George Selgin: prediction

Transcript context

…So, we made him sane when he turned his neck across the Atlantic. Yes, to some considerable extent. I honestly — not just to be provocative — will say that the things Keynes had to say to Roosevelt directly, sometimes through letters publicly published, and also in his meeting with Roosevelt insofar as we know about it — his one meeting — Keynes’s advice on how the US should deal with the Depression and try to get out was very sound. I’ll give you a few examples. He was very concerned about regime uncertainty, specifically with Roosevelt’s tendency to attack businessmen and even pursue policies that were directly aimed at punishing them. He told him, more or less — not in so many words — that he ought to back off, this was not the time. Similarly, he said that the New Deal was confusing or getting priorities wrong about reform versus recovery. He said, “Look, maybe some of these reforms that you’re implementing will have good, long-run results, but this is not the time. You should be concentrating on recovery,” partly because reform shook up businessmen and made it, again, hard for them to regain their confidence. The whole discussion of animal spirits, by the way, is all about what we now more often call regime uncertainty. Finally, Keynes attacked very strenuously some of the worst New Deal policies. The gold purchase program, he ridiculed and said this was just a very bad idea, and he was right. Also, the NRA — he was extremely critical of the National Recovery Administration and its price controls, and he didn’t mince words about it. The other important thing that Keynes recommended was that Roosevelt spend more. That’s where the conservatives and libertarians would have a beef with him. If Roosevelt had spent a lot more — whatever you think about fiscal stimulus — if he’d done that instead of the things he and the other New Dealers actually did, there’s no doubt in my mind that it would have been better, because pouring more money into the economy may have adverse consequences, but nothing like some of the scary reforms, highly regressive taxes, price controls, and that sort of thing had. There’s a book you may know by John Flynn. It was called As We Go Marching. He argued the New Deal was bringing a kind of semi-fascistic planning to the United States. How correct was Flynn? How does that book hold up? Exaggeration or a prophet before his time?…

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