Hear: If FDR Had Done Nothing

Freezing in Allston, Mass.

Grandwazoo/Planet Money Flickr group

 

Today on Planet Money:

With the incoming Obama administration planning a $700 billion economic stimulus, the question now is whether a wave of government spending will revive the economy.

For answers, we turn to the example of President Franklin Delano Roosevelt. If you're like me, you first encountered FDR in history class as the hero of the Great Depression. Lately, though, some people have renewed debate over whether FDR and the New Deal saved America or made matters worse.

We'll start with historian Eric Rauchway, who considers a world in which FDR had done nothing.

Bonus: Rauchway's got a blog and a new book, The Great Depression and the New Deal: A Very Short Introduction.

Download the podcast; or subscribe. Intro music: Paramore's "I Caught Myself." Find us: Twitter/ Facebook/ Flickr.

-- Laura Conaway

4:48 PM ET | permalink

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You've Got Maille

Click for bigger image.

Ben Hatke

 

Ben Hatke, an illustrator, sent this over today. He first posted it back in October, with the idea that fashion might become a silver lining. Me, I'm holding out for a Great Recession t-shirt.

-- Laura Conaway

3:52 PM ET | permalink

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'Not A Tax Cut!'

Economist Russell Roberts battled his way through our Friday podcast, arguing against a federal stimulus package to revive the economy. Now Roberts is back, on his own blog, where he tees off on President-elect Barack Obama's proposed tax cuts.

Roberts writes:

"[A]n increase in spending coupled with lower tax collections is an INCREASE in taxes. AN INCREASE in taxes. NOT A TAX CUT. If I spend more money and collect less, the government is promising to collect more taxes in the future. It is not a tax cut. Not a tax cut. Not a tax cut. And when you don't cut rates but rather give people a lump sum of $500, there are no incentive effects other than to increase the probability that the US Treasury will be unable to honor its obligations in the future."

-- Laura Conaway

3:34 PM ET | permalink

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As Goes Real Estate . . .

The smart folks at Calculated Risk take a look this week at the connection between unemployment and sales of new homes.

Typically, new home sales bottom out during a recession and then start growing at least three months before the worst is over. Unemployment, on the other hand, can peak as late as a year after the recession ends. That makes sense, because companies start hiring once they feel confident that business will keep growing.

So far, so good, right? Calculated Risk says this is not your typical recession. Right now, we've still got falling home sales and rising unemployment. What we'll have next, they write, could be anyone's guess.

-- Laura Conaway

3:08 PM ET | permalink

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Cooking For The Recession

I've got the recession on my mind today -- and so, apparently, do any number of you.

Twitter pal @olevia sends this bit about the ways in which recessions tend to make us healthier.

Meanwhile, Claire in Northern California reports that her husband's talking about a possible pay cut. She says the same thing we always say at my house -- break out the rice and beans.

-- Laura Conaway

1:59 PM ET | permalink

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Recession Attire

Pam Olson sends this "3 Suits for the Price of 1!" ad from Centerville, Ohio. Pam says:

Look what came in the mail last weekend! Thought you might want to add this to your list of indicators. If you had a job, a job where you needed to wear a suit, these deflationary times have got you covered!

(See the ad after the jump.)

Continue reading "Recession Attire " »

-- Caitlin Kenney

11:25 AM ET | permalink

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The Layoff Guarantee

With economists expecting really, really bad numbers on job losses this week, Hyundai's offering a deal: Buy or lease a car, and if you lose your income, the dealership will take the car back.

Among the asterisks: The offer's good for up to $7,500 of what you owe.

(Thanks, Shannon and Aimee.)

-- Laura Conaway

11:19 AM ET | permalink

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Open Thread: New World Now?

Michael Lewis and David Einhorn have fired up a major op-ed in the New York Times: "The End of the Financial World as We Know It." It's long. Pour yourself a cup of coffee and dig in -- I want to know what you think of it. Here's the opening:

Americans enter the New Year in a strange new role: financial lunatics. We've been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet's college graduates seemed to want nothing more out of life than a job on Wall Street.

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don't know what they are doing with money, who does?

-- Laura Conaway

9:25 AM ET | permalink

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Hear: Fight Night

Slim pickings.

Ron Deutsch/Planet Money Facebook group

 

Today on Planet Money:

Planet Money listeners have sometimes hopped all over us for using too many free-market economists. Now, David Kestenbaum sets one free-market thinker against an ideological opposite. These two forces have had only one proper fight -- the Great Depression. Both claimed victory.

Now, in one corner, it's Russell Roberts, an economist at George Mason University, who believes the economy works best when government stays out of it. He likes the Austrian School of economic thought.

In the other corner, it's Steven Fazzari, an economist at Washington University in St. Louis. He believes the government plays a key role in the economy, especially when it comes to recovering from recessions. He describes himself as a Keynesian.

Which of these mighty warriors is right? Your future could depend on it.

Download the podcast; or subscribe. Intro music: Survivor's "Eye of the Tiger." Find us: Twitter/ Facebook/ Flickr.

-- Laura Conaway

4:33 PM ET | permalink

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New Economic Theory?

I've had this question the last few weeks: will this crisis give birth to some new way of thinking about economics?

The Great Depression begat Keynesianism, the crisis of the 1970s/1980s gave broader support to Friedmanism. So, will this crisis give birth to some new theory? Or are we just going to keep refining the big ideas we already have.

I had a great talk with Daron Acemoglu, a big-shot young economist about this. He says that yes, certainly, there will likely be radical new ideas.

Continue reading "New Economic Theory? " »

-- Adam Davidson

4:11 PM ET | permalink

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