Pump Priming Quotes
March 4, 1933 was the date that Franklin Delano Roosevelt had assumed the Presidency from Herbert Hoover and used government to combat the Great Depression whereas Hoover would not take any of these steps as the conservative wing of his party and he regarded anything that government did was “creeping socialism”. Historically, it is useful to recall what steps Roosevelt took that were described as socialism. These include Social Security, Federal Deposit Insurance for bank accounts, aid to farmers, the Civilian Conservation Corps, Regulation of the stock market, regulation of banks and many other things that are key elements of modern capitalism which virtually every capitalistic nations has in one form or another. Long after Truman was out of office, the most conservative elements of the Republican Party have accused every Democratic President of “creeping socialism” when they were actually quite opposed to socialism. Even when their career before their presidency was full of criticisms of socialism and policies that are opposite, as in the case of President Obama, the President has been accused of being a socialist. However, it started with Franklin Delano Roosevelt and Harry S Truman.
This is a particularly interesting historical quotation. It shows that when FDR was first elected, he had a classic view of deficit spending. However, above all, Roosevelt was a pragmatist and not an ideologue. Faced with the Great Depression that was not getting much better, Roosevelt turned around, changed his mind and policy about deficits and embarked on the “pump priming” approach of injecting substantial Federal spending into the economy and accepting the deficits in order to improve the situation which had been stagnant. FDR’s new policy staved off total disaster, but few remember that his great success was a total reversal of his earlier views.
Reference to the British Economist John Maynard Keynes who advocated government action to manage the economy.
This is a classic illustration of a quotation illustrating the problem that political discussions have with the issue of causality. Conrad is absolutely correct in stating that investment and innovation as the direct cause for most productivity. However, without the demand created by consumption (or the prospect of it) there will be little capital and effort at innovation. There is a causal chain and different ideological proponents argue for their preferred link in the chain tending to ignore the other links. Many liberals tout increasing consumption and pay little attention to the investment and innovation—an error of the opposite of Conrad’s.
The speech was actually drafted by Peter Jay, his son-in-law and a journalist. The leader of the left-wing Labour party, to the surprise and anger of many of the party stalwarts, was repudiating Keynesianism which had been basic to the party for years. This appears to be the first specific statement that a government cannot spend its way out of a recession. Conservatives have used it ever since in countries throughout the world. The truth of the Keynes proscription is in constant modern economic and political debate with no resolution likely soon.
He was expressing his cynicism about deficit spending leading affluence. However, those who advocate government counter-cyclical spending have never advocated constant deficit spending, but have urged deficit spending for specific periods and when the economy has turned around, stopping the spending and reducing the deficit.
