Gene Lyons: Don't Forget The Lessons Of The Great Depression

Gene Lyons writes that history shows us the dangers of the current Republican economic strategy, in his column, “Republicans Lost The Economy, Democrats Lost The Narrative:”

Look at it this way: If the Wall Street banking crisis had taken place in 2007 instead of 2008, George W. Bush wouldn’t be able to leave home without being jeered. (As it is, he rarely leaves Texas.) Hardly anybody would buy the brand of tycoonomics GOP presidential candidates are selling. People would understand that save-the-millionaires tax cuts and deregulation had dramatically failed. President Obama would get more credit for pulling the economy out of a nosedive.

Alas, people have short attention spans and a weak understanding of abstract economic issues. You have to tell them a story. The failure of policy makers to do that has been driving progressive MVP Paul Krugman crazy. How can it be, he asks, that governments foreign and domestic are repeating the mistakes of the early 1930s—slashing government spending to reduce budget deficits, putting more people out of work, reducing demand, and inadvertently increasing deficits? Rinse and repeat.

Part of it’s that the lessons of the Great Depression belong to history, and, as such, are infinitely malleable. Arguments your grandfather would have dismissed—such as Mitt Romney’s plans to assure prosperity by topping off Scrooge McDuck’s bullion tank—are given credence today. Granddad may not have grasped Keynesian economic theory, but he remembered “Hoovervilles” and bread lines. Scrooge McDuck wasn’t a cartoon figure for nothing.

Prof. Krugman acknowledges that some kinds of economic thinking seem counterintuitive. “Thus,” he writes “it’s normal to think of the economy as a whole as being like a family, which must tighten its belt in hard times; it’s also completely wrong.” Yet it makes him crazy that even President Obama has used the belt-tightening analogy.