I sure hope so — but the book I reviewed in this week's Observer suggests that the big problem in the Depression was that aggressive deficit spending didn't go far enough to overcome the fear and pessimism of bankers, workers, and employers.
The book reminds me of one of Ralph Waldo Emerson's notes: "My estimate of America, which sometimes runs very low, and sometimes to ideal, prophetic proportions. My estimate of my own mental means and resources is all or nothing: in happy hours, life looking infinitely rich; and sterile at others."
The gyrations between perhaps irrational exuberance and deep self-loathing that Emerson saw in himself and in his country seem very widely shared among Americans in our time. For one tiny example, check out the "black panther" in the Observer comments section who concluded from the review that the fall of capitalism and World War III are upon us.
Accidental Blogger 
2 responses to “Will Obama’s Stimulus Package Be Big Enough? (Andrew)”
Great review, Andrew.
A thorough Keynesian at heart, I never did believe in the “Invisible Hand” which for the most part, seems to be the hands of financiers picking your pocket! In fact I believe that the root cause of our current doldrums (more of a “financial” crisis than an “economic” one) lies in the mishandling and unethical manipulation of money, rather than in any negative trend in production and consumption.
I am no socialist either. Government, though not as sly and greedy as the bankers, can be inept. However, government intervention in times of unsettling economic times usually does more good than harm, if only to calm frazzled nerves. Feeling of prosperity, confidence and optimism are states of mind. It helps if the public thinks that the government has taken control of a rudderless ship.
Akerlof and Shiller are right on the money (in more senses than one) when they say: “Yet we are currently not really in a crisis for capitalism. We must merely recognize that capitalism must live within certain rules.” I have never understood why the same folks who want us to live by strict rules of morality, religion and social decorum become so profligate when it comes to money and unbridled capitalism. There is no natural law that says it should be so – capital, after all is a man made entity subject to the “animal spirit” which includes both optimism and greed.
LikeLike
Thanks very much for your comments Ruchira. And I fully agree at the oddity that is moralistic social conservatives who nevertheless argue for unbridled laissez faire when it comes to money. I think it’s they don’t understand your point that capitalism is a man-made entity — they seem to have deified market-based outcomes.
LikeLike