim Il Sung is the Eternal President of North Korea. In the preface to the North Korean constitution. It reads:

    "Under the leadership of the Workers' Party of Korea, the Democratic People’s Republic of Korea and the Korean people will hold the great leader Comrade Kim Il-sung in high esteem as the eternal President of the Republic". Thus, it will only be held by him (forever).

    There is no other president.Kim Il-sung's son Kim Jong-il is the de facto ruler, however, technically he is Chairman of the National Defense Commission.

    Like the ideas of Keynes, I am comfortable with Kim Il-sung running things from the grave or hell.

    Of course, for those needing a flesh and blood command control leader, Kim Jong-il has few equals.