Didn't the War end the Great Depression?

The last time the world was suffering from this kind of economic malaise my father was just a boy, so it's not surprising no one really remembers it. Still - although it's hard to imagine! - there was in fact scholarship and research before the internet, and for those who care to have actual evidence there is plenty available.

Of course 2008 is not 1929, but it is the only historical analogue so there's a lot to learn. Sensible questions to ask would be "What helped us recover last time? What hurt or slowed that recovery?"

It is beyond doubt that stimulus spending aided the recovery, and austerity set back the recovery. 

This graph (courtesy Wikipedia) shows the dramatic crash of 1929, with the downward trend in GDP finally rebounding in 1934. The correlation could hardly be more clear: laissez-faire economics and extreme wealth disparities enabled the crash; the austerity measures in the 2 years following the crash either did nothing to help or made it worse; and the depression ended with GDP and employment growing almost immediately following the adoption of the New Deal (1933-1936). 

Now, that is only one data series, but it is a very powerful one and while it does not prove that spending works and austerity fails, those who cheer for austerity have a lot of explaining to do (in particular, why they recommend a policy that has never been successful in ending a depression). 

The 1937 Double-Dip

Fortunately there is another data series hidden within. Going into his re-election campaign, FDR was under attack from exactly the same kind of economic conservatives that are on the austerity warpath today (mostly simplistic Tea Party types but also including genuine conservatives like David Cameron and genuine Libertarians like Ron Paul).

In 1937, following the end of the New Deal II stimulus and under pressure from Republicans who had surged to big gains in mid-terms on cries to reduce the debt (sound familiar?) the US entered a "double dip". While conservatives blame the New Deal, the fact remains that prior to the New Deal the economy was in free fall; during the New Deal and New Deal II programs the economy and jobs rebounded to a higher point than the pre-depression peak; following the end of those programs and a return to austerity politics the economy went into free fall again. 

This no longer looks like a single persuasive series of data. Rather, it looks like a full blown experiment that shows the effectiveness of stimulus and the damage of austerity. The government was able to turn the taps on and off and see dramatic economic results - results that could be misconstrued only by the most intentionally obtuse and faith based economic conservatives.

But didn't World War Two end the Depression?

No. This is a facile response made by economic conservatives for a reason: Since we only suffered one massive global depression before, and since it was manifestly resolved by Keynesian stimulus spending, the entire episode has to be struck from the record lest the conservative emperor be revealed to have no clothes.

The argument is a false dichotomy, since of course there were and are multiple influences at work, not simply a binary choice of the Federal government to spend or a binary circumstance of war/peace. Of course the impending war (all data precede direct US involvement) had some effect, and government programs had some effect. The "War hypothesis" posits that WW2 was the single overwhelming cause of the recovery, such that we can reject any other cause no matter how well supported by the data. This monocausal explanation provides a simple answer to those without much knowledge of history or economics, but is clearly incorrect:

• If it was WW2, why did the recovery begin 6 years before the war started?
• If it was WW2, why doesn't economic growth steadily increase with war spending in 1937-1938?
• If it was WW2, why did New Deal policies and agencies (and a 90% marginal tax rate for the richest) continue to correlate with US economic growth for another 20 years? 
• What is a war effort anyway if not a crisis-inspired stimulus package?

The "War Hypothesis" is facile: of course the thirties were different from today, but that does not mean we have nothing to learn from our history. On the contrary, we recorded and learned from that history specifically so that we would not face calls from the ignorant or self-serving to repeat the mistakes of their economic and spiritual forbears. 

The only conclusion that is justified by the evidence is the conclusion that wise Keynsian investments are absolutely necessary, and that austerity is not bitter medicine but poison that will damage the economy. Any other prescription is made on pure faith in the face of clear, contradictory evidence and therefore must be rejected by sensible and rational people.

Why Should I Care? Trinity Spadina All Candidates' Debate

More than 80 local residents joined the Why Should I Care team last night in welcoming the candidates seeking to represent Trinity-Spadina in the upcoming Provincial election to an all candidates' debate at the Duke of York. Incumbent NDP MPP Rosario Marchese, Liberal candidate Sarah Thompson, and Green Party candidate Tim Grant all attended to speak to and hear from voters. The Conservative Candidate declined our invitation... and missed quite a show.

The Candidates were permitted to begin with a short speech introducing themselves and their positions. After declining a poorly timed cell phone call, Tim Grant pulled no punches in calling for transit reform. He noted that the current debate is mostly about how transit is funded, and not about how transit is planned to be successful and sustainable in the long term. Noting that we spend six times as much on roads as transit, Grant said that transport funding should be more reflective of the province's 80% urban nature.

Liberal Sarah Thompson took a more personal approach, describing her background both in and outside of the riding and in particular her recent tilt at the Mayoral chair, hinting that if elected as MPP Ford might remain in her sights. She also emphasized her entrepreneurial background, first in transportation and presently as publisher of the Women's Post, saying that she supported the liberal approach of supporting entrepreneurialism over big government.

Incumbent Rosario Marchese seemed, perhaps not surprisingly, most comfortable with the room, promoting a 'people focus' for his politics before applying it to condo owners (vs. developers), rules for junk food advertising, tuition fee reduction, and an electric rail link to the airport. He stated that he promotes a return to the 50/50 funding formula for transit, and an end to corporate tax cuts to provide the tax base for these programs.

Following the candidates' comments, the floor was opened to questions. Speakers were invited to read their question to the candidates but, because of the limited time with all candidates, the audience was then polled to determine whether a majority present wished to hear the candidates' responses to, and audience commentary on, the question. Questions concerning treatment for MS, OMB zoning, and the HST failed to make the cut, among others, but questions on child care, nuclear power, affordable housing, underemployment, and transit made for a very active debate and discussion relevant to the overwhelming majority of residents.

Perhaps the most heated discussion arose from the question about the maintenance of the separate Catholic school system. One commenter wisely added that, with French language education, there are in fact four separate systems. While the crowd present seemed to agree with the United Nations, which has in fact censured Ontario for maintaining this system, only Grant was prepared to state that Ontario should break with this constitutional legacy.

Ultimately, all three candidates engaged with the discussion in a meaningful and unscripted way, which was much appreciated by those in attendance and contributed greatly to the success of the event.

Marchese returned frequently to the theme of Provincial funding cuts (mostly attributed to Mike Harris) having had a detrimental impact on the city and reflecting a now-chronic unfair funding formula, and the ability of the corporate sector to sustain small tax increases where required to return to a more equitable ratio.

Thompson was the most combative of the three, taking several opportunities to challenge the incumbent on having realistic plans to back his politics or - to the audience's delight - the power in opposition to effect them, and asked for the voters to make a change after 21 years.

Grant preferred to focus on how best practices could be adopted in a variety of areas, from building code to job training, and asked voters to make history by electing him as the first Green member of Ontario's Legislature.

The WSIC team extends their thanks to all the candidates and attendees, and invites you all to join and continue the discussion on-line at www.whyshouldicare.ca/, on Facebook, and on Twitter #WSIC_Canada.

[republished with permission]

Long Form Census - Why Should I Care?

I joined an evening of political conversation earlier this week hosted by the nice people at "Why Should I Care". The subject was the decision of Stephen Harper's Conservatives to end the mandatory long-form census and replace it with an optional one.

Much of the discussion revolved around the ways in which census data have been used - by businesses and community groups, in particular - and how this decision will reduce the quality of information available for those users, who are really all Canadians. Of course, since the government will send out more copies of the optional long form than the mandatory version, this program will actually increase costs in exchange for decreased  quality of information. 

This discussion of details, however, misses the fundamental point: The ending of the mandatory long form census is an attack on information, carried out for ideological purposes by a party for whom information is frequently an obstacle to partisan policy-making.

This is no more visible than in the way the legislation was introduced: Conservatives claimed that thousands of Canadians complained about being 'forced' to answer the mandatory long-form - in fact one MP alone said his office had received thousands of complaints (but, conveniently, all those complaints were from 2007 and lost). When pressed in the House, it turned out that there were "many, many" complaints, not thousands. An access to  information request by the Star revealed less than 100 total complaints since the 2006 Census, even though the mandatory form was received by millions of Canadian households; the Privacy Commissioner has received 50 Census-based complaints in 20 years, none about the long form.

The only way the government can stand up and lie to Canadians in the face is if they believe they will not be challenged on those lies. Independent oversight and good quality information is poisonous to a government that prefers ideology to facts. Statistics Canada, the Auditor-General, the Parliamentary Budget officer - it's not about small government, it's about small-mindedness.

Having been caught lying to Canadians, Tony Clement conjured a remarkable response: a small minority of voters can require the government to address their concerns through legislation.

He should have added: 'but only if they vote Conservative.'

Conservative Politics for Dummies

Rob Ford recently discovered that it was harder to find gravy than to pour it on a thanksgiving turkey, and after promising to cut 2.5% in spending from the budget actually returned with a first budget that has more spending than in any of David Miller's eight years. 

This is no surprise. Stephen Harper inherited a surplus and stayed in surplus for two budgets, both of which increased spending; since 2008 of course he has been in deficit. Mulroney promised fiscal conservativism and contributed more to Canada's debt than any previous PM; ditto for George W. Bush and US Presidents. 

Frankly, it seems strange that people still associate the conservative brand with fiscal responsibility when there is very little evidence of this in recent memory. However, this view of conservative fiscal responsibility in the face of contrary facts is grounded by the idea that they like 'small government' but that, once they take control, they are confounded by the bureaucracy and succeed in making only a few cosmetic cuts. This is totally wrong, and misses the key philosophical point about conservative governments:

They don't care about the waste, only the identity of the waster. 

When they get in they don't realize they can't make the cuts they promised, they knew all along and had no intention of fulfilling most of the promises made.

They don't start with the easy or cosmetic stuff; they usually start with small projects that make no difference to the budget but defund the most disadvantaged groups. Defunding Karios? 0.0002 percent of the budget. Not having to put up with them complaining about the plight of the poor? Priceless! Harper has taken a Republican page and attacked the actual institutions, picking fights with the Auditor-General, the Parliamentary Budget Officer, Statistics Canada, and just about anyone else who refused to take instructions directly from the PMO).


At the end comes the sell-off, which transfers assets, services, and waste to the private sector - the purpose of their joining the dark side (politics) in the first place. We all know what kind of people go into government and politics, and we know that it's only the boardrooms of the private sector that offer sufficient reward to earn the services of the best and brightest on the free market. Why would someone that hates government and believes in the free market - and the power of the free market to pay them many multiples of the PM's salary - want to be part of government? When the sell-off is complete they can return to private sector jobs at privatized companies that have lots of profits to distribute to managers and directors because they are re-selling us our own investments that we paid for by tax dollars and they bought for cheap during a 'crisis'. There's no necessary reduction in waste, but that waste is directed from taxpayers and government workers to wealthy owners and executives, as is their right and due for being savvier than the rest of us.

The only risk in this model is that you are voted out before you have a chance to complete the sell-off, and therefore you may wind up actually living off your government pension. (The Mulroney version is to complete the sell-off, but to Americans, thereby depriving you of the corporate directorships that are rightfully yours, forcing you to slum with arms dealers and other such shady characters for the personal wealth that is your due.)

Well, there's also the risk that you can't look at yourself in the mirror because you are a disgusting human being, but I don't think that's really a relevant risk factor in the immediate cases since I find it unlikely Ford or Harper spend much time looking at themselves in the mirror.

Rehabilitating Reagan

Ronald Reagan, greatest President ever?

He is if you believe the most recent Gallup poll, but this surprising result is actually not difficult to understand.

Recall that this is a poll of average Americans, *not* of Presidential historians or political observers. Those groups routinely put Lincoln, Washington, and FDR in the top slots, and indeed those are the only three Presidents that have appeared in the top quartile of Presidents in every major Presidential survey:

http://en.wikipedia.org/wiki/Historical_rankings_of_Presidents_of_the_United_States

So, those are the 'right' answers. How come America gets it so wrong?

First, average Americans have very little awareness or understanding of history, even their own nation's history. Although the poll asked for the greatest President *ever*, the vast majority of respondents picked a President that served during their lifetime. Thus, Clinton or Reagan are 'top-of-mind' and did better than the Great Emancipator or Honest Abe.

Second, Americans are extremely partisan. Most democrats picked a democratic president, and most Republicans picked a Republican President.

When we combine these things, we see why Reagan performs so well: he is the only Republican President to have served in living memory who average Republicans are not ashamed of.

GWB? Probably one of the worst modern Presidents. GHB? Couldn't even win re-election. Nixon? Oh geez! Before Nixon? I wasn't born!

And that's how, forgetful, supply-side, Iran-Contra Ronnie can be chosen by a plurality of Americans as the best ever. Democrats simply have more great Presidents to choose from, while Ronnie is the only choice for forgetful, partisan Republicans.

The Truth About Environmentalism

Strangely, there's still a debate in the public discourse about climate change, and whether or not it's happening. A lot of people, I find, react with naked skepticism, as if to say “I don’t really have to believe ANYTHING you say.” They aren’t adamantly against climate change, their just against believing anyone’s claims about anything. The “statistics can say anything” and “that’s just a theory, they don’t really know” crowd.

I like to say this:

Forget for a moment about global warming and climate change and sea levels and all of that. Think about what we can see around us every day, things that have happened in our lifetimes or the lives of our parents.

The industrialists told us all the smoke didn’t matter, the world was a big place, it would all disappear. But they were wrong – go to any big city and in spite of the fact that most of them have lost a lot of their manufacturing they’re STILL full of smog on hot days, sometimes bad enough that its dangerous to exercise. 

We thought we could throw our garbage in the ocean forever, because it’s so big. But we were wrong, we’ve poisoned the great lakes and the Gulf Coast and there’s a floating plastic dump the size of North Dakota in the Pacific Ocean where no fish can live anymore. 

We thought we could keep fishing forever, because there’s “always more fish in the see”. There’s plenty of fish in on-line dating, but we’ve destroyed fish (and whale and shark) stocks from the grand banks to the Antarctic. 

People have always wanted to tell you that the crap they did doesn’t make any difference, so that you would leave them alone and they could continue to make their profits by downloading the costs of pollution onto the general public. And although they've usually gotten away with it, they’ve been wrong every single time. 

We can SEE the impact we are having all around us, in the air, in the water, in the wildlife, and now even in the economy.

I don’t want you to accept any specific predictions about the future of climate change, or any specific prescriptions of what we need to do. All I want you to admit is the certainty that our actions have consequences and have done great damage to our world, and that they continue to do great damage and that we have a moral obligation to think about what kind of effect we are having and what we can do about it. 

All I want you to admit is that the only irrational position in this debate is denial.

Lest we Forget

This Remembrance Day do not think of our men and women in uniform. Do not think of bravery. Do not think of patriotism. Do not think of our sacrifices and victories. None of this is of Remembrance Day.

Lest we forget, we mark the armistice of what was then the Great War but is now only World War One to remember the horror of war. This Remembrance Day think only of the corpses, the piles and piles of corpses, most not uniformed, corpses shot and starved and murdered and gassed, corpses rotting in trenches or rendered into unrecognizable pulp by mortar or artillery fire, corpses mangled and burned and crushed by aerial bombardment (and we are told the bombs are much smarter now, but how intelligence is measured by mangled corpses I do not know), corpses still locked in their tin cans under the sea, corpses in their dress uniforms and in neat rows.

Remember the maimed, the limbless, the blind, the ones whose souls not bodies were rent and torn, but mostly just remember the tens of millions of corpses, and 'remember' a horror of war that you have never experienced, and want never to experience, and vow to never support it.

The rest is propaganda: don't think it, don't say it, don't hear it.