It's not 1933, it's 1930
A major storyline of the 2008 election was that it was the Great Depression all over again: George W. Bush was the hapless Herbert Hoover and Barack Obama was the FDR figure, coming in on a wave of popular resentment to clean things up. The stock market crash made the parallels pretty direct. One could continue the analogy, with Bill Clinton playing the Calvin Coolidge role, mindlessly stoking the paper economy and complicit in the rise of the stock market as a national sport. Public fascination with various richies seemed very 1920s-ish, and we had lots of candidates for the “Andrew Mellon” of the 2000s. Obama’s decisive victory echoed Roosevelt’s in 1932.
But history doesn’t really repeat itself—or if it does, it’s not always quite the repetition that was expected. With his latest plan of a spending freeze (on the 17% of the federal budget that is not committed to the military, veterans, homeland security and international affairs, Social Security, and Medicare), Obama is being labeled by many liberals as the second coming of Herbert Hoover—another well-meaning technocrat who can’t put together a political coalition to do anything to stop the slide. Conservatives, too, may have switched from thinking of Obama as a scary realigning Roosevelt to viewing him as a Hoover from their own perspective—as a well-meaning fellow who took a stock market crash and made it worse through a series of ill-timed government interventions.
I can see the future debates already: was Obama a Hoover who dithered while the economy burned, too little and too late (the Krugman version) or a Hoover who hindered the ability of the economy to recover on his own by pushing every button he could find on the national console (the Chicago-school version)?
In either storyline, it’s 1930, not 1932: rather than being three years into a depression, we’re still just getting started and we’re still in the Hoover-era position of seeing things fall apart but not quite being ready to take the next step.
Anyway, I’m not claiming to offer any serious political or economic analysis here, just pointing out that the 1932 election was a full three years after the 1929 stock market crash, so Obama’s stepping into the story at a different point than when Roosevelt stepped in to his.
Or maybe we’re still on track for Obama to “do a Reagan,’ ride out the recession in the off-year election and sit tight as the economy returns in years 3 and 4.
Comments
I think a 1982 scenario is much more likely. The difference between 2008 and 1930 is that we’ve avoided a systemic banking collapse, and the stock market has recovered. The problem is that once the markets recover it takes year or so for employment to recover.
One thing that I find interesting is that every economist that I’ve heard comment on employment has pointed out that there is very little that Obama can do to radically change employment figures since the economy can only generate new jobs at a limited rate. Obama’s challenge is basically political, which is to do a Reagan/Roosevelt and offer reassurance and comfort.
I think that the real debate is going to be over the roles of Bush/Obama. If everything works out, then expect Republicans arguing that it was all because of W.
Posted by: Twofish | January 26, 2010 11:36 PM