Something Krugman said today triggered a thought.After the Asian financial crisis of 1997-1998, it was often said that a key barrier to recovery was the uncertain state of property rights: so much debt had been run up during the boom, and there had been so many defaults in the bust, that it was no longer clear who owned anything. Plus, these countries lacked clear legal procedures, and in general suffered from insufficient rule of law. All this was said, of course, in a tone of superiority: we Americans had solved such problems. Bold face mine.
Teaching U.S. history and economics for many years the general thought about the Great Depression of the 1930's is that Hoover did nothing, FDR tried all kinds of things, but that it didn't end until WWII started. A number of the different textbooks said the same thing that the Republicans fussed that FDR was doing too much and to let "the market" correct itself, and the progressives like Huey P. Long, fussed that he wasn't doing enough. Sound familiar?
So what about the New Deal was effective?
To answer, it wasn't in stimulating the economy. The success of the New Deal was in creating a social safety net in welfare, unemployment insurance, social security and the regulation of business.
Half of FDR accomplished is working. The elderly are not being thrown under the bus yet. Their social security hasn't been raided, but give the reptilian party time and they will. Dubbya gave it his college try and got burned, but that was before the Tea Party started bringing the crazies out.
For sixty years the real success of the New Deal was the regulation of the financial community. Banks were banks, not investment firms. Wall Street couldn't make money both ways on stocks, so there was no reason to start rumors or panics to make money off a falling market.
Then Saint Reagan came to power with the mantra of getting the government off businesses backs. He deregulated the Savings and Loan industry burdening the taxpayers with a trillion dollars in bad loans to absorb when their orgy of bad loans came due. The New Deal kicked in and the mess was quickly handled and cleaned up, but the public didn't learn its lesson that deregulation was bad. Bill Clinton is just as responsible for the mess we are in as Dubbya because he's the one who signed the bill allowing wall street to profit off a falling market. Dubbya and a republican congress effectively killed all the regulations the New Deal put in place to protect the general public from getting ripped off by the banksters.
Another stimulus package will help like the last one helped some, but they are band aides only. To stop the financial bleeding we need a congress willing to stand up to the crooks running wall street and restore the rule of law in the financial sector. There can be no order in our country and society until there is order in our financial institutions. As long as banks can steal people's homes and can't show they have the right to foreclosure there is no justice.