Sounds like a crazy headline, doesn’t it? Something written by a black helicopter-fearing loony from his underground bunker somewhere in the mountains? Yet that’s exactly what author David Leonhardt did last week when writing about President Obama’s trip to the economic summit: Stimulus Thinking, and Nuance
In the summer of 1933, just as they will do on Thursday, heads of government and their finance ministers met in London to talk about a global economic crisis. They accomplished little and went home to battle the crisis in their own ways.
More than any other country, Germany — Nazi Germany — then set out on a serious stimulus program. The government built up the military, expanded the autobahn, put up stadiums for the 1936 Berlin Olympics and built monuments to the Nazi Party across Munich and Berlin.
The economic benefits of this vast works program never flowed to most workers, because fascism doesn’t look kindly on collective bargaining. But Germany did escape the Great Depression faster than other countries. Corporate profits boomed, and unemployment sank (and not because of slave labor, which didn’t become widespread until later). Harold James, an economic historian, says that the young liberal economists studying under John Maynard Keynes in the 1930s began to debate whether Hitler had solved unemployment.
No sane person enjoys mixing nuance and Nazis, but this bit of economic history has a particular importance this week. In the run-up to the G-20 meeting, European leaders have resisted calls for more government spending. Last week, the European Union president, Mirek Topolanek, echoed a line from AC/DC — whom he had just heard in concert — and described the Obama administration’s stimulus plan as “a road to hell.”
Here in the United States, many people are understandably wondering whether the $800 billion stimulus program will make much of a difference. They want to know: Does stimulus work? Fortunately, this is one economic question that’s been answered pretty clearly in the last century.
Yes, stimulus works.
Power Line and Contentions both ably dismantle Leonhardt’s arguments; I’ll just point out the irony in a left-liberal writer pleading “nuance” when looking to Nazi Germany for inspiration, when his colleagues on the Left had spent years denouncing the Bush Administration’s national security measures in the wake of 9/11 as naked Hitlerism. I guess nuance is okay when Democrats are in power.
Getting back to the Leonhardt’s article, his thesis is that, in those cases where stimulus didn’t seem to work, it’s because government didn’t stimulate enough. More massive spending and more government intervention in the economy is the solution. This intervention leads almost inevitably to control, as government becomes the dominant player in public-private “partnerships.” He who pays the piper calls the tune. Jonah Goldberg explained it thusly in his Liberal Fascism:
The fascist bargain goes something like this. The state says to the industrialist, “You may stay in business and own your factories. In the spirit of cooperation and unity, we will even guarantee you profits and a lack of serious competition. In exchange, we expect you to agree with—and help implement—our political agenda.” The moral and economic content of the agenda depends on the nature of the regime.
We’re already seeing this in the efforts of the administration to control compensation and even executive personnel decisions at companies that receive federal money, all to serve the administration’s agenda. Firing the CEO of GM, demanding the power to seize non-banking financial firms at the Treasury Secretary’s discretion, refusing to accept repayment of TARP funds because that would diminish government’s control … with each new measure, the government leviathan seems to want more.
Call it “a managed market,” “corporatism,” “fascism,” or plain old “statism,” Leonhardt’s recommendation, one that Team Obama seems to agree with, is a recipe for a vastly enlarged federal government and a concurrent loss of personal freedom. Just take a look at where it’s been implemented in the past.
No nuance needed.
(Cross-posted at Public Secrets, my secret headquarters on the Web)