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Nutshell.

January 12, 2009, 10:37 am

This graph, from David Beckworth, is pretty hilarious. It’s unfair, but who minds unfair?

Thanks to commenter, uh, David Beckworth, for pointing this out.

I think what this picture best illustrates is the peril of getting drawn into a debate over the recovery question and the recovery question alone. The New Deal did a lot more than just set about a plan for recovery. For one thing, it saved some considerable number of people from starving, which is a nice thing. For another, it gave us a significantly reformed system of regulating economic downturns: a re-drawn Federal Reserve System, the FDIC, the SEC (which, prior to its gutting, was a pretty good thing), Social Security (which includes not only old-age but also unemployment insurance), and a variety of other similar measures. For yet another, it set about hauling the South out of poverty—a project at which nobody had succeeded despite considerable effort since the Civil War. So it was a lot more than just a recovery program.

But also, thinking just of the recovery program, I guess I think this graph isn’t so terrible at illustrating what I think we ought to notice: there was a deep, deep hole to climb out of in 1933, and the rate of climb was pretty quick. Could you really, realistically, expect much quicker, as broken as things were?

One question for David: what numbers did you use to establish trend? Did you include 1928-9, or just 1923-7 (which is one of the methodological disputes here)?

And one further point: the person who really should be on the list with Krugman, Sirota, and me, is the currently-rather-important Christina Romer. Probably also Gauti Eggertson, of the New York Fed, come to think of it.

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