A comment or two...

From some pithy thinkers of late.

One is a recent reader's comment from Paul Krugman's NYT blog regarding Rush Limbaugh and the Republican Party. It reflects my thoughts as well as any author thus far in this early Obama presidency:

"Rush Limbaugh openly states that he hopes for the failure of this presidency and its policies — and clearly states that any honest Republican shares his view. But isn’t wishing that the policies fail the same as wishing that the country fails? If one disagrees with the policy decisions, it’s legitimate to say so. But if the policies work, the intellectually honest thing to do is to reevaluate one’s own belief system. Wishing for their failure though is patently ideological, and ultimately an act of metaphorical suicide bombing. 'I’ll go down with the whole country just to make sure they’re never proven right'".— A. Devero

Another is from Ed Phillips, an old friend and retired real-life economist from Alaska, now from beautiful Kalama, WA. I get the big point but not the finer ones, really:

"There are real reasons to criticize the Obama fiscal policy. It's too bad the conservatives have chosen to retreat to a 1920's pre-Keynesian argument. They have adopted what is know as "The Treasury View".,promoted by the British Treasury in the interwar (WW1/WW2) and held by very few economists otherwise, even then.

This view holds that any increase in government expenditure must come at the expense of private expenditure. Public expenditures financed by taxes or deficits (future taxes) are held to "crowd our" private expenditures. This argument is plausible if the economy is at full employment and/or government borrowing increases interest rates, thereby reducing private investment and consumption. It seems that in periods of recession and/or depression the full employment constraint is not operative and it is possible to increase government expenditures financed by deficits and not crowd out private expenditures. This was recognized before Keynes and public works projects as a means of reducing unemployment was recognized by the economics profession by the early 20th century. A British commission in 1912 or so explicitly advocated such a policy.

In 1932 members of the University of Chicago Economics Faculty including Frank Knight, Jacob Viner, Henry Simons and Paul Douglas( Yes, the Paul Douglas that became a US Senator) sent a letter to Congress advocating public works projects financed by deficit spending and monetary expansion. Sounds very Keynesian.

In fact the efficacy of deficit spending and public works projects was orthodox nostrum before Keynes. His major contribution was to give it a theoretical underpinning. Had the Roosevelt Administration been willing to become Keynesian (follow the advice of Chicago) before WW2 the Great Depression may not have been "Great".'

Fox News "Analysts" claims FDR prolonged the Depression. If he did, it's because he spent too little, tried to balance the budget after 1936, and needed WW II to get us out of the "Great" depression. Here's to Obama not making the same mistake.