TEXT OF INTERVIEW
Kai Ryssdal: There are a lot of comparisons being made between what’s happening now and what happened to get us into the Great Depression. You heard the FDR tape in the first part of the broadcast and how the country trusted him to get us out of it.
What we thought we’d do now is look at those comparisons and how or whether we can trust either man running for the White House today to do the same thing. For that, we’ve called Stanford University historian David Kennedy.
Professor Kennedy, welcome to the program.
David Kennedy: Good to be here.
Ryssdal: In terms of the scope of history, how well positioned are we with this administration to deal with this economic crisis?
Kennedy: Well, I don’t really know that the question goes to this administration so much as it goes to just the structure of the federal government that we now have. There is a world of difference between the array of apparatus, devices, instruments and institutions that the federal government now commands to deal with a crisis like this, which is why I keep telling people that we’re not likely to see a catastrophe on the scale of the Great Depression, particularly not something of the duration of the Great Depression, which was more than a decade.
Ryssdal: What do you think would be the first move then for the next president come the 20th of January?
Kennedy: I think clearly the steps that have been taken already to stabilize and liquidate the banking system — or liquefy the banking system, maybe I should say — and not least of all, I think most importantly, the steps that have been taken in the direction of international cooperation, multinational cooperation to deal with this, are initiatives that were all but impossible in the context of the 1920s and 1930s and already give me at least some reassurance that governments around the world have got not only the instruments, but also the political will to come to grips with this.
Ryssdal: You know, during the debates both candidates have been asked what they’re not going to be able to do policy wise because of the economic crisis and yes, they’re politicians and they don’t ever tell you what they’re not going to be able to do, but doesn’t there have to be an acknowledgment that we can’t do everything we want to do?
Kennedy: Well, you would think so. It seems to make common sense that there’s only so much money, so much fiscal power, so much taxing authority out there, so a lot of things that are being promised aren’t going to happen. On the other hand, if we think back to the big one — the Great Depression of the ’30s — it was in that context that we put in place still the largest entitlement program in our political landscape, which is Social Security. So, governments are not without resources and without the capacity to do some pretty dramatic things, even in the context of great financial constraint.
Ryssdal: Let me do another compare and contrast with FDR’s time and the present day. The federal government obviously today is much more wide-reaching. It has greater scope, it’s got greater liabilities. Is that a help or hindrance in figuring out how we can trust people to manage this and go forward?
Kennedy: The scope of the federal government’s activities today in the economy as a whole, you’re absolutely right, are incomparably greater than they were in the 1920s and ’30s and that provides, it seems to me, some very solid ballast for the economy going forward. Again, not least of all just from the simple fact of Social Security payments, which not only more or less guarantee the elderly that they have at least a floor of income beneath them, but also in the aggregate Social Security payments do a lot to maintain at least some minimum level of consuming power. Here’s another measure of the difference: federal expenditures in 1930, in the middle of the Hoover presidency, amounted to about 3 percent of GDP. Today federal expenditures on the whole are about 20 percent of GDP — a roughly 7-times greater presence in the economy as a whole. That’s simply not as vulnerable to contraction and disappearance as is, for example, private investment.
Ryssdal: David Kennedy, professor of history at Stanford University. Professor Kennedy, thanks a lot for your time.
Kennedy: Very nice talking with you Kai.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.