Amity Shlaes: The candidates keep touting Depression-style public works programs. Why?
[Ms. Shlaes is author of "The Forgotten Man: A New History of the Great Depression" (HarperCollins, 2007).]
Is a public-sector job really as good as a job created in the private sector? I've been wondering about this a lot lately, in part because I just finished a book about the period of the first great American experiment in public job creation, the New Deal. Critics have written that I failed to appreciate the value of New Deal emergency jobs. But the quality of government-paid jobs is also relevant because of the Democratic presidential candidates' interest in that 1930s experiment.
To hear the candidates talk, a repeat of 1930s-scale government job creation is dangerously overdue. John Edwards has proposed that government take the lead in creating types of jobs--"green collar" and "stepping stone"--to serve the two goals of protecting the environment and giving lower earners new skills. Dennis Kucinich is calling for a new green version of FDR's Works Progress Administration.
A structural disaster--the collapse of the levies in New Orleans or the bridge in Minnesota last summer--adds a sense of moral urgency to the debate. Hillary Clinton is warning that "We're trying to build our children's future with our grandparents' infrastructure." Republican Mike Huckabee's talk about domestic infrastructure investment as crucial to our "economic viability" sounds similar.
Academics are backing the politicians up. Bruce Katz of the Brookings Institution recently suggested that intelligent planning is the key to success: "smart policies and investments on infrastructure can foster productive growth in our economy, sustainable growth."
Given this Edifice Complex, the actual quality of New Deal spending, job creation and growth are worth a second look. The record is less impressive than the rhetoric implies.
The New Deal government indeed spent a lot. Nowadays Congress considers a 1% increase in the budget tantamount to treason, or nirvana, or both. President Roosevelt had no time for paltry 1% changes. He nearly doubled the federal budget in his first term. The WPA that Mr. Kucinich mentions spent several billion all by itself. The idea, as the New York Times put it, was for Washington to do work that could "not be undertaken by private industry." A second multibillion-dollar project, the Public Works Administration (PWA), was headed by Harold Ickes, the father of the Clinton adviser. PWA schools, swimming pools or town halls went up in nearly every county of the U.S.
The New Deal also created a lot of jobs--millions. And the New Deal did cause significant business activity. Industrial production--factory activity, basically--came back to 1929 levels around the time of Roosevelt's re-election. All of these outcomes are taken as evidence of public spending's success.
But what really stands out when you step back from the picture is not how much the public works achieved. It is how little. Notwithstanding the largest peacetime appropriation in the history of the world, the New Deal recovery remained incomplete. From 1934 on--the period when the spending ramped up--monetary troubles were subsiding, and could no longer be blamed alone for the Depression. The story of the mid-1930s is the story of a heroic economy struggling to recuperate but failing to do so because lawmakers' preoccupation with public works rather got in the way of allowing productive businesses to expand and pull the rest forward....
Read entire article at WSJ
Is a public-sector job really as good as a job created in the private sector? I've been wondering about this a lot lately, in part because I just finished a book about the period of the first great American experiment in public job creation, the New Deal. Critics have written that I failed to appreciate the value of New Deal emergency jobs. But the quality of government-paid jobs is also relevant because of the Democratic presidential candidates' interest in that 1930s experiment.
To hear the candidates talk, a repeat of 1930s-scale government job creation is dangerously overdue. John Edwards has proposed that government take the lead in creating types of jobs--"green collar" and "stepping stone"--to serve the two goals of protecting the environment and giving lower earners new skills. Dennis Kucinich is calling for a new green version of FDR's Works Progress Administration.
A structural disaster--the collapse of the levies in New Orleans or the bridge in Minnesota last summer--adds a sense of moral urgency to the debate. Hillary Clinton is warning that "We're trying to build our children's future with our grandparents' infrastructure." Republican Mike Huckabee's talk about domestic infrastructure investment as crucial to our "economic viability" sounds similar.
Academics are backing the politicians up. Bruce Katz of the Brookings Institution recently suggested that intelligent planning is the key to success: "smart policies and investments on infrastructure can foster productive growth in our economy, sustainable growth."
Given this Edifice Complex, the actual quality of New Deal spending, job creation and growth are worth a second look. The record is less impressive than the rhetoric implies.
The New Deal government indeed spent a lot. Nowadays Congress considers a 1% increase in the budget tantamount to treason, or nirvana, or both. President Roosevelt had no time for paltry 1% changes. He nearly doubled the federal budget in his first term. The WPA that Mr. Kucinich mentions spent several billion all by itself. The idea, as the New York Times put it, was for Washington to do work that could "not be undertaken by private industry." A second multibillion-dollar project, the Public Works Administration (PWA), was headed by Harold Ickes, the father of the Clinton adviser. PWA schools, swimming pools or town halls went up in nearly every county of the U.S.
The New Deal also created a lot of jobs--millions. And the New Deal did cause significant business activity. Industrial production--factory activity, basically--came back to 1929 levels around the time of Roosevelt's re-election. All of these outcomes are taken as evidence of public spending's success.
But what really stands out when you step back from the picture is not how much the public works achieved. It is how little. Notwithstanding the largest peacetime appropriation in the history of the world, the New Deal recovery remained incomplete. From 1934 on--the period when the spending ramped up--monetary troubles were subsiding, and could no longer be blamed alone for the Depression. The story of the mid-1930s is the story of a heroic economy struggling to recuperate but failing to do so because lawmakers' preoccupation with public works rather got in the way of allowing productive businesses to expand and pull the rest forward....