A Monetary Lapse of Reason

Megan McArdle, The Atlantic’s resident in-house World’s Tallest Female Libertarian Econoblogger Who Nonetheless Voted for Obama, wrote yesterday:

Random thought of the day: what if Lord Keynes was right . . . but only in 1932?


Actually, that timeframe makes a certain amount of sense — we know Keynes wasn’t right from 1933 to 1941, when, as UCLA noted a few years ago, “FDR’s policies prolonged Depression by 7 years, UCLA economists calculate.” Or as Mark Steyn presciently noted, in late October of 2008, other nations had economic Depressions at the start of the 1930s; the US had a Great Depression, earning that added sobriquet due to its needless longevity.

And we know that Keynes’ medicine — spend ‘til a nation is even more broke than it was at the start of the Depression — wouldn’t go over well with the American people during 1932, since it wasn’t a part of Roosevelt’s platform. FDR, to listen to him, seemed most concerned with ending Prohibition, and far from promoting massive Make Work Projects, in some ways, ran to the right of Herbert Hoover.

But thanks to almost three quarters of a century worth of self-perpetuated myths, today’s liberals actually couldn’t wait for the 21st century economy to collapse before literally promising to dust-off 70-year old programs. Pennsylvania Democrat Paul Kanjorski was quoted in May of 2008 as saying:

“All we’re doing is going into the basket and saying, ‘Damn, what did they do in ‘32, what did they do in ‘34, what did they do in ‘36,’ and we’re pulling them out, dusting them off, giving them a paint job, correcting the fenders a bit, and we’re using them…To get us through the horrendous problems we may have over the next several years, we’ve got to make these old programs work, and we’ve got to be as inventive as hell.”


In May of 2008, the Dow-Jones was 2000 points higher than it is today, and unemployment was at about 5.5 percent, half of today’s national average.

At least though, most of FDR’s Keynesian programs were focused on temporarily creating jobs by building things. But that’s the paradox: pace Rep. Kanjorski, we can’t do what they did in ‘34 and ‘36. Thanks to a morass of political correctness, NIMBY “Not In My Backyard” extremism has gone BANANAS — “Build Absolutely Nothing Anywhere Near Anyone.”

In his op-ed this week, Jonah Goldberg squared the circle:

Gleichschaltung is a German word (in case you couldn’t have guessed) borrowed from electrical engineering. It means “coordination.” The German National Socialists (Nazis) used the concept to get every institution to sing from the same hymnal. If a fraternity or business embraced Nazism, it could stay “independent.” If it rejected Nazism, it was crushed or bent to the state’s ideology. Meanwhile, every branch of government was charged with not merely doing its job but advancing the official state ideology.

Now, contemporary liberalism is not an evil ideology. Its intentions aren’t evil or even fruitfully comparable to Hitlerism. But there is a liberal Gleichschaltung all the same. Every institution must be on the same page. Every agency must advance the liberal agenda.

And this is where the Catch-22 catches. The dream of a nimble, focused, problem-solving government is undone by the reality of hyper–mission creep. When every institution is yoked to an overarching philosophy or mission, its actual purpose can become an afterthought. In 2005, volunteer firefighters from all over the country offered to help with Katrina’s aftermath. But FEMA sent many of them to Atlanta first to undergo diversity and sexual-harassment training (which most already had).

Such examples are everywhere. What is political correctness other than the gears of the liberal Gleichschaltung? The financial crisis was worsened because Fannie Mae and Freddie Mac became tools for liberal social engineering. Let’s not even mention public schools.

The White House is determined to be a great friend (i.e., servant) to the unions, so everything from the stimulus to the automaker buyout to the Gulf spill must first pass union muster. Remember those vital, “shovel-ready” weatherization jobs the stimulus was supposed to pay for? The Labor Department delayed them for nearly a year while trying to figure out how to comply with pro-union “prevailing wage” rules for each of more than 3,000 counties.

Liberalism has become a cargo cult to the New Deal, but many of the achievements of the New Deal would be impossible now. Just try to get a Hoover Dam built today.


But Didn’t Candidate Obama realize this when he was running in 2008? Mickey Kaus recently wrote:

On page 85 of his excellent quick-history, The Promise, Jon Alter discusses Obama’s 2009 stimulus bill:

The biggest frustration involved infrastructure. Obama said later that he learned that “one of the biggest lies in government is the idea of ’shovel-ready’ projects.” It turned out that only about $20 billion to $40 billion in construction contracts were truly ready to go. The rest were tied up in the endless contracting delays and bureaucratic hassles associated with building anything in America. [E.A.]

a) Good that Obama is still learning, but the realization that the expensive projects he repeatedly assured Americans were “shovel-ready” actually weren’t comes a little late, no? The economy needed stimulating 18 months ago. How many unemployed Americans could have had jobs for the last year and a half if Obama had realized the House Dems’ “shovel-ready” pitch was a crock and pursued other, quicker forms of stimulus–like an instant payroll tax cut?

Mickey quipped, “And here I thought the coming to power of the Democrats was a voyage of discovery only for their youthful journalistic enthusiasts.”

Heh. Or as somebody said in early September of 2008, “My fellow citizens, the American presidency is not supposed to be a journey of personal discovery.”

Fortunately though, California’s state government, knowing that its unemployment rate is even higher than the national average, shows that when it wants to cut through the red tape, it can, as J.E. Dyer writes today on Commentary’s Contentions blog:


Thousands of people in the farming industry have lost their livelihoods and property since California’s “man-made drought” became reality three years ago. In some counties, unemployment tops 20 percent. The state has lost billions in revenue from its largest industry: agriculture.Advocacy groups this spring brought the central dispute, which is over the celebrated Delta smelt in the San Joaquin River delta, to a judicially brokered compromise that now allows some level of water pumping. (A good summary of the process is here.) But this is a conditional outcome: not sustainable and not intended to be so. New development is what’s needed to transcend the limitations of our state water infrastructure, which set us up for the crisis to begin with. But legislators in Sacramento aren’t serious enough to prioritize taking action; they have to wangle votes from each other with unseemly pork, which only makes their “fix” more difficult to present to tax-weary voters.

There is, however, something on which the political leaders in Sacramento were able to take unified action this week. In 2008, California voters passed Proposition 2, which mandates a set of humane conditions for the hens tended by egg-producing farmers. This year’s legislature has passed a law that will require out-of-state egg producers to conform to the mandate as well, if they want to sell eggs in California. The governor signed it yesterday, demonstrating that they can get things done in Sacramento. The things just have to be on their list of priorities.

What will it take for California’s political class to recognize that prosperity, public order, and human survival are not givens? They can collapse under the weight of hostile regulation. The Golden State’s sour economy and staggering deficit are the chief exhibits in that lesson today, and worse is probably looming. But by all means, let us fight to ensure that hens across America can spread their wings without bumping into each other.


So how does one fix a worldview that’s so trapped in an imaginary glorious past that it thwarts its ideology’s technological advancement?

Good luck — not even NASA knows how to solve this issue.

Update: Amity Shlaes, the author of The Forgotten Man, her brilliant 2007 look at human cost of the Great Depression, has an op-ed at AOL that dovetails well with this post: “Is Obama Spurring Growth, or Knocking It Down?”

(Originally posted during my stint as part of the team of guest-bloggers at Hot Air this week — and a big thank you once again to Ed and Allah for allowing me to sit-in this week; title suggested by one of the commenters to my post there.)


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