The Long View 2009-01-16: Pods are Our Friends

John J. Reilly was in general positive about the impact of the New Deal on the United States. But his reason why is more interesting than most:

But did the New Deal do more good than harm? Probably, because it generated national solidarity; which, among other things, is the predicate for the rule of law that makes market economies possible. If we are offered the choice between the that solidarity and economic growth, we should take the former.

In general, commentary on the New Deal tends to focus on how socialist the commentator thinks it was, and then the valence of their opinion turns on whether they think socialism is good or bad. However, that is in my opinion to ask the wrong question, especially as the degree of socialism in the American economy is rarely identified with any degree of precision. The economy of the United States has swung from something very laissez-faire in the late nineteenth century, to corporatism in the 1930s, to war socialism during the First and Second World War, and then to a very mixed economy with varying degrees of state regulation that differ considerably from market to market and from decade to decade.

It is far more useful to think about the results a given economy produces, and for whom in what proportions. The current neoliberal economy might generate better GDP growth the New Deal corporatist one, but the population of the United States might well trade off some GDP growth for real solidarity if given the choice.

Pods Are Our Friends

"Dinner at Lucrezia Borgia's house, with Tartuffe as guest of honor," was how Russell Baker in a dark mood once described social life in official Washington. This characterization can have no application to Barack Obama's dinner at George Will's house this week with a select group of conservative pundits. Under the rules of such occasions, the participants may not repeat publicly what was said in private. However, one among the happy diners was Charles Krauthammer, who wents so far as to make some comments on Fox News. (I quote here from a Lefty blogger who was outraged that the Electus would consort with publicans and anti-tax-gatherers.)

What's interesting is the fact that he would want to do this. And you see that since his election he's kind of reached out to people who may not be his ideological allies. To Rick Warren, the pastor who will be at his inaugural. To John McCain, who he's treated with a lot of dignity and respect and to a bunch of right wing columnists last night. In part because I think he is a guy who's intellectually curious and he wants to exchange ideas. Also in part because he wants to co-opt the vast right wing conspiracy and I'm here to tell that speaking for myself---he succeeded. I'm brainwashed entirely. I'm in the tank and I'm a believer now in hope and change and above all audacity.

On one hand, we can agree that this meeting really was a fine gesture on Obama's part. We will also be pleased when our next stimulus checks arrive, accompanied by large, green, pods, one for each member of the household. Please follow the instructions to store the pods in a dry place in the basement and to get a lot of sleep.

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At the risk of repeating the same theme again and again, permit me to quote this posting by Ambrose Evans-Pritchard (hat-tip to Vox Day), Will China lead the world into depression?:

Albert Edwards at Societe Generale has issued another terror alert:

Sell everything. Hide in a bunker with plenty of whisky. The S&P 500 index of US shares is about to crash through its half-century support line to 500....

The key argument is that markets have been sold a pup on the China growth miracle and have massively underestimated the risks for the global FX and trading system as this unravels.

"The Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression....

I think it less likely that the world's trading-state governments will begin a game of "beggar-thy-neighbor" than that they will all find themselves pushing on a string.

* * *

On a related note: I continue to see assertions on the Web to the effect that the New Deal made the Great Depression really Great. To some extent, this is a question of what you mean by "the New Deal." Certainly the Roosevelt Administration prevented the institutional collapse of the banking system; probably it also preserved the infrastructure of Midwestern agriculture. It may well be that the Administration also slowed down economic growth by discouraging investment, but of that I am not sure.

In any case, a "recovery" of the bubble-blowing decade of the 1920s was not in the cards. The political economy that came out of the panic of 1929 was going to be different in important respects, no matter what else happened. Several years were necessary for that realization to sink in. (Actually, perhaps the scariest economic commentary I hear today is the assertion that all we really have to do is restore confidence enough so that the securitization of mortgages can begin again.) Beyond the slow pace of paradigm change, there was also the matter of pure traumatization. Economic actors moved more slowly than in the 1920s because they did not trust the counterparties who had already defaulted; they did not trust the the financial instruments they used; they did not trust the creditworthiness of any institution but the government. The Great Depression was also a cultural shift; to some extent, official policy simply mirrored that shift.

But did the New Deal do more good than harm? Probably, because it generated national solidarity; which, among other things, is the predicate for the rule of law that makes market economies possible. If we are offered the choice between the that solidarity and economic growth, we should take the former.

* * *

Speaking of explosive gas, NASA reports, yet again, that there seem to be whiffs of methane in the Martian atmosphere:

The first definitive detection of methane in the atmosphere of Mars indicates the planet is still alive, in either a biologic or geologic sense, according to a team of NASA and university scientists.

"Methane is quickly destroyed in the Martian atmosphere in a variety of ways, so our discovery of substantial plumes of methane in the northern hemisphere of Mars in 2003 indicates some ongoing process is releasing the gas," said Dr. Michael Mumma of NASA's Goddard Space Flight Center in Greenbelt, Md. "At northern mid-summer, methane is released at a rate comparable to that of the massive hydrocarbon seep at Coal Oil Point in Santa Barbara, Calif." is possible a geologic process produced the Martian methane, either now or eons ago. On Earth, the conversion of iron oxide (rust) into the serpentine group of minerals creates methane, and on Mars this process could proceed using water, carbon dioxide, and the planet's internal heat. Although we don’t have evidence on Mars of active volcanoes today, ancient methane trapped in ice "cages" called clathrates might now be released.

As I believe I have remarked before, there were reports like this even in the 1960s in connection with the Mariner missions, though the claims were later withdrawn. If you read the article, you will see the suggestion that maybe microorganisms live far undergroud, in warm regions of the crust. When summer comes, the ice covering vents to these regions is volatilized, releasing the methane. That hypothesis has too many moving parts.

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