A steady voice in support of fiscal stimuli has been Nobel laureate Paul Krugman. He recently compared our present stalled recovery with that of 1938, when President Roosevelt heeded those calling for a balanced budget, in an election year that boded ill for the Democrats, and cut the legs out from under his program. Krugman wrote: "I had hoped that we would do better this time. But it turns out that politicians and economists alike have spent decades unlearning the lessons of the 1930s, and are determined to repeat all the old mistakes."
As everyone should know, the Great Depression was ended by World War II. America not only swung to full employment, but added massive numbers of new jobs that were filled by women and by immigrants, while millions of young men swelled the ranks of the military. Our factories worked at full capacity to produce the armaments, uniforms, vehicles, equipment and supplies needed for war. With auto plants suddenly converted to the making of jeeps and tanks, passenger cars were unavailable--not that it mattered since gasoline was rationed, along with food and fabric for clothing. People couldn't even find a pack of cigarettes in those days. The result was that workers were piling up dollars that they couldn't spend. So when the boys came home, their pockets stuffed with cash and the GI Bill available for college, while Europe's factories lay in ruins, America enjoyed a post war boom the likes of which the world may never see again.
I'm woefully unqualified to debate Mr. Krugman, but I can point out two disparities between then and now: we have largely abandoned manufacturing and we don't save a dime. As much as I want the Obama administration to prevail, I can't see how stimulating consumption of goods that are made abroad can possibly restore our domestic economy to health.
Rosie the Riveter by Norman Rockwell, 1943; (above). I love the contrast between the exalted symbolism of the backdrop and the homely details of this strapping but ordinary young woman with her ham sandwich. Her pose was borrowed from Michelangelo's Isaiah in the Sistine Chapel; (right). Click on the picture for a closer look, and see what is beneath her feet.