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Herbert Hoover Lives!

Krugman:

[T]he new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages. [. . .] The British governmentís plan is bold, say the pundits ó and so it is. But it boldly goes in exactly the wrong direction. It would cut government employment by 490,000 workers ó the equivalent of almost three million layoffs in the United States ó at a time when the private sector is in no position to provide alternative employment. It would slash spending at a time when private demand isnít at all ready to take up the slack.

[. . .] What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.

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  • Display: Sort:
    Is this some sort of punishment (5.00 / 3) (#4)
    by inclusiveheart on Fri Oct 22, 2010 at 09:16:14 AM EST
    from the gods for those of us who have read and understood history?

    Watching this idiocy unfold wouldn't be nearly as frustrating if I hadn't read all those damn history books.

    Advice that Bush might offer G.B. (none / 0) (#1)
    by Yes2Truth on Fri Oct 22, 2010 at 08:23:12 AM EST

    War!  That's how you stimulate the economy.

    Driving down wages (none / 0) (#2)
    by MO Blue on Fri Oct 22, 2010 at 08:31:47 AM EST
    that is the benefit for the corporations and not a flaw.

    Notice that he used Lambert's (none / 0) (#3)
    by andgarden on Fri Oct 22, 2010 at 08:58:27 AM EST
    "NOW NOW NOW." :D

    Yep, seeing the same in my state (none / 0) (#5)
    by Cream City on Fri Oct 22, 2010 at 10:10:24 AM EST
    with the numbers just out on employment last month: the worst drop yet in the entire year.  Why?  Public employees let go at state and municipal levels by the many thousands -- teachers and others -- and no pickup in the private sector.

    This only will accelerate the spiral we already have seen with earlier layoffs in the public sector as well as pay cuts, as the result at the state level is increasing decline in income tax revenue.  That leads to further layoffs and pay cuts not only at the state level but also at the local level, with less state fund streaming, etc.

    And down and down we go. . . .  It's Hooverville, all over again, but this time they will be Obamavilles.

    Sacrifices must be made (none / 0) (#6)
    by MO Blue on Fri Oct 22, 2010 at 10:39:54 AM EST
    At least by the lowly peons.

    Much of the income of the highest earners is treated as capital gains, anyway -- subject to a 15 percent tax. The typical hedge-fund and private-equity manager paid only 17 percent last year. Their earnings were not exactly modest. The top 15 hedge-fund managers earned an average of $1 billion. Reich


    Parent
    Sad (none / 0) (#7)
    by Militarytracy on Fri Oct 22, 2010 at 11:07:23 AM EST


    Goes to show (none / 0) (#8)
    by robotalk on Fri Oct 22, 2010 at 11:13:06 AM EST
    that emotion and false morality outmatch reason and history.  And not just in the teabagger class, but among ruling elites as well.

    and we're also doomed (none / 0) (#9)
    by cpinva on Fri Oct 22, 2010 at 12:18:46 PM EST
    to read santayana, over and over and over again!

    i don't know what the fuss is all about, that hoover was such a successful president, in a "driving the country to the edge of the abyss" kind of way. perhaps the danger of putting an engineer in charge of the government?

    anyway, the great depression produced lots of good music, so it couldn't have been all that bad.

    Macro should be required reading (none / 0) (#10)
    by KLCarten on Sat Oct 23, 2010 at 06:23:01 AM EST
    Anyone that runs for office should know and understand the basic on macro economics.  Sure it can be dry reading and it is a science, but really we are making the same mistakes that we did before.  We know what worked heck, anyone that studied a little bit of history on the great depression knows what needs to be done.  Its easier to play politics, I guess then make policy.  It's frustrating to see how close we are following Hoover's and Sec. Mellon stupid mistakes.  

    We are flirting with deflation, and its tough to get out of once in that cycle.  Inflation is easy to control but not much works with deflation.  QE, is about the only thing the fed can do, we need leadership with the guts to do some real stimulates and we do not have that kind of leadership.  I am hoping that the investor class will take a hit when the lay-offs start to effect Wall Street, when you no longer can show a profit from cutting the work force and stocks take a hit maybe they will start lobbying for something that will turn the economy around.  Otherwise I do not see any hope for the rest of.

    Don't hold your breath (none / 0) (#11)
    by cal1942 on Sun Oct 24, 2010 at 11:16:15 PM EST
    Conservatives in this country insist on the same discredited ideology.

    Now our problem is a conservative in the White House who thinks his biggest mistake in office was allowing himself to be branded a 'tax and spend liberal' who may have a GOP Congress to "work with."

    We're really, really screwed.

    Parent

    Wonder how (none / 0) (#12)
    by cal1942 on Sun Oct 24, 2010 at 11:29:55 PM EST
    all those British voters are going to feel after they only recently put the Tories back in power.

    It didn't help that the prededing Labor government didn't act much like a Labor government.

    Sound familiar.