Amity Shlaes: Cheering for Obama Stimulus Buys Into 1930s Myth

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[Amity Shlaes, author of “The Forgotten Man: A New History of the Great Depression,” is a Bloomberg News columnist.]

It takes only a few seconds to make history new again.

Leaders around the world are talking up economic stimulus, channeling U.S. President Barack Obama, who in turn is channeling Franklin Delano Roosevelt.

Obama bases his confidence on an old story line with some appealing parallels to today:

A disastrously high stock market caused by excessive faith in the private sector generated an epic crash. A Republican, Herbert Hoover (George W. Bush), let us down. A new president, FDR (Obama), knew that action was imperative and understood the value in “bold persistent experimentation.”

FDR stimulated the Dow back up, and unemployment down, saving America and democracy. Massive wartime spending solidified the recovery in the 1940s, proving that when it comes to stimulus, more is better.

So, celebrating the $787 billion stimulus bill Obama signed yesterday depends on ramming through this version of history -- and dismissing dissent. That is what Obama did at a news conference when he said those who criticize FDR’s New Deal are “fighting battles that I thought were resolved a pretty long time ago.”

In fact, this battle is far from resolved. Economists are arguing more now about the quality of the Roosevelt programs than they were a decade or two ago.

Consider key components of that old narrative...

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