Can Occupy Wall Street make Obama welcome some hatred?

My wife and I went into Times Square for the Occupy Wall Street rally held there Saturday evening.  One of the lead chants was "Wall Street got bailed out; we got sold out." That's a half truth -- and a vague charge, as it leaves the nefarious deeds in the passive voice. Obama thus avoids the direct hit. But not everywhere:

Although that sign is more false than true, I'm glad it's out there. Obama did need to complete the bank bailout and engineer their recapitalization, but he did it with far too few strings attached, and without demanding reciprocal action from the banks in the form of mortgage relief.  I want him pressured from the left -- as FDR was pressured.

Today people love to quote Roosevelt's October 31,1936 campaign speech in which he laid into powerful moneyed interests, who had been excoriating him for instituting a tax on a tax on undistributed corporate profits. Roosevelt responded by campaigning with increasing fervor, according to David M. Kennedy in Freedom from Fear, against "greed" and "autocracy." The Madison Square Garden speech was the climax:

FDR was Hoover, too

We've all heard by now that FDR cut spending in 1937, sending the economy into a sharp recession that reversed much of the rapid economic growth his New Deal policies had helped spur in his first term. 

What's less well known, I think (at least to me), is that when he reversed course after this disastrous bout of balanced budget fever, he did so only fitfully, with ambivalent half measures, and the economy sputtered on with weak growth and unemployment near 20% until 1941, when wartime spending kicked in. Moreover, his assault on big business, via populist denunciations and new corporate taxes -- driven mainly by a need in 1935-36 to cover his left flank and stave off a feared populist third-party challenge -- left a widespread perception that he'd driven away the confidence fairy. David M. Kennedy summarizes in Freedom from Fear: The American People in Depression and War, 1929-1945:

Yet so far as the economy was concerned in 19838, Roosevelt's actions looked for the moment to be something considerably less than revolutionary. The president may have planted the seeds of the "Keynesian Revolution" in American fiscal policy, but it would be some time before they would fully flower. In the meantime, Roosevelt seemed to have wrought the worst of all worlds: insufficient government spending to effect recovery, but sufficient government sword-rattling to keep private capital cowed. "The President won't spend any money," an exasperated Jerome Frank exclaimed. "Nobody on the outside will believe the trouble we have with him. Yet they call him a big spender. It makes me laugh." As for private businessmen, they still hesitated to make new investments. Why, the president mused on night at dinner, did they lack confidence in the economy? Eleanor replied tellingly, "They are afraid of you."  Deprived of adequate public or private means of revival, the economy sputtered on, not reaching the output levels of 1937 until the fateful year of 1941, when the threat of war, not enlightened New Deal policies, compelled government expenditures at levels previously unimaginable.

Productivity revolutions can hurt

Program update: thanks to Hurricane Irene, I am held over in Ireland -- a very nice place to be stuck, I must admit.  Continuing squibs based on current reading....

In December 2009, Atul Gawande drew an extended analogy between the agricultural revolution of the early 20th century, sparked by an array of creative government programs that promulgated improved farming techniques, and the welter of cost control measures packed in the Affordable Care Act, which collectively may have the potential to radically lower healthcare costs while improving quality. Here's Gawande's overview of what happened in agriculture, circa 1900-1920:

The United States did not seek a grand solution. Private farms remained, along with the considerable advantages of individual initiative. Still, government was enlisted to help millions of farmers change the way they worked. The approach succeeded almost shockingly well. The resulting abundance of goods in our grocery stores and the leaps in our standard of living became the greatest argument for America around the world. And, as the agricultural historian Roy V. Scott recounted, four decades ago, in his remarkable study “The Reluctant Farmer,” it all started with a pilot program....

What seemed like a hodgepodge eventually cohered into a whole. The government never took over agriculture, but the government didn’t leave it alone, either. It shaped a feedback loop of experiment and learning and encouragement for farmers across the country. The results were beyond what anyone could have imagined. Productivity went way up, outpacing that of other Western countries. Prices fell by half. By 1930, food absorbed just twenty-four per cent of family spending and twenty per cent of the workforce. Today, food accounts for just eight per cent of household income and two per cent of the labor force. It is produced on no more land than was devoted to it a century ago, and with far greater variety and abundance than ever before in history.

What I'm learning from David M. Kennedy's Freedom from Fear: The American People in Depression and War, 1929-1945  is that however good this 'revolution' proved to be for consumers, it was absolutely wrenching for farmers. According to Kennedy, American farmers (who still made up 30% of the U.S. population in 1930) had been suffering a Depression of their own since the end of World War I, when prices collapsed. The problem was essentially massive oversupply, triggered by those wonderful productivity gains. The early New Deal remedy was the set of subsidies -- paying farmers not to grow certain crops -- that plague us to this day. Then as now, too, those subsidies disproportionately benefited large holders -- particularly southern landlords, who responded to incentives not to grow by depriving their sharecroppers of their less-than-bare-subsistence livelihood.

Another disillusioned pundit

N.B. I am trekking the Kerry Way in Ireland this week and just slipping in a squib or two from current reading here and there...
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After the president signed a controversial bill that most economists believed would worsen a sharp economic slowdown, a former admirer wrote that he

had surrendered everything for nothing. He gave up the leadership of his party. He let his personal authority be flouted. He accepted a wretched and mischievous product of stupidity and greed...

Why? The pundit probed for the President's tragic flaw:

He has the peculiarly modern, in fact, the contemporary American, faith in the power of the human mind and will, acting through organization, to accomplish results...[but] the unreasonableness of mankind if not accounted for in [his] philosophy...in the realm of reason he is an unusually bold man; in teh realm of unreason he is, for a statesman, an exceptionally thin-sknined and easily beweildered man...He can face with equanamity almost any of the difficulties of statesmanship except the open conflict of wills.