1938 in 2010 | Hacker News Reader

1938 in 2010

nytimes.com

4 pointsjamesbressi5 comments

I'm surprised that USA newspapers mostly support Keynsian theory. That's maybe 10th article I've read that agitates to increase spendings.

Is it universaly believed in America that the only way out of recession is by going deeper into debt? Examples from Europe (German, Greece) and China seems (IMO) to contradict that there are similarities between Great Crisis of '20 and this?

There are many examples from our own history as well, such as the great depression.

The reason is that the media in the us is very heavily influenced by government and the political parties. It is much easier to publish interviews, opinion pieces from political partisans like krugman and government press releases than it is to go out and dig up news, consider an alternative perspective and write about it with some depth.

This whole "double-down" strategy is a bit terrifying to me. But it could work. The real key though, I think, is that it would only work if the stimulus money put people to work on projects that would increase the Nation's competitive edge: green infrastructure, broadband, better schools. Dumping the stimulus into tax cuts for home buyers--which serve only to pull demand forward--that strikes me as a useless wealth transfer.

Any stimulus spending should both create jobs now (to distribute consumption dollars and ease consumer fear) and should pay dividends in the future by creating an atmosphere where the average worker can be more productive. The WWII stimulus obviously had a major impact because, by winning the war, we emerged with a huge competitive advantage. Unless we're going to rebuild that advantage by bombing our competition back to 1944, which I hope we aren't considering (...), we've gotta find another way to construct that advantge. That's the challenge.

completely agree that if such a strategy will work it will only work when spending increases the nation's competitive edge: the 1938 counterpart to this was the war where a lot of funding went, it increased technological innovation which in turn positively affected the competitive edge of the US throughout the 20th century.

The problem is this is self-evidently political money, and it's allocation is always, pretty much by definition (well, outside of a war) going to be political. That was true for FDR and has been true for Obama.

You and I disagree on how it should be spent (I think "green infrastructure" is a mirage at best, unless you're also e.g. serious about nuclear power, broadband could use some money but really needs a different regulatory regime and the "spend more money on schools" approach has been tried for half a century with highly negative results) ... but I guarantee you neither of us would be happy with how it would actually be spent.

Heck, even if it's spent in a totally partisan pro-Democratic Party way, based on the last stimulus it would sure look like it would be a bad investment; then again, Dave Obey has decided to spend more time with his family after this Congress (he's the Chairman of the House Committee on Appropriations and writing the stimulus bill was delegated to him).

Reply on news.ycombinator.com