David R. Henderson  

Krugman's View of Corruption

PRINT
Gullibility, Madoff, and Fisca... Mark Thoma on the Risk Premium...

In his column in today's New York Times, Paul Krugman claims that Franklin D. Roosevelt's New Deal was "clean" and avoided corruption. So clean was FDR's Works Progress Administration, writes Krugman, that "when a Congressional subcommittee investigated the W.P.A., it couldn't find a single serious irregularity that the division had missed."

A skeptic would immediately want to know who was on that subcommittee and how thorough a job the subcommittee did. Unfortunately, Krugman doesn't address that issue.

Even if one takes the subcommittee's claim at face value, though, as Krugman seems to, there are other ways to look for corruption. Here are two:

1. Evidence compiled by Gary M. Anderson and Robert D. Tollison in "Congressional Influence and Patterns of New Deal Spending, 1933-1939," Journal of Law and Economics, Vol. 34, pp. 161-175, shows that political factors were important in the allocation of such spending. Anderson and Tollison conclude:

New Deal spending went partly to the needy and partly to those with political clout. Our findings here suggest that federal transfer programs did not become captured by interest groups and self-interested politicians recently, but were affected by such factors from their beginnings. The New Deal was not big government's Garden of Eden, but rather the more familiar stomping ground of Homo economicus.

Krugman might not regard this as corruption. I do. It gets back to the point I made about the governor of Illinois. People seem upset, not about his corruption per se, but about his bluntness and clarity and his foul language.

2. FDR, upset that the Supreme Court was knocking down some of his most-cherished New Deal legislation, threatened to "pack" it by increasing the number of justices beyond nine and, obviously, choosing those new justices. He never did so, but he didn't have to. Supreme Court justice Owen J. Roberts got the message. Thus the famous saying: "The switch in time that saved nine." It saved nine alright, but gutted the economic freedom provisions of the U.S. Constitution.


Comments and Sharing





COMMENTS (27 to date)
libfree writes:

One expects massive amounts of government spending to have some corruption, intuitively. It just seems a little too clean for my tastes. It would have been more believable if they had found a small amount of serious corruption.

The Roosevelt Administration was riddled with traitors. Alger and Donald Hiss, Lauchlin Currie, Sol Adler, Harry Dexter White, just to name a few. There has probably never been as corrupt a Presidency as FDR's.

Craig Travis writes:

It seems like corruption by conservatives is what causes depressions. Then we have people like McCarthy to find the traitors.

Jim Glass writes:

"A skeptic would immediately want to know who was on that subcommittee..."

Well, we certainly know it was a Democratic-chaired, Democratic-majority committee, directed by at Democratic Congress.

One might also consider how standards of corrpution -- and of deferral to the President among those who might expose it -- have changed since then.

David Brinkley told this story, that occurred when he was reporter covering FDR's White House, in his memoir...

...the Internal Revenue Service had investigated the financial dealings of a Roosevelt friend and ordered him to pay twenty thousand dollars in fines, interest and penalties.

The president thought it was too much, telephoned the director of Internal Revenue and told him, "Cut his fine to three thousand. I think that's enough."

It is diverting to imagine the scandal today if a president ordered the IRS to reduce a fine for a friend and it was duly leaked to the Washington Post, as it would be. But in Roosevelt's case he made the call in the hearing of some of us in the press corps, and nobody seemed to think it was news or even very interesting...


Busby SEO Test Gary Viray writes:

I sometimes perceive that corruption is inevitable in a lot of infrastructure projects especially in the past where war - kill or be killed - has a high influence then.

John V writes:

Why go here, David?

Personally, I find Krugman's argument to be a non starter.

Krugman's entire argument is simply an avenue for him to fawn over his cherished dream idea of "Good, Big, All Powerful, ALL Knowing, All Encompassing, All Curing Government."

He is probably the biggest New Deal fanatic alive and the greatest propagator of Pro-New-Deal-rooted economic opinion and commentary.

He's in love with the New Deal...totally head-over-heels in love. His book, "Conscience of a Liberal" (which I did read) spends a great deal of time finding and rationalizing anything and everything that he can possibly use to fan the flames of that love by making the New Deal out to be the greatest thing that every happened and responsible for everything good that has happened in the country since WW2. Of course, I'm exaggerating a bit...but not by much.

This article is just another avenue to slobber over the New Deal and all of its wonders....real or rationalized.

Whether the New Deal was corrupt or not (by anyone's standard) is to me irrelevant.

The arguments, in so far as they matter today, as to whether it worked, as to whether it was all it was cracked up to be, as to whether it has any relevance to today's world...pro or con...are the ones that matter.

Krugman is acting as a partisan coach and strategist in this article. That in itself disqualifies it as worthy of another professional's attention....especially when the professional, like you, is not his partisan hack counterpart.

I think Krugman has gotten bored with his career as a real economist in which his tireless work on trade theory won him a Nobel Prize. He now finds the Dark Side...political operative work...far more interesting, tasty and gratifying.

His partisan pulpit at the NYT has twisted his mind. He is now addicted to political debate and opportunism as well as the notoriety that it has brought him.

I liken it to Indian Jones in the movies in that Krugman's has gotten so involved in partisan politics (like Jones in treasure hunting) that his true professional calling as a professor and researcher has become a secondary activity to pass the time when he isn't indulging himself in partisan warfare...like Jones who is almost never in class and instead in the four corners of the earth chasing artifacts and treasure.

dearieme writes:

Krugman's article is an insult to the reader's intelligence. What an odd fish he must be.

Greg Ransom writes:

Don't kid yourself.

Krugman doesn't care a fig for the truth of the matter.

Krugman isn't an honest fellow, and he cares less what the honest history of WPA might be.

Brandon Berg writes:

Whether there was corruption is beside the point. The things they did openly were worse than anything they may or may not have done in secret.

OcBody.com Doc writes:

Not surprising from a New York Times writer. Mr Obama in planning a billion dollar stimulus package is kinda following in the same footsteps. Don't you think?

At that point he will have finally done something - good or bad. At this point he is extraordinarily well-revered for good speech.

justareader writes:

Democrats, by the NY Times' definition, cannot be corrupt, because their aims are good (allegedly).

Oh, occasionally there will be a bad apple like Blago who lets his mouth run and allows the outsider to see what goes on inside the back room, but that's to be expected. He'll be excommunicated soon enough for letting slip the real deal.

Republicans, on the other hand, are a "culture of corruption."

That's what Krugman was trying to explain. He's setting the table for the very pricey meal to come.

Bill Dalasio writes:
Krugman isn't an honest fellow, and he cares less what the honest history of WPA might be.

Not entirely true. It often seems as if there are two Paul Krugmans or that he suffers from a sort of split personality disorder. When he writes as an economist, he's a lot more intellectually honest. I suspect he thinks his readership in the Times is not smart enough to understand that there are shades of gray beyond the assumed party line. In that respect, he may not be wrong.

H. Ickes writes:

in regard to the PWA, it does seem to have been free of corruption, in part because of the careful administrative style of Harold Ickes who was known to visit construction sites to personally verify that the workmanship was not shoddy and that, for example, the concrete being poured was of the specified quality.

However, it was precisely because of Ickes's careful management style that the PWA projects provided negligible countercyclical effect. They took too long to get going.

As for the Supreme Court packing, I don't like it either but the Constitution does not say how many judges should serve on the Supreme Court so there is nothing sacrosanct about nine. In any event, FDR's antics were rewarded in 1938 by a far more conservative Congress.

PAR65 writes:

[Comment removed pending confirmation of email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog.--Econlib Ed.]

Paul writes:

Oh sure, all that money ran through Boston's Mayor Curley, through the Chicago machine, Truman's Pendergast and all the other machine political organs.....and there was no corruption.

Yeah, that Krugman, sharp. Cann't pull anything past him.

/sarcasm off

Joe Yowsa writes:

What about allowing the UAW to blockade Ford without FDR or the governor of Michigan enforcing the law?

Gapeseed writes:

The real dispiriting irony is that George W. Bush will be used to impeach the credibility of conservatives on economic issues when he governed as anything but. Obama and a Democratic Majority will pass a New New Deal to greatly increase governmental involvement in an economy wrecked by such meddling these past two administrations. And everything that goes wrong will be seen as proof that Bush's free market principles caused more damage than previously thought, necessitating further intervention. Thus the harsh lesson that the standard bearer for your party actually believe in the party's platform. Free marketers might never recover from that electoral miscalculation.

Steve Skubinna writes:

It's worthwhile recalling that when Krugman was on Enron's payroll he saw no corruption there, either. Oddly, Mr. Krugman never seems to mention that job in his public resume.

red writes:

--Republican's are a culture of corruption.

Silly joke. Look at Rangel who as the nation's tax writer has found at least six ways to enrich himself while breaking tax laws. Add Barney Frank's love affair with a CEO of Fanny Mae; Chris Dodd's sweatheart mortgage deals; Biden's son under investigation, never mind Jefferson's cash in the freezer. Why did Michelle O's salary triple after 'the one' earmarked her employer?

What astounds me about Blago is that nobody seems upset that he was extorting a children's hospital. I thought Dems did it for the children not to the children.

Dems - Reps equally corrupt. Just the Dems own the corrupt cheerleading media.

Alice Finkel writes:

Don't let the fact that Krugman resembles a shifty-eyed weasel affect your judgment. It has been many years since he stole any chickens. His main job now is to provide good PR for those who are still active.

ajackson writes:

[Comment removed for supplying false email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog.--Econlib Ed.]

William Hamblen writes:

People seem to have forgotten that FDR wanted to license newspapers under the National Recovery Act. The publisher of the Nashville Banner newspaper lead the legal battle that FDR ultimately lost, but FDR continued the fight by using the Reconstruction Finance Corporation to give the rival Tennessean newspaper to a political ally. The New Dealers were not above using the taxpayers' money for political advantage.

John writes:

Krugman is acting as a partisan coach and strategist in this article. That in itself disqualifies it as worthy of another professional's attention....especially when the professional, like you, is not his partisan hack counterpart.

cubanbob writes:

Krugman can't see the forest for the trees. The Democratic corruption is built in to the system.
The Davis-Bacon Act being a the prime example. The mystery is why Republicans when they had the opportunity to repeal the act and withhold funding from state and local governments with similar legislation. The same with rent control laws and abusive eminent domain policies. The list is nearly endless. And that does not include the tax code. Corruption is not a bug, its a feature.

cubanbob writes:

" cubanbob writes:

Krugman can't see the forest for the trees. The Democratic corruption is built in to the system.
The Davis-Bacon Act being a the prime example. The mystery is why Republicans when they had the opportunity to repeal the act and withhold funding from state and local governments with similar legislation. The same with rent control laws and abusive eminent domain policies. The list is nearly endless. And that does not include the tax code. Corruption is not a bug, its a feature.
Posted December 27, 2008 7:04 PM"

Pardon the typo, I meant to say is why the Republicans failed to act when they had the opportunity.

T L Holaday writes:

Please state your presumably robust definition of corruption.

GU writes:

Most people do not realize how large a role the "switch in time that saved nine" has played in eroding liberty.

Many of the worst populist domestic policies were literally unconstitutional before the "switch." It really opened up the floodgates for the mess we have now. :(

Comments for this entry have been closed
Return to top