Krugman and the Depression

When Paul Krugman recently won the Nobel Prize, I was worried, not so much that he didn't deserve it for his earlier work, but that he would use the fame to legitimize his much less rigorous later work. My fears were proven correct when I saw his new book The Return of Depression Economics, or rather a rehash of his old book of the same name, staring at me from the shelves of the local Barnes & Noble, complete with a "Nobel Prize Winner" emblazoned on the front cover.

The Wall Street Journal, however, once again in defense of reality economics, has an interesting editorial on a topic in his book today:

This reality shows most clearly in the data -- everyone's data. During the Depression the federal government did not survey unemployment routinely as it does today. But a young economist named Stanley Lebergott helped the Bureau of Labor Statistics in Washington compile systematic unemployment data for that key period. He counted up what he called "regular work" such as a job as a school teacher or a job in the private sector. He intentionally did not include temporary jobs in emergency programs -- because to count a short-term, make-work project as a real job was to mask the anxiety of one who really didn't have regular work with long-term prospects.

The result is what we today call the Lebergott/Bureau of Labor Statistics series. They show one man in four was unemployed when Roosevelt took office. They show joblessness overall always above the 14% line from 1931 to 1940. Six years into the New Deal and its programs to create jobs or help organized labor, two in 10 men were unemployed. Mr. Lebergott went on to become one of America's premier economic historians at Wesleyan University. His data are what I cite. So do others, including our president-elect in the "60 Minutes" interview.

One of the Best Arguments Against Something...

Is the fact that Pat Buchanan is for it...

I am a bit behind commenting on this subject, but this bailout of the Big Three is just idiotic. Personally I am rather upset at much of the bailout in general, but this is not a systemic problem, it is unique to the incompetence of the industry. Here is Herr Pat's spin:

In a good year, like 2005, Americans buy more than 17 million new cars, and West Europeans as many. Tens of millions in Eastern Europe, Russia, China, India and Southeast Asia are now moving into the middle class each year. These folks will all need or want one or two family cars. If we let the U.S. auto industry die, that immense and burgeoning market will be lost forever to America, and ceded to Asia.

"Who cares?" comes the free-traders' reply. Japanese and Koreans are setting up factories here. They can pick up the slack.

But that means Americans will work for and depend on foreign companies for a necessity of our national life as vital as the imported oil and gas on which our cars and trucks operate. All the profits of the mighty automobile industry in America will be sent abroad.

Hey genius, the profits go to the shareholders. Based on their profitability, I am sure more profit has gone to Americans who hold Honda stock than GM lately. In fact the Big 3 have been one of the biggest destroyers of wealth in the history of the world.