Barry Bluestone

Lest you think I'm not going to classes as I haven't blogged about them, I am. Four a day. Every day. But they're tricky to write about. Complex issues. Big discussions. How do I distill this particular scholastic experience? I'll start by talking about one of today's professors, Barry Bluestone, Dean at the School of Public Policy & Urban Affairs at Northeastern University. A very cool guy and author of 12 books. An economist. An inspiring speaker. The theme of his session was understanding the nuts & bolts of US economic growth, beginning with a simple, powerful, influential formula used to calculate Gross Domestic Product:.  Y = C+I+G+X-M

Y is GDP. C is consumption which makes up about 70% of the equation. I is investment. G is government spending. X is exports and M is imports. 

Barry led us through the economic history of the US using this formula as a guideline for what happened, beginning in the Roaring Twenties - the decade that began with a grand celebration of US capitalism. In the post WW I economic boom, companies like General Foods, General Motors and General Electric became giants, riding high on a wave of consumption.  Packaged foods, electrical power lit up the nation and cars put the whole country on the move. (General Motors grew to become the 18th largest company in the world with a GDP as big as Belgium.)  People borrowed money to speculate on the stock market - until the great stock market crash of 1929. Everything burst - nobody could afford to buy anything any more so consumption was bust. Investments were bust. Government had a balanced budget of shrinking revenues and shrinking expenditures. Exports shrunk. So the GDP collapsed. Catastrophically.

The Great Depression of the 1930's hit with 25% unemployment - but it was probably really closer to 50%.  We looked at the fiscal stimulus provided by all the massive public investment campaigns, including the WPA (Works Project Administration). Under 4-term President FDR the government's role in the economy increased profoundly - it was the New Deal after all. Social safety net programs came into being including Social Security. New-fangled federal pensions would get money into the hands of retirees so they could spend and increase consumption and improve the GDP!! By 1938 we had the minimum wage and the 40 hour work week, with OT after 40 hours. Rather than pay OT, companies hired more workers, which got more people working - and increased consumption and improved the GDP!! I know none of this is rocket science but viewed through the POV of a labour economist, it becomes new again. At least to me! (My high school economics teacher was the gym teacher. Not to denigrate gym teachers, but she was no economist.)

It gives a different spin to FDR's, "we have nothing to fear but fear itself". Fearful people would not spend money which would not boost consumption which would not improve the GDP.

Now I want to read a lot more abour Roosevelt. And Eleanor....