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Wednesday, November 10, 2010

Henderson Smack Down?

Over at AB, commenter MG (11/10; 1:24:27 AM)  objects to the way Mike Kimel (and I, I'm assuming) have dissected the data in order to refute Henderson.  I responded to one of his comments like this:


I am not particularly impressed by nor interested in the smackdown game being played on Henderson by some AB participants.  I think that misses the point.    

No.  You are wrong.  Nobody here would be smacking Henderson down if he were making a valid case based on an objective look at the data.  I think you're confusing the way people on the two sides of New Deal denialism behave.  We look at data and draw conclusions.  They start with conclusions and then attempt to cherry pick data that supports them.

The point is that Henderson is spreading a lie by saying:

1) There was a post war boom.  There wasn't - and denying the data is denying reality. 
2) The pre-war years were a bust - which is clearly not the case in the New Deal years after '32 when a robust recovery started from a very deep pit.
3) Ergo a laizze faire policy is better than a Keynesian policy.  In fact it trumps it, hands down, every time.

The deepest fundamantal underlying error of Libertarians, Austrians, and Chicagoans is to draw this invalid Keynes vs free enterprise conflict meme.

It is not convenient for them to recognize that Keynes was a capitalist, who was out to save capitalism; and that he was an economist out to save economics.  He did not overthrow classical economics (a big mistake, IMHO) he was attempting to improve it at a nuanced level, in order to bring economic theory more in line with reality.

Classical econ could not accommodate the involuntary unemployment of the Great Depression.  Hence the Great Vacation idea that workers were withholding their labor, rather than not being able to find a damned job.

I'll repeat, Henderson's purpose is new deal denialism.  People who want to do that concentrate on the years following WWI and WWII, to try to make some sort of a case.  They choose those times because they are aberrations (temporary oversupply of goods, services and labor, and post WWII at least, a shortage of production capacity) and a self-serving narrative can be spun around those events.  However, in neither case does a hard look at the data support their narrative.

Regardless of what has been stated in Mike Kimel's three posts and stated by others, one would be hard pressed to deny the overall growth and types of growth that occurred in all aspects of the civilian sector of the U.S. economy in the post-WWII period.

Even though we've shown that private investment growth was less than during the New Deal, and therefore not especially remarkable (even though in response to large pent-up demand) and GDP growth was stagnant-to-anemic for over a decade.  Neither Mike nor I have played games with data.  We've presented it in the most rational way possible.

The post war economic disaster that some expected didn't happen, and to that extent, the transition was successful.  Pent up demand and enormous reserve saving had something to do with that.  And the government didn't just suddenly turn off.  There was - you know - a transition.

You, MG, seem to have a mindset that buys into the lies of people like Henderson, and at the same time necessarily denies reality.   You've also shown an inability to be swayed by facts and data. 

What this indicates - again - is that ideology trumps reality, always and everywhere.

Oh, well,

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