Ai Weiwei

In the ongoing discussion in Reader Response about Keynesian econom­ics, it is interesting how the far-right Tea Party group pushes the con­cept that government can do no good for the economy. Conser­vatives may not like the way FDR

expanded the social safety net, but it is hard to support the claim that his policies made the Depres­sion worse. When he was elected in 1932 the unemployment rate was estimated to be 23.6 percent; four years later it was 17 percent, which is still bad but not worse. By 1941, before the U.S. entered the war, it had fallen to 9.9 percent. As for

the housing crisis, your correspon­dents again latch on to a myth. The policy of expanding home owner­ship did not lead to no-doc loans, nor did the government insist that banks make loans to unqualified borrowers. Did the feds insist mort­gage providers not discriminate? Of course. The problem was in fact rooted in the quasi-governmental nature of Fannie Mae and Freddie Mac. Federal guarantees allowed managers at those agencies to create compensation schemes like investment banks', and the connec­tion to government meant the cost of failure ended up being paid by taxpayers. Finally, we don't often get to observe real-world economic experiments. The rapid cutting of deficits in Greece and the U.K. is causing those economies to con­tract, increasing the rate of descent into poverty. It is playing out exactly as John Maynard Keynes suggested it would.

Robert Perry

Cohasset, Massachusetts

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