Graph That Explains Everything About Amity Shlaes
by Mike Kimel
Thanks to Linda Beale, I headed over here:
The George W. Bush Institute announced today that Amity Shlaes has been named director of the 4% Growth Project, a key part of the Institute’s focus on economic growth. Miss Shlaes will open the project’s office in New York. The aim of the project is to illuminate ideas and reforms that can yield faster, higher quality growth in the United States, and to underscore the importance of growth in America’s future. Part of that work involves finding ways to make growth and economics generally accessible to more Americans, especially younger Americans. The program will conduct and sponsor research on all aspects of economic growth, host conferences, as well as partner with other institutions in such endeavors.
The following graph, I think, illustrates you need to know about Amity Shlaes:
OK. I lied. The graph is actually missing something. See, we only have official data going back to 1929. And the Great Depression began very, very early in Hoover’s term. And Hoover had been a cabinet secretary under Coolidge, and ran for office under a platform which essentially called for continuing Coolidge’s policies. And Shlaes’ forthcoming book is in praise of Calvin Coolidge. It should be noted that the economy was in recession during over 38% of the months in which Coolidge took office, which makes much of the Coolidge era a dry run (so to speak) for the monster that would come in 1929.
Put another way… Shlaes is part of a movement to praise policies responsible for a lousy economy culminating in the Great Depression (i.e., those of Coolidge and Hoover). Shlaes is also part of a movement to praise the policies responsible for a lousy economy culminating in the start of the Great Recession and the mess we’re in today. (Yes, the Great Recession started in 2007, and no, Obama hasn’t made any substantial changes on taxes or regulation from the way GW Bush ran the country.) Conversely, Shlaes is a well-known critic of the policies that produced the fastest period of peace time economic growth this country has seen.
To me this feature of economics is kind of odd. For some reason, policies that have failed spectacularly over and over continue to have adherents. Policies that have worked spectacularly have critics. Debating the merits of a cavalry charge into the teeth of an armored column was barely excusable in August of 1939, but at least that debate was put to a rest by the German blitzkrieg. Its been generations since anyone argued that horsemen can go toe to toe with tanks.
Which leads me to a hypothetical. Say we lived in a parallel universe where Shlaes was a quisling, a real villain whose goal was to harm this country as much as she could by convincing the nation to commit economic suicide. How would the graph above and the two paragraphs that followed it look any different?
Mike
i just received a communication from an economist who tells me that because he is an economist and i am not i should just shut up and learn from him.
i don’t think you need the quisling argument. there is plenty of evidence that true believers in religious cults never change their minds. even after waiting all night on a cold hillside for the second coming, and the guest of honor doesn’t show, they can go back and find “overlooked text” that shows either A) oh, we got the date wrong. or B) he really did show, but he was invisible and is now off fighting the devil.
Coberly,
Amity has an English degree, that qualifies her as historien and economist. If you have a degree in English you have all the expertise you need to opine on anything too. IMHO.
coberly,
When GW put out his Economic Blueprint in February 2001, he truly believed what it says: cut taxes, boost military spending, and you can pay down the debt in record time. It wasn’t an attempt to ruin the economy and increase the debt – he truly believed. But its worth pointing out – that’s also the same approach that someone who wanted to make the debt explode would have taken. Not to call GW a traitor, but to point out that it doesn’t make sense to follow GW’s advice any more than it would make sense to take advice from Kim Il Sung or some Iranian high poobah about how the US should run its economy.
The same is true of Shlaes. I’m not arguing she’s a quisling. I don’t know her, but I don’t see much evidence she dislikes this country. On the other hand, I am noting that from what I can tell, you get the same advice from her that you get from a quisling, so it doesn’t make sense to take her advice. And on the third hand, it also is a comment about her reasoning ability and her priorities.
I find it sad that someone like Shlaes who knows so little about Economics gets paid so much
to pass on her thoughts about it.
Malcolm & Lys,
I don’t have a problem with Shlaes not having training in Econ. There are plenty of folks who do have training in econ and then end up writing the sort of thing you see at Cafe Hayek or AEI. Conversely, there are a people who weren’t trained but are able to reason out conclusions that are supported by data.
Mike,
You are saying she can’t reason and draw conclusions. Agreed, but what reputable institutions would hire her? What does it tell us about them? She is no better than a Glenn Beck, that is what is so scary.
I’m tired of economists, historians and English majors squabbling about the Great Depression.
Given the recent (lack of) reliability of economists of all stripes, there are more important issues to squabble about.
STR,
Yes. But you’ve seen my three questions (http://www.angrybearblog.com/2011/09/basic-macroeconomics.html) I don’t think you can formulate a theory that fits the data if you don’t enough about economic history to answer those three questions.
Its clear that Shlaes would get them all wrong.
Mike
Not too off topic, have you seen this one Mike? Maybe FDR Should Get More Blame
Obama’s numbers are bad not becuase of maintaining Bush’s tax policies, but because tax policy will not address the economy’s problems. The economy’s problems are related to a massive housing bubble that burst, and credit tightness – not tax policy. Funny thing is that the current administration is just starting to get that, as I see they are trying to deal with underwater mortgages. The tax the rich talk is a political sideshow.
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2011/10/18/MNB11LHCFQ.DTL
You want to put money in consumers hands this is one place to start.
And I thought that Amity Shales was the name of a Canadian oil field. 😉
Mcwop,
“Obama’s numbers are bad not becuase of maintaining Bush’s tax policies, but because tax policy will not address the economy’s problems.”
Yes and no. First the yes. You are correct… tax policy isn’t what will put a dent into the problem. Regulatory policy also won’t put a dent into the problem.
Now the no – Obama bought into the idea that low taxes and other elements of the Republican agenda were needed to help the economy. That prevented him from doing things that would have helped. You may recall I’ve been posting about the lack of demand since about March of 2008 so I’m with you here.
The rest of the no… when someone like Shlaes talks about how wonderful Coolidge was and how lousy FDR was, what they mean is: low taxes plus laissez faire = good, high taxes plus gov’t intervention = bad.
The fact that low taxes plus laissez faire leads to disaster produces funny results. An Amity Shlaes will go around pumping up periods of awful recessions as a good thing if they happened under a Coolidge, and periods of fantastic growth as a bad thing if they happened under FDR.
A similar thing motivates a guy like Scott Sumner to go around insisting that Singapore is some sort of libertarian paradise.
mike
i understood all that. i was just pointing out that normal human insanity accounts for a lot of what passes as economics.
Bush might well have believed himself in 2001. For anyone to still believe in 2011 is…
well, a matter of faith.
close your eyes and cross your fingers and say “i believe” three times and you will be raptured into Galt’s Gulch.
Definately not saying Shlaes is correct, but rather sidetracked like many others with something that is not the issue. Even Hoover was not that Laissez Faire, he just did not implement programs near the size of FDR. But again, how much of the depression was caused by Hoover versus federal reserve policy?
There will be plenty of oppotunity to raise taxes during good times, and it will be politically more feasible.
It’s possible to believe these mouthpieces (I include Bush among them) truly believed the usual 7, 14 or howevermany wrong ideas about steering an economy, just as it’s possible to believe the tour bus driver honestly thought he was driving towards Florida when he took the northbound exit rather than the south. Kind of thing could happen to anyone.
But unless the bus driver has a sack over his head, he has to eventually notice the pine trees, snowdrifts and strange green and pink wavy lights in the sky at night. Thirty-five years of economic bus-drivers and their navigators have invariably taken the northbound exits (sometimes barrelling over a median to get to it.) They’re on the tundra now — look out for the bears.
What is anyone to think? That America is under a hypnotic voodoo curse, where north is south and cold is warm and prosperity is poverty? A plausible alternate to this tempting thesis would surely be welcome.
Noni
It’s possible to believe these mouthpieces (I include Bush among them) truly believed the usual 7, 14 or howevermany wrong ideas about steering an economy, just as it’s possible to believe the tour bus driver honestly thought he was driving towards Florida when he took the northbound exit rather than the south. Kind of thing could happen to anyone.
But unless the bus driver has a sack over his head, he has to eventually notice the pine trees, snowdrifts and strange green and pink wavy lights in the sky at night. Thirty-five years of economic bus-drivers and their navigators have invariably taken the northbound exits (sometimes barrelling over a median to get to it.) They’re on the tundra now — look out for the bears.
What is anyone to think? That America is under a hypnotic voodoo curse, where north is south and cold is warm and prosperity is poverty? A plausible alternate to this tempting thesis would surely be welcome.
Noni
It’s possible to believe these mouthpieces (I include Bush among them) truly believed the usual 7, 14 or howevermany wrong ideas about steering an economy, just as it’s possible to believe the tour bus driver honestly thought he was driving towards Florida when he took the northbound exit rather than the south. Kind of thing could happen to anyone.
But unless the bus driver has a sack over his head, he has to eventually notice the pine trees, snowdrifts and strange green and pink wavy lights in the sky at night. Thirty-five years of economic bus-drivers and their navigators have invariably taken the northbound exits (sometimes barrelling over a median to get to it.) They’re on the tundra now — look out for the bears.
What is anyone to think? That America is under a hypnotic voodoo curse, where north is south and cold is warm and prosperity is poverty? A plausible alternate to this tempting thesis would surely be welcome.
Noni
nanute,
I think you’ll find very few people who have looked at the data enough to conclude that FDR generally did a god job who won’t also tell you that the recession of 1937-1938 was his fault which is Beckworth’s point. I’ve written that myself. I’ve seen Krugman write the same thing.
The question is not whether he was perfect. The questions are:
1. did he do more good than harm?
2. if so, then how much more good than harm?
3. can some of his policies be replicated and will they produce the same benefits today?
I think the answer to 1 is yes, 2 is a lot, and 3 is at least some of the policies are replicable, and yes, they’d work. Shlaes would say the fastest peacetime growth in this country’s history was a disaster.
Noni,
Hence the attraction of Tyler Cowen’s The Great Stagnation. Its not our fault, its just that the low hanging fruit was all taken. And ignore the fact that it happened just at the time when our policies started to take over in the US. And definitely ignore the fact that the same thing hit the rest of the world just a bit after those policies started taking root elsewhere.
There is no great mystery sorrounding the intentions and goals of people like Amity Shlaes. Nor is there any question regarding the popularity of her ideas amongst Republicans and the right wing in general. She is a disseminator of lies and half truths. She is not alone. There is an entire industry of econoomic, social and political experts who have no real expertise in their subject matter, but their work is popular and well supported because they support a general theme. That theme being the wonders of laissez-faire capitalism and any political ideology that promotes unbridled economic adventureism.
While Shlaes’s work may distort the reality of general economic history it may be focused instead on the effects of economic policies that have benefited the One Percent throughout the past one hundred years. Even in a depression, as in the current recession, those at the top of the pyramid do very well. Shlaes promotes ideas that are intended to maintain not the wealth of the nation, but the wealth of a few in the nation. Why? Promoting the benefit of the rich will make you rich.
And in case any of you have forgotten the words of that great social philosopher:
“When will the people be educated? When they have enough bread to eat, when the rich and the government stop bribing treacherous pens and tongues to deceive them. When will this be? Never.” M. Robespierre
I will presume that economist does not express views on matters requiring some understanding of politics. Then I can disagree entirely but respectfully.
Jack
yes, but you don’t go quite far enough. the “rich” don’t give a damn about laissez faire. all they care about is power..not even money so much. of course power leads to money, but they’ll spend money to hold power. laissez faire is just their theme song because it sells so well.
and it’s what every creep says when the cop arrests him for pissing in the well.
No, I think you’ve got the cart before the horse when it comes to the One Percent Club. Of course they have all the power so that fact obscures the point of their having and wanting to keep that political power. They are certainly willing to spend some of their money to hold onto power and to continuously promote the ideas that protect and enhance their wealth. Wealth is at the core of the activity. Having it, growing it and holding onto it. Power is only for the purpose of wealth. In the case of the political class the purpose is obtaining wealth. Those that already have wealth are looking to hold onto it.
Rusty,
There is so much mendacity!
I thought it logic fallacy but that is the symptom, they are all propagandists.
Mendacity.
Not saying the US’ current issues are like the Nazi invasion of the Soviet Union, but…………
Mendacity sold with propaganda, sells soap, sells Mises ideas, sells a paperhanging maniac, divides and conquers republics…………
A people swayed by lies………………
The Nazis were just getting started. Check these days in history for 1941.
jack
they use money to influence the behavior of others. and money is what drives your lower level creep to do bad things. but at the top it has always been power. money is a by-product of power.
i wouldn’t insist upon this, but i think it may be important to understanding what they do, will do.
It boils down to what came first, the chicken or the egg?
Lys
yes, but if it comes down to it, i prefer boiled eggs to boiled chicken.
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The numbers in this chart do show something, but it is not what the author wants to communicate. First of all it is not a suprise that economic growth has been steadily falling since FDR became President. The United States has been traveling down a socialist path ever since Hoover and Roosevelt took office. The government is now the largest provider of finance, and not the private sector. Government Corporations have boomed and are almost to numerable to count. Taxes and fees paid to the government has grown. Socialism has produced the failure of the american growth and spirit. This will have to end either domestically or externally we will be brought to account for destroying the capitalist system which before Hoover made us the wealthiest nation on earth.
McWop:
“credit tightness”
I have been waiting for someone to cast an eye to what the Fed was doing in 2000 and 2006 when the Fed Rates were increased to slow the economy. For example, the Fed Rate in 2000 went from ~6% to ~1.5% when Obama took over. 2006 and Bernanke found himself racing to the bottom also. Too late for both and we all paid for it.
McWop:
“credit tightness”
I have been waiting for someone to cast an eye to what the Fed was doing in 2000 and 2006 when the Fed Rates were increased to slow the economy. For example, the Fed Rate in 2000 went from ~6% to ~1.5% when Obama took over. 2006 and Bernanke found himself racing to the bottom also. Too late for both and we all paid for it.
michael:
I agree. We need to get Goldman Sachs and other investment firms off the public dole of cheap and guaranteed loans due their status as banks.
Oh please, where do they teach this malarkey? I have heard such nonsense since Norquist.