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Obama to the right of Nixon? Part 2

Follow-up to previous post.

We should take no comfort from the fact that the level of unemployment in this transition from a wartime to a peacetime economy is lower than in any peacetime year of the sixties.

This is not good enough for the man who is unemployed in the seventies. We must do better for workers in peacetime and we will do better.

To achieve this, I will submit an expansionary budget this year--one that will help stimulate the economy and thereby open up new job opportunities for millions of Americans.

It will be a full employment budget, a budget designed to be in balance if the economy were operating at its peak potential. By spending as if we were at full employment, we will help to bring about full employment.

I ask the Congress to accept these expansionary policies--to accept the concept of a full employment budget. ...

With the stimulus and the discipline of a full employment budget, with the commitment of the independent Federal Reserve System to provide fully for the monetary needs of a growing economy, and with a much greater effort on the part of labor and management to make their wage and price decisions in the light of the national interest and their own self-interest--then for the worker, the farmer, the consumer, for Americans everywhere we shall gain the goal of a new prosperity: more jobs, more income, more profits, without inflation and without war.

This is an excerpt from Nixon's 1971 State of the Union address, lifted from part 3 of David Frum's savage takedown of Charles Murray's new book on working class values, about this more anon. But note how fully Keynesian Nixon sounds here, and how he assumes his audience understands and agrees with the concept of expansionary government spending, so that he merely has to urge them to commit to implementing it. He sounds like Krugman's dream president. As well he should: this is standard stuff from the leading textbook in economics for decades [Paul Samuelson], not left-wing nuttery.

And that's in response to unemployment of 6%. Six, not our 8 or 9. As Frum notes, if Obama tried this the Republicans would go totally spare, and half his own party would likely recoil as well.

Puts context on Krugman's claims of a modern dark age of macroeconomics, as evidence that ideas once accepted in the highest politics of the land are now outre.

What happened? The propaganda of the agents of the top 0.1%, mostly. But I'll grant that the history of the 1970s probably provided fertile soil. The long boom was followed by stagflation, stagnation and inflation, and management seemed to fail. Part of that might have been the borrowing for Vietnam, but I suspect mostly it was the energy crises (not just one!) and perhaps an oversell of Keynesianism. It's not a magic wand for getting out of depressions, it's a magic wand for getting out of liquidity trap, paradox of thrift, depressions, aka "your economy has the stupids". Depressions because the cost of energy, sine qua non, has gone up, are another matter. But if your central banks don't realize that and stay on the monetary gas pedal despite not actually being in a liquidity trap... inflation.

Mind you, monetary policy comes from the Friedmanite, monetarist, strands in the modern blend. I wonder if more pure New Deal government jobs policies would have worked better, i.e. create (hopefully low energy) jobs directly, rather than counting on money expansion to make it happen.

Plus failure of the War itself, general 1960s, etc., undermining past confidence in government. (As Frum admits, the Greatest Generation was a statist generation.) And the rise of the South, both from civil rights and the Southern Strategy and the vulnerability to migration of our flawed democracy.

But, anyway... yeah. On this issue at least, Nixon *way* to the left of Obama, let alone the modern GOP.

Which points to a flaw in the Poole methodology, assuming it's not hokum to begin with: they're averaging everything together, when a moment's consideration says that the modern world is socially to the left -- how many of even GOP House members oppose interracial marriage? -- and economically to the right. We've got partial gay marriage and a black president and realistic chances of a woman winning, but we've lost unions, progressive taxes, and acceptance of basic macroeconomics and what used to be standard policy.

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Damien Sullivan

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