Jan Kregel opened this year’s Minsky Conference (which just wrapped up yesterday) with a reminder that the broader public challenges we face today are still in many ways an echo of those that faced the nation in 1930s. What follows is an abridged version of those remarks:

This year’s conference takes place in an increasingly charged and divisive economic and political atmosphere. Sharp differences in approach are present within the new administration, within the majority party, and even within the opposition. It is a rather different environment than the one envisaged when planning for the Conference started last September. I had originally proposed as a title “The New Administration meets the New Normal: Economic Policy for Secular Stagnation.” It was an obvious attempt to hedge our bets on the outcome of the election. After the election the first adjustment to the title was “Can the New Mercantilism Displace the New Normal: Economic Policy under the New Administration.” As you can see the final title eventually adopted the elocution proposed at the presidential Inauguration.

My intention was not to elicit recollection of the “America First” committee’s support of isolation from the emerging European conflict in the 1930s. It was rather to recall that the phrase was first used, to my knowledge, by Franklin Roosevelt during his first election campaign.

Herbert Hoover had resolutely refrained from direct government support for the growing masses of the unemployed (although support was more than most give him credit for) for fear of interfering with the operation of the market mechanism in producing recovery from what was presumed to be a temporary cyclical downturn: “Recovery was just around the corner.” When this did not occur as expected the blame was laid on foreign financial and political events eroding confidence.

For Roosevelt, Hoover’s policy implied that “farmers and workers must wait for general recovery until some miracle occurs by which the factory wheels revolve again” but “No one knows the formula for this miracle.” Instead he argued in favor of direct measures to “restore prosperity here in this country by re-establishing the purchasing power of half the people of the country … In this respect, I am for America first.”

Instead of the miracle of a spontaneous market recovery, Roosevelt promised to take action to defend the condition of the “forgotten man” by offering him a “new deal” to protect from the ravages of bankers and industrialists. The simple substitution of “America Great” for “new deal” suggests an important similarity between the rhetoric and the target audience of the two campaigns.

It is instructive that in both cases the election was won with promises, creating a belief that appropriate actions would be forthcoming. We know from history how Roosevelt proceeded by experimentation, by trial and error, of what at the time were considered audacious, radical policies.

The question before us today is how the experimentation of the new administration may be directed to fulfill campaign promises. continue reading…