Half a century ago, veteran actor Robert Preston revived his career playing con man Harold Hill trying to sell River City on his think system for playing the Minuet in G. A think tank at Bard College seems to be applying that approach to Twentieth Century economics.
“The government was too small to offset the collapse of gross capital income that followed the Great Crash of 1929,” L. Randall Wray writes in a paper for the Levy Institute at Bard College. “After World War II, we emerged with a new stage of capitalism—managerial welfare-state capitalism—with a government so large that its deficit could expand sufficiently in a downturn to offset the swing of investment.”
“This maintained the aggregate surplus, allowing debts to be serviced.” Wray is a professor of economics at the University of Missouri at Kansas City. The students who have taken his class and recorded their impressions on ratemyprofessor.com give him rave reviews.
Nevertheless, Wray’s interpretation of the 1930s only works if you ignore the steps taken by President Warren G. Harding when he faced the recession that followed World War I—cutting government spending and taxes. Then what happened?
Well, that’s why you still read about the Roaring 20s in history books rather than the Harding Depression.
Malcolm A. Kline is the Executive Director of Accuracy in Academia.
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