A while back, a commenter led me to a Life Magazine article from 1954 where President Eisenhower’s top economists discussed their plans for a slowing economy. Here’s how they were thinking about dealing with it:
Anti-depression planning by the Administration includes plenty of stop-gap measures just in case the experts prove wrong and the expected moderate decline turns into full-scale recession. On the shelf are $15 billion of public-works projects [that’s about $100bn today] already blueprinted and approved by Congress, which can quickly be set in motion. Plans have been made to speed up state and local public-works projects, if need be by buying up their bond issues. The “tight money” policy, which has already been liberalized, would quickly be switched to fast expansion of credit by decreasing Federal Reserve margins, resuming the price-pegging of government bonds, and stimulating installment buying. Taxes would be cut still more, the building industry would get special inducements to expand. The republicans say they will spend money faster than the New Deal if they have to.
This paragraph came to mind today when contemplating how the vast gulf between what we need to do and what our political system is willing to do. I also thought back to this post, and the finding that past deficit reduction deals got 40-80% of their savings from revenues—and that 80% was Reagan!
Anyway, we have truly become a lot worse at governing ourselves, an assertion with which the broad public clearly agrees. Yesterday’s Republicans were apparently ready to go all New Deal on the situation if they had to!
Update: Just as I posted this, a colleague tells me that S&P is planning to downgrade our debt. I think S&P is wrong to do so–our ability to service our debt remains as solid as it ever was, and that’s what our rating should reflect.
But after the spectacle we’ve just been through, I’m a bit more understanding of where S&P are coming from. I mean, you’ve now got prominent R’s–Rob Portman, Sen McConnell, Rep Ryan–calling for the debt ceiling debacle to be the new template. Like I said, we’re just a lot worse at governing.
Note, from the link on the downgrade: “A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited [for the downgrade].”
Never thought I’d say this, but…calling Ronnie Reagan!
This is just another criminal enterprise like ws were everyone broke the law and trust of the citizens of the worlds and no one goes to jail. Only Iceland has arrested banksters, everywhere else they’re hero’s, even 0 thinks these are really smart guys ( NO Women Allowed Club ) and placed a few of them at the center of the job creation table. This makes perfect sense since ge has moved 30,000 plus jobs out of Amerika in the last 6yrs and none of them pay taxes in the US.
Never thought I’d say this, but…calling Ronnie Reagan!
Please be careful what you wish for ronnie-ray-gunne broke the Air Traffic controls strike by firing everyone. Then added to the nation debt 3 fold over, for money used by dod to crush the evil empire and at the same time beginning the crushing of the middle class in Amerika. The USIAD whole program was changed under ronnie to help Amerikan corp. move out of the country instead of helping small business in foreign countries.
Have a great weekend and thanks for the music
Just how gullible have we become? Have all of the Teddy Roosevelt’s & Philander Knox’s been banished from government service through capture? Just what government are these organizations “agencies” of? Maybe its time to downgrade the ratings agencies and hold them responsible (& accountable) for their prognostications. What, exactly, is the objective definition of a AAA rating? What, exactly, is it saying about the probability of default and can government mathematicians verify the accuracy of what these companies are publishing? Why are these private companies allowed to attempt to influence interest rates on U.S. government debt based on some “proprietary” formula without oversight and assurance that these formula are based on mathematically sound principles that we agree are unbiased? Why are we not investing these “agencies” for possible market manipulation, insider trading, and treasonous attempts to influence the cost of government borrowing to the benefit of bondholders? These are exactly the same agencies that were accomplices in the largest fraud this country has ever seen, the same fraud that led to the mess we’re in now, and no one has really come up with a good reason why they’re not in jail. But we still give them credibility & allow them free & unfettered access to influence our financial system?
I have no idea how old you are, but I was born in ’53 and graduated college (math/physics double major) in ’76. So I perused the LIFE issue with considerable nostalgic interest.
I don’t know if you read the section titled ‘Automatic Factories’ on page 76, which was part of a larger article looking forward to the US bicentennial in ’76. Some excerpts:
“The place where American inventive talents find their widest expression, the factory, is due for the most far-reaching changes of all. Operations analysis, the scientific evaluation of procedures which was developed so markedly during the last war, will greatly affect industry. The automatic factory, which has got off to a slow start, will be in full swing by 1976. Already, there is a machine which sorts rice grains so fast that it can remove all the grains with black specks on them from a 100-lb bag of rice in a few minutes. Such novelties of today will become commonplace. Laborers replaced by such machines will be shifted to more important jobs; the more energy a workman can control, the more he can be paid.
… calculating machines like ENIAC and WHIRLWIND, capable of making thousands of arithmetical operations in a second, can be made to tell these other machines what detailed instructions to give (but always there must be men to give the first orders).
Basic in assessing the effect of changes in any commodity on our wealth level is the labor involved in its production.
… Machines can replace men in countless jobs which the machines can do better and which men prefer not to do. The scientific advances which bring in the new machines always open up new jobs. … the 40-hour week of 1953, will fall further, to perhaps 30 by 1976.
Improved communications will have lessened our work by increasing our efficiency. … While transistors will by no means have replaced vacuum tubes, they should, in combination with electronic circuits printed on plastic, make possible very light and compact pocket telephones approaching the “wrist watch radio” of today’s science fiction and comic strips.”
I began a graduate minor in operations research in ’76; I was already a professional software developer by that time as well, having been paid as a programmer during my 4 years as an undergraduate working on my college’s computer systems in various capacities. By 1976, not only were transistors and printed circuit boards in common use, but the microprocessor was well along – the 8-bit Zilog Z80, with its original 2.5MHz clock and 1 microsecond instruction cycle time, could thus perform a million arithmetic operations per second – 1000 times faster than ENIAC and WHIRLWIND. And the pace of Moore’s Law has not slowed quite yet. By now, 64-bit microprocessors run at GHz+ clock speeds, more than a million times faster still than the Z80. And personal computers were available in Radio Shack stores by 1977.
What seems not to have changed is the optimism about this technology, which had exceeded all predictions from just 20 years earlier. The potential scope of its economic impacts – particularly on labor – were anticipated even then, but for whatever reason, the anticipation was entirely positive in tone. And it was only in this respect that the predictions failed.
Put another way, although the technological change has exceeded what was anticipated, the necessary societal changes needed to avoid any negative impact from the anticipated economic changes – e.g., the prediction of a 30-hour work week by ’76, have simply not happened, at all, in the US.
The more things change, it seems, the more they stay the same…