As Paul Krugman says,
Not much point in going through Amity Shlaes’s latest: after having inadvertently revealed that she has no idea what Keynesian economics is, she’s back on the warpath against FDR, and me.
Krugman deals with her wages argument there. But she gives half her column to the unemployment statistics story again, apparently in the hope that if she makes it seem complicated and controversial, it will look as if she’s got it right. Let me spend some virtual column inches on this one more time.
Amity Shlaes lives in New York. She has a unique advantage: in many cities, access to a world-class research library, if one exists at all, is open only to members of a university community. But in New York, the Public Library is a world-class research library.
Suppose like Amity Shlaes you’re in New York. Suppose further you’re a sufficiently honest and competent researcher wishing to find out historical statistics of US unemployment in the 1930s. What would you do? You would go to the New York Public Library—for the purposes of this story it doesn’t matter whether you goes go to the main reading room on 5th Avenue and 42nd Street or the Science, Industry, and Business Library on Madison and 34th. Both are free and open, both easily accessible by a variety of major subway lines, and both have convenient hours that extend into the early evening in case you’re tied up during the working day.
If you go either to the main reading room or the SIBL you will find—and if you do not, a research librarian will be happy to show you—the current edition of Historical Statistics of the United States on open shelves—you don’t even have to page it from the stacks and wait for it.
If you open it up and look under B, “Work and Welfare”, then under Ba, “Labor”, then under “Employment and Unemployment” for a historical series on unemployment, you will find David Weir’s series from Research in Economic History, and if you read the footnotes, you will understand why Weir’s revision is regarded as superior to earlier versions. If you’re really curious, you might want to read the relevant issue of Research in Economic History to see how the debate proceeded; there’s a long forum there that includes Stanley Lebergott and takes in the work of Christina Romer (economic history is a small world). Unfortunately it looks as though NYPL doesn’t have the 1992 volume, so you might have to go somewhere else to do it.
But at this point you’re in possession of the relevant information. And if you’re not in New York or otherwise near a major research library, or maybe you don’t want to undertake this experiment yourself, you can read a summary of what you’d find here. Where I pointed out, quite politely, and in respect of which I point out, quite politely again, if you have got this far and you now choose to use a different series than the ones in HSUS, you are not doing what a sufficiently honest and competent researcher would do.
Shlaes spends a lot of time on the bona fides of Stanley Lebergott, who compiled the series that’s now considered pioneering, yet flawed. This is foolish ad hominemism; Newton was a pretty impressive fella, but Einstein improved on his physics.
And Shlaes’s method is by now suspect. It led her to praise the Bush administration’s competence in the wake of Katrina and then to acknowledge the administration’s incompetence but to blame it on the president’s wise respect for federalism. It led her to agree with Phil Gramm about our current crisis being “mental” and America being a “nation of whiners”. And it led her, as a correspondent points out by the email, to this prediction:
A house is inherently more lovable an object than cold metal or a stock certificate and so it is harder to part with. This means that the housing market cannot be as volatile as the others. In other words, while house prices may sag and sag, they will not pop.
She wouldn’t be worth responding to, you know, if she didn’t have free access to the op-ed pages of major newspapers, to the airwaves of PBS and even Comedy Central. But she does. It’s a mystery.
PS: Michael Cembalest says in his summary by email,
For the anti-FDR crowd that believes that WPA/CCC workers were not really employed: that would mean that the pre-war decline in unemployment to 10% by 1941 is even larger and more impressive, and that fiscal stimulus did an even better job. Another anti-FDR myth asserts that employment only improved via government workers; a chart decomposing civilian, government and emergency workers shows that all 3 contributed meaningfully to the employment gains of the late 1930s. I have relatives that despise FDR but can’t remember why; this phenomena seems to infuse a lot of the ideologically-based research against the fiscal policies of that era.
PPS: It also doesn’t matter that, per Shlaes, Barack Obama may have had Lebergott’s series in mind when he referred to unemployment in 1932-33. The president-elect is not, so far as I know, offering his services as an expert commenter on the subject.
PPPS: I took so long to write this, what with the patience and the reasonableness, that DeLong got in first, claiming Shlaes has ventured into “flunking the Turing Test territory.”
36 comments
November 30, 2008 at 11:59 am
Chris
DeLong may have been quicker and now has several comments, but I like your response better.
November 30, 2008 at 12:37 pm
Rob_in_Hawaii
What a spanking, Eric. I hope I never piss you off wanking about the Great Depression. (And you would have been much better on the Daily Show!)
November 30, 2008 at 1:31 pm
Prof B
If one isn’t going to count WPA and CCC labor as “employed,” wouldn’t consistency require that we not count the 16.1 million people who served in the armed forces during World War II as employed? In which case, the master winger narrative would suffer a wee bit of a setback.
November 30, 2008 at 1:57 pm
Steven
No, “Prof B” it would require that imprisoned people working chain-gangs and such be counted as “employed.”
Make-work is not real employment.
November 30, 2008 at 2:02 pm
Steven Attewell
Is there any way I could get my hands on “a chart decomposing civilian, government and emergency workers shows that all 3 contributed meaningfully to the employment gains of the late 1930s.”
I could really use that for my dissertation.
November 30, 2008 at 2:07 pm
Steven Attewell
Steve:
People on the WPA and CCC (not to mention the NYA’s part time/full time jobs program) applied for jobs, got paid cash wages, were free to spend money as they wanted, and were…well, not in prison.
The only real difference between public employment and private employment in the 30s was that while private employment wages were theoretically set by the market (personally, I think relative power between management and labor had a lot to do), public employment wages were set by a mix of the prevailing wage (hence, still somewhat tied to the market) and what WPA/CCC officials thought was a “security wage” to keep a family alive. Even there, since the security wage was then scaled to the prevailing wage by means of reducing hours, public employment jobs were more or less equivalent to full-time or part-time jobs in the private sector (depending on what era of wage policy you’re talking about).
November 30, 2008 at 3:01 pm
bitchphd
People on the WPA and CCC (not to mention the NYA’s part time/full time jobs program) applied for jobs, got paid cash wages, were free to spend money as they wanted, and were…well, not in prison.
And again, as Eric’s pointed out more than once, they were also usually doing work that actually created useful things: archives, dams, public buildings. As opposed to breaking rocks or whatever. (And yes, I gather there was some useless rock-breaking type activity, but by and large.)
November 30, 2008 at 3:07 pm
Vance
Steven @2:02: this is what you’re after, I think.
November 30, 2008 at 4:17 pm
John Emerson
My local bar (a municipal liquor store) was built by the WPA. It’s still in use after maybe 70 years, though it’s no longer a youth center.
November 30, 2008 at 4:21 pm
ben wolfson
She’s out on the streets again
She’s down on her knees, my friend
But you know she’ll never ask you please again
So when are you going on the Daily Show?
November 30, 2008 at 4:22 pm
eric
So when are you going on the Daily Show?
To the best of my knowledge, they haven’t expressed any interest in having me as a guest, ben.
November 30, 2008 at 4:25 pm
bitchphd
C’mon, Eric. Self-promote!
November 30, 2008 at 4:25 pm
ben wolfson
You’ll never make it as a self-promoting sleaze if you keep this up.
November 30, 2008 at 4:27 pm
eric
The producers are not unaware of my existence and virtues; they seem merely not to care.
November 30, 2008 at 4:49 pm
Michael Elliott
for the purposes of this story it doesn’t matter whether you goes to the main reading room on 5th Avenue and 42nd Street or the Science, Industry, and Business Library on Madison and 34th.
I disagree. I would feel much more warmly toward anyone who chose the main reading room over the SIBL.
November 30, 2008 at 4:53 pm
eric
More importantly you’ve highlighted a grammatical/typographical error. Oh, woe.
November 30, 2008 at 4:58 pm
Michael Elliott
I can even feel warmly about typographical errors if they are composed in the NYPL main reading room.
November 30, 2008 at 5:46 pm
baa
Apologies if you have already addressed this somewhere, Eric, but I am interested in the question “how do we get the private economy to come back after a depression.” Looking naively at both employment series you reference in your way back post, I see employment dropping markedly post 1932, but still by 1940 remaining substantially higher than pre-depression (of course, I lack the series for the 1920s; maybe 1929 is the outlier). That seems like a long time for a recovery.
There seem to be two competing narratives drawn from these data. Narrative one is “The New Deal wasn’t at all an unalloyed good, some of FDRs policies inhibited growth, as evidenced by a very high employment rate 8 years later.” Narrative two is “The Great Depression was just really bad, the New Deal performance is an exceptionally good one all things considered.” Again, looking naively (and I should say, as a big FDR fan), I can see the unemployment data supporting either narrative. Do you believe this is a mistake, and the unemployment data actually unambiguously support narrative two? If so, can you explain briefly why you think this?
November 30, 2008 at 6:24 pm
eric
Must I choose?
I think “The New Deal wasn’t at all an unalloyed good” is perfectly fine; I think “some of FDRs policies inhibited growth, as evidenced by a very high unemployment rate 8 years later” is problematic, because how much of that very high unemployment rate 8 years later owed to having a long way to come back, and how much owed to the inhibitory effect of FDR’s policies?
If you want my preferred summary narrative, it’d be something like, “The New Deal was on balance rather a good thing, and though some of its policies probably inhibited recovery they were in the main swiftly dropped. In the first instance, repair of the banking system made New Deal monetary policy an effective instrument of recovery. But the damage that had been done to the economy was so severe that this was insufficient; even a repaired banking system with plenty of money to hand wasn’t a sufficient tool for recovery.* And by 1938, it appears to have become clear to New Dealers that Keynesian fiscal policy would be a necessary spur to recovery. They tried it then, to an insufficient degree, and probably would have tried it more later even without the war. As it was the war occasioned a real blast of Keynesianism.”
Note, too, that this discussion has to do only with recovery; the other two “r”s of the New Deal are traditionally “relief” and “reform”, on which the New Deal deserves quite good marks, I think.
—
*Witness the result of the RFC’s recapitalization program; banks still weren’t lending enough money—so everyone thought—by the second part of the 1930s, leading to the RFC deciding to lend money on its own—where it seems to have discovered there weren’t enough qualified borrowers. Hence: more and different stimulus needed.
November 30, 2008 at 7:35 pm
ac
I would feel much more warmly toward anyone who chose the main reading room over the SIBL.
Because it is where one can feel close to Trotsky.
November 30, 2008 at 7:39 pm
bitchphd
The producers are not unaware of my existence and virtues; they seem merely not to care.
Bastards. If only you had a book to promote.
November 30, 2008 at 9:28 pm
urbino
Have you shown them the picture of you in your wetsuit?
November 30, 2008 at 10:50 pm
Michael Turner
There she goes again
She calls my name
she pulls my train
No one else could heal my pain
(The Las, “There she goes”)
Whether that song was about a young man’s puerile infatuation with a woman or about shooting smack (still debated by those with even more time on their hands than I have), well it kinda doesn’t matter here, does it?
The hit of a one-hit wonder, if that’s any source of hope.
December 1, 2008 at 8:19 am
kharris
Just a point about the style of argument in which one declares that workers paid as part of a fiscal stimulus program aren’t “really employed” and so shouldn’t be counted. That is the purest instance of “begging the question” that anyone can hope to find. There is no analysis there, no falsifiable statement. It is pure argument by insistance on one’s own terms – the weakest form of argument there is.
December 1, 2008 at 8:44 am
Chris
Make-work is not real employment.
What’s the economic value of a dead German? If that’s all your work “produces”, isn’t that the epitome of nonproductive work?
There were, of course, compelling *non*economic reasons to fight WWII. But our troops didn’t exactly come back laden with the plunder of Berlin – modern wars are not a profit-making enterprise like they sometimes were in Caesar’s day.
The claim that a man shooting Germans and drawing government pay is productively employed while the same man, five years earlier, building bridges and drawing government pay was not requires an awfully creative definition of “productive”.
December 1, 2008 at 9:20 pm
Steven Attewell
kkharis:
Actually, there’s a subtle, unspoken argument there that private sector employment (making goods for sale for profit) = real, and that public sector employment (making public goods at cost) = not real. It’s a subtextual call for the strip-mining of the commons, the billboarding of the public square, and ultimately the denial that the “public good” or a “common interest” exists.
December 1, 2008 at 9:25 pm
Timeless Melody
I beg to differ, my ill-informed one hit wonder friend.
December 1, 2008 at 9:26 pm
Timeless Melody
Ahem.
December 2, 2008 at 11:34 am
kharris
Steven A,
Point taken. Isn’t the existence of a subtext a defining element in this sort of endlessly repeated argument of political convenience? It is what is meant by the expression “dog-whistle”. The stated argument if for the guy making the dent in the barstool. The subtext is for the armchair intellectual.
The gratifying thing about your observation, from my perspective, is that the dog-whistle argument also begs the question.
December 2, 2008 at 11:41 am
Michael Turner
OK, Timeless Melody, two-hit wonder. [*] And Shlaes wrote some book before The Forgotten Man, about taxes being bad — a reliable hit theme with a certain crowd, so it probably sold well. There’s still hope on this count.
[*] A two-hit wonder that’s probably going to be a guilty pleasure of mine for another decade, before I switch to Benny Goodman for the sake of appearances.
December 2, 2008 at 1:33 pm
jazzbumpa
Michael –
Benny Goodman* is its own reward.
* As a listening choice, not as a human being.
December 2, 2008 at 2:05 pm
metaljaybird
Sigh. Do people really believe FDR was an economic master?
Bush is a Keynesian.
I really have no idea who Amy is.
I think the Great Society and The New Deal were unnecessary, had we let the market work out its issues.
We’re dealing with something a bit different, in that our currency is outright a fiat currency. What dictates the value of fake money now?
-Just another disgruntled Austrian libertarian in a growing line of disgruntled Austrian libertarians.
December 2, 2008 at 3:48 pm
Hedley Lamarr
One reason for Shlaes to stay out of the NY library is that she seems not to be sighted. Either that, or she is one of the dizziest looking women ever.
December 2, 2008 at 9:20 pm
100 Top Posts WordPress English 3/12/2008 « Kopanakinews’s Weblog
[…] There she goes again. As Paul Krugman says, Not much point in going through Amity Shlaes’s latest: after having inadvertently revealed […] […]
December 3, 2008 at 12:10 am
Ben
What’s your view of taxes under Hoover and Roosevelt, Eric? From my limited reading taxes were very low by modern standards under both presidents – until the war, that is.
Yet Shlaes has been saying tax increases under Hoover were a major contributing factor to the Depression. Kennedy cut taxes as part of an explicit Keynesian strategy, but he had a decent tax base to play with. I have a hunch that the tax base was so low that it held back New Dealers from more ambitious – and needed – deficit spending. Any thoughts Eric?
February 6, 2009 at 8:11 pm
Obama - Page 79 - Fires of Heaven Guild Message Board
[…] attempt going on to try to redefine the great depression. Heres a good discussion on it. There she goes again. « The Edge of the American West And an Article […]