A Taste Badge for Republicans

The Council on Foreign Relations organized a conference on the New Deal and Great Depression that was, by several reports, curiously rich in revisionists who follow Amity Schlaes theory that Roosevelt actually deepened and extended the Great Depression with his New Deal policies, and curiously lacking in the crowd of economists and historians who hold the traditional view that the New Deal helped to end the Depression.

At best, it looks like the revisionist evidence is thin on the ground; at worst, revisionism is being used to create a political counter-movement to the Obama Administration's interventionist policies.

Update: Looks like Brad DeLong didn't think much of it:

It is hard to know what to say. The fall in unemployment from 23% in 1932 to 11% in 1939 is not "recovery" because the economy only "started recovering in 1939"? The post-1939 recovery--as unemployment falls from 11% in 1939 to 9.5% in 1940 to 6% in 1941 to 1.2% in 1944--is "not expenditures... expenditures... did not jump until 1941"? The claim "the current administration has abandoned the use of cost-benefit analysis" would astonish Cass Sunstein and Jeff Liebman, who are doing just it in OMB right now. And who were those "businessmen who had fled to England" and stayed there until 1939 in the aftermath of Roosevelt's election? Can Prescott name a single one? No.

This is not economics. This is fantasy pure and simple.

Also, check out his letter to Patricia Cohen, who covered the event for the NYT:

An Open Letter to Patricia Cohen of the New York Times

Dear Ms. Cohen:

Eric Alterman speaks very highly of you indeed. And right now I am trying to resolve a certain... cognitive dissonance. The reports I got of the Council on Foreign Relations's conference last week on the Great Depression portrayed a day that was--frankly--insane.

We had Edward Prescott ranting about how the Depression came about because Herbert Hoover was not free market enough; denouncing "Hoover's anti-market, anti-globalization, anti-immigration, pro-cartelization policies"; and claiming that the economy only "started recovering in 1939, when... Roosevelt... called up the businessmen who had fled to England... and said please come back." I have never heard of a single one of the "businessmen who had fled to England" in the aftermath of Roosevelt's election, stayed there until 1939, and was then called back by Roosevelt.

And unemployment did fall from 23% in 1932 to 11% in 1939.

We had Ellen McGrattan misrepresenting my friend Christina Romer and claiming that because she is "using estimates of spending multipliers of about 1.5," she believes pure socialism in which we "have the government basically do everything." But Christy Romer says that she believes that the fiscal policy multiplier is 1.5 (or larger) now when unemployment is high--and thus that the government should do more right now--but that the multiplier drops to a very small value whenever unemployment is low.

We had Amity Shlaes claiming that "unemployment remained high throughout the decade" of the 1930s--in spite of its fall from 23% to 11%--because "the uncertainty created by Roosevelt’s continual tinkering paralyzed private investors"--in spite of the rise in inflation-adjusted private investment spending from $11 billion in 1932 to $77 billion in 1939.

Yet you seem to write of a quite different conference. I would have thought that Prescott's denunciation of Hoover, McGrattan's claim that the Obama administration seeks socialism (and their denials), and the striking disjunction between Shlaes's claims of little progress in unemployment and falling private investment in the 1930s and the reports of the Bureau of Labor Statistics and the Bureau of Economic Analysis would be... somewhat newsworthy.

Can you shed some light on the difference between the CFR conference as related by, say, James Galbraith and the conference that you attended?