Great Depression Online Archive Issue:

What's Needed Now

Great Depression Online
Long Beach, CA
October 24, 2008

Inside This Issue You Will Discover…

*** Caged Gorillas
*** Seeing The Light
*** What’s Needed Now
*** And More

Caged Gorillas

Today, while surveying the landscape, we came across an emerging eyesore of sorts. 

Like budding mushrooms from a soiled cow patch or the mysterious appearance of maggots on a back alley garbage can…in a flash, as if from the heavens, we behold the sudden surplus of social mechanics, world improvers, schemers, and nonsense peddlers.

Politicians, academics, Leonardo DiCaprio, and soothsayers have been thrust upon the world in mass…each with a plan, a scheme to fix the economy and make society over in their image. 

Urgent calls for more bailouts, stimulus, industry nationalizations, foreclosure moratoriums; no idea is too absurd, no scheme is too illogical, and no proposal is too vain, to not whoop and hoot and howl like a caged gorilla. 

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And with each Sunday night announcement, we learn that the problem is solved at last.

To celebrate the 100 Year Anniversary of one social schemer that glittered with genius, we’ll rehash a little yarn that some of you may remember…

Seeing the Light

In 1908 Italian Economist Enrico Barone put down his meatballs and marinara and gazed into the outer frontiers of deep space.  Looking around, he couldn’t believe his eyes.  For in this far corner of absolute darkness, he saw something truly amazing.  Out in the distant reaches of nothingness, peering into a black hole, he saw not the dark…but rather, he saw the light.

The light being a socialist utopia achieved through “scientific management” of the economy, lorded over by the Ministry of Production.  Through this endeavor, he conceived, an economy could attain “maximum collective welfare.”  

The proposal was simple enough.  If a bounty of academics were put to the task of determining the best prices for all goods and services, supply and demand could be optimized to produce an economy without poverty, without unemployment…and without possibility.

Of course with all these number crunchers writing all these tech memos on the optimal price of olive oil and pizza, how could they account for a change beyond their control?  What if there’s a springtime heat wave resulting in a meager wheat harvest?  How would this affect their pre-determined price for pasta?

The idea was absurd.  And this was exactly why the socialist visionaries loved it…it endorsed their conceit.  Here was a marvelous way for them to play God…muck with people’s lives at large…and remake the world in their image.

Keynes, we know, later elaborated that you can do all this by just mickey mousing with the supply of money.  If the economy slows down, increase the amount of money in circulation…and when the economy heats up, tighten it back.  But always leave some slack for inflation to goose the economy and keep the consumer spending.

Still, we’ll tip our hats to Barone for first fashioning the light of scientific management into a luminous scheme for offering the world the great ideal of “maximum collective welfare.”

What’s Needed Now

Irwin Kellner is a Distinguished Scholar of Economics at Dowling College in Oakdale, NY, and is chief economist for MarketWatch.  We don’t know the man, but we’re aghast by his absolute idiocy.

“It may be true that the Treasury’s injection of capital into the major banks along with a guarantee of their debts shows signs of working,” begins Kellner in an October 20th MarketWatch column titled, Just What The Doctor Ordered.  “The frozen financial markets are beginning to thaw, reflecting a pickup in interbank lending along with a decline in global interest rates.

“And once the banks regain confidence in each other, it won't be long before they will begin to trust business and consumer borrowers, thus providing credit to where it is needed the most.”

Thus far we appreciate the man’s optimism, but then his brain quickly turns to mush…

“But a good dose of fiscal stimulus is also necessary to boost spending and create enough jobs to ameliorate the ongoing recession.

“To be sure, the government has already injected a fair amount of stimulus into the system.  Rebate checks totaling more than $150 billion were mailed out over the summer.

“Yet more stimulus is needed, even if it means more red ink on the government's books.”

Then he pitches his scheme to save the world…

“What's needed now is for federal funds to be sent to where they will do the most good.

“For example, Washington should extend (and increase) jobless benefits.”

And here’s why…

“People who are unemployed will spend every dollar the government gives them and then some.”

Here we’ll pause to ask, have you ever heard such a brainless proposal?

Following this logic, the way to “boost spending and create enough jobs to ameliorate the ongoing recession” is to put more people on the government dole and then increase their unemployment checks because the “unemployed will spend every dollar the government gives them and then some.”

And whence does the “and then some” part come?

Alas, the social mechanic is not to be burdened by such concerns.  For they have already seen the light…they’re no longer encumbered by the impediments of mere mortals.

Sincerely,

M.N. Gordon
Great Depression Online

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