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Where is the bar?

January 21, 2009, 10:36 am

My friend Julian Zelizer of Princeton:

there were really three different economic goals in the First Hundred Days. The first was the goal with which we are most familiar–to revitalize the economy and move the nation out of the Great Depression. When we evaluate FDR’s success in meeting this challenge, the New Deal does not look very good.

The question one should ask here is, “professor, what’s your counterfactual?” Which is to say, what would “very good” look like? If the economy is at around 25% unemployment and most of the people still working are working part time and productivity has fallen off a cliff, things are pretty darn broken. How fast should they get fixed?

In real life—not in the counterfactual—they got fixed at reasonably quick speed. Christina Romer says they got better at a rate so “rapid” it was “spectacular”; Gauti Eggertson notes that 1933-37 saw

the greatest expansion in output and industrial production in any four year period in U.S. history outside of wartime.

So “does not look very good” means what? “Falls short of Economic Jesus”?

I’m glad Julian’s not grading my work.

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