Here’s a Russian take on the battle which has been raging in the U.S. Congress between the dwindling Republican minority and the majority Democrats: In the midst of the greatest economic crisis since the Great Depression, should market forces and economic discipline rule the day, or should the government intervene as Obama [and Bush] have decided it should?
Maksim Sokolov of the Russian newspaper Izvestia warns that while rigorous economic orthodoxy might shorten the time to recovery, there might be some extremely unpleasant side effects to following this strategy.
Comparing Germany’s method of emerging from the Great Depression to Roosevelt’s New Deal, Sokolov writes in part:
“During Roosevelt’s term, the Depression dragged on until World War II. Perhaps things were more difficult before the New Deal, but according to the principle of ‘first to leave is the first to arrive,’ the economy could have recovered much more quickly without it. …
In contrast, there’s an example of another economic policy that laid the foundation for a recovery from the crisis. Chancellor Heinrich Breuning of Germany, who led the cabinet during the difficult years of 1930-32, refused to yield to socialist experiments, but instead remained unshakably firm in his anti-inflation policies and stayed the course of keeping a balanced budget, raising taxes and cutting government spending – pensions, salaries for public employees, etc.”
Then referring to the consequences, Sokolov writes in part:
“While it’s true that firm economic orthodoxy may be a formula for a fast recovery from today’s crisis, it would also result in a painful shock and create the conditions for another Fuehrer-chancellor. Just as it was in Germany, which so quickly recovered from the crisis of the 1930s.”
By Maksim Sokolov
Translated By Yekaterina Blinova
February 10, 2009
Izvestia, Russia – Original Article (Russian)
A grief-stricken Anatoly Chubais [photo, left] just returned from Davos, where men of fame and power confessed to him: “We don’t know what’s going on.” And his grief is likely to get worse if one recalls that to this day, there is still no great understanding of the Great Depression of 1929-33 – at least not in terms of what should have been done about it.
Then after World War II, everything was eventually written off and a new set of problems were on the agenda. But this method of recovery isn’t a desirable one to repeat, and as of yet, no opinion has been formed about how to escape this depression without paying just as high a price. Everyone is pulling in different directions. And this, despite the fact that three quarters of a century have passed and there are no classified documents left to reveal. The conundrum remains.
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