Harry Hopkins represented the radical wing in FDR's adminstration. This was in 1930s. Harry fought hard for make-work programs. He had been a social worker, he knew how personally demoralizing it was to not work. He wanted to make sure every American had a job, even if the job was useless and stupid, like raking leaves in the park. He did not want to simply give money to people without requiring them to work, he felt strongly that the money would be demeaning to the people who got and engender a backlash against the program. He was too much of a humanist to think of it in merely economic terms - the restoration of aggregate demand.
I think I'm quoting from the, uh, is it Sherwood Anderson? The early classic on Hopkins, published in the late 40s, right after Hopkins had died. I assume some of you know what book I mean, even if I got the author's name wrong.
> No one is cheering for unemployment. But what has been gained by a decade
of
> official foot-dragging and resistance to dealing with the consequences of
> the bubble--a bubble largely effected by the financial life of the much
> vaunted keiretsu?
>From what I've read, the whole world has suffered in subtle ways because of
Japan's wasted 10 years. My understanding of the situation (based on very
limited knowledge) is that public spending was done on a large scale, and
toward some infrastructure projects that were, perhaps, genuinely needed or
helpful. But also there is the feeling that much of the money was spent
propping up businesses that would not have survived in a more competitive
environment, especially one in deep recession. In a sense, the money was
spent propping up the status quo. That has made the recession relatively
painless, and with the lack of pain there has been only limited impetus to
change, and with such limited impetus, no real change has happened. Thus,
the massive public spending did more to prolong the recession than end it.
Needed reforms were postponed.
However, as I say, my knowledge is limited. Mostly I'm repeating what I've read, and I do not much trust the way American papers report on Japan.