FDR's policies prolonged Depression by 7 years, UCLA economists calculate

[cpwill]

I'm no economist, but this part raised some red flags for me

They're using the obviously inflated numbers present just before the crash as a baseline? Seems to me that they're taking pre-Depression numbers, eliminating the depression, extending their trends, and blaming the difference on FDR rather than the Depression. Am I missing something or is this as stupid as it seems?

hmm, off the top of my head, it seems that if their prices and wages are from 1929, and they were measuring how unusually high they remained off of that metric, that if anything the effect they were measuring would have been underestimated.

 

[cpwill]

Guess who said the following: “We have tried spending money. We are spending more than we have ever spent before and it does not work.” Was it Sarah Palin? Rush Limbaugh? Karl Rove?

Not even close. It was Henry Morgenthau, secretary of the Treasury under Franklin D. Roosevelt and one of FDR’s closest advisers. He added, “after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”...

Whole generations have been “educated” to believe that the Roosevelt administration got this country out of the Great Depression. History textbooks by famous scholars such as Arthur M. Schlesinger Jr. of Harvard and Henry Steele Commager of Columbia have enshrined FDR as a historic savior of this country, and lesser lights in the media and elsewhere have perpetuated the legend.

Although Professor Schlesinger admitted that he had little interest in economics, that did not stop him from making sweeping statements about what a great economic achievement the New Deal was...

There are few historic events whose legends are more grossly different from the reality than the New Deal administration of Franklin D. Roosevelt. And there are few men whose images have been more radically different from the men themselves.

Some of the most devastating things that were said about FDR were said not by his political enemies but by people who worked closely with him for years — Secretary of the Treasury Henry Morgenthau being just one. Morgenthau saw not only the utter failure of Roosevelt’s policies, but also the failure of Roosevelt himself, who didn’t even know enough economics to realize how little he knew.

Far from pulling the country out of the Great Depression by following Keynesian policies, FDR created policies that prolonged the depression until it was more than twice as long as any other depression in American history. Moreover, Roosevelt’s ad hoc improvisations followed nothing as coherent as Keynesian economics. To the extent that FDR followed the ideas of any economist, it was an obscure economist at the University of Wisconsin who was disdained by other economists and who was regarded with contempt by John Maynard Keynes.

President Roosevelt’s strong suit was politics, not economics. He played the political game both cleverly and ruthlessly, including using both the FBI and the Internal Revenue Service to harass and intimidate his critics and opponents...

 

[obvious Child]

Haven't we already addressed this idiotic argument before?

Ignoring the aspect of the dirty trade war makes any discussion of other policies dishonest.

 

[phattonez]

Haven't we already addressed this idiotic argument before?

Ignoring the aspect of the dirty trade war makes any discussion of other policies dishonest.

The tarriff was a horrible idea, and the other programs implemented were horrible in their own right. There, honesty.

 

[drz-400]

Haven't we already addressed this idiotic argument before?

Ignoring the aspect of the dirty trade war makes any discussion of other policies dishonest.

There is no doubt that the collapse in international trade had a large negative impact on the world economy. Which could bring an interesting caveat. Why were the protectionist motives as large as they were during the depression era? From our experience in the recent recession it is amazing that protectionism has remained abandoned, and reduced to a few select cases, since protectionism tends to show its face during times of economic peril. One could argue it has largely been due to institutional changes within the economy, namely the formation of the welfare state. Modern economies now have a multitude of social protections such as unemployment insurance, health insurance, food stamps, etc. that mitigate the demand for protectionist policy.

 

[Mensch]

There is no doubt that the collapse in international trade had a large negative impact on the world economy. Which could bring an interesting caveat. Why were the protectionist motives as large as they were during the depression era? From our experience in the recent recession it is amazing that protectionism has remained abandoned, and reduced to a few select cases, since protectionism tends to show its face during times of economic peril. One could argue it has largely been due to institutional changes within the economy, namely the formation of the welfare state. Modern economies now have a multitude of social protections such as unemployment insurance, health insurance, food stamps, etc. that mitigate the demand for protectionist policy.

In my observation, protectionism is still quite alive. And any left-leaning politician who supports "social protections" would favor protectionist policies as a "social protection." Republicans, too.

 

[drz-400]

In my observation, protectionism is still quite alive. And any left-leaning politician who supports "social protections" would favor protectionist policies as a "social protection." Republicans, too.

They would favor... a hypothetical? Lets just look at recent history. Your observation is incorrect. The world markets have become and remained liberalized even during the recent financial crises. The only instances protectionism one can complain of are relatively minor.

 

[Mensch]

They would favor... a hypothetical? Lets just look at recent history. Your observation is incorrect. The world markets have become and remained liberalized even during the recent financial crises. The only instances protectionism one can complain of are relatively minor.

When I said "alive," I generally meant that it remains a passionate cause for many on the left and the right. I just finished a response to a DP post regarding tariffs and how they may or may not be needed to protect American jobs. People still strongly favor protectionist policies like tariffs, and this is true in every recent election since time immemorial.

 

[oldreliable67]

According to this blurb, a recent World Bank study asserts a number of protectionist measures directed at China:

Ahead of the G-20's meeting in Seoul on Thursday and Friday, a World Bank-backed study released Monday shows the U.S., European Union and G-20 allies have recently outpaced other countries in measures that have defended domestic producers, from France's $2.3 billion payout to its farmers in October to a South Korean program that is giving export subsidies to 100 hand-picked companies. China has been the biggest target of these measures, the study said.

Note however, that 'incipient protectionist trends' have been a recurrent World Bank theme for a couple of years, so for them to conclude in November 2010 report that such is happening shouldn't be too surprising.

For some reason, the connection to the IBRD web site keeps timing out, so I haven't been able to get a link to this report. Will try again later.

 

[cpwill]

how many complain about 'jobs being shipped overseas', and want the government to do something about it? inasmuch as it is not a call for reducing our tax and regulatory burden; that's a call for protectionism. Obama his first year began to hit the Chinese with tarrifs; minor things to be sure (tires, as i recall), but testing measures too.

Protectionism does not rule, but it is not dead.

 

[cpwill]

It did not recover, it merely stabilized at a very bad place.

true. Henry Morgantheau, FDR's Secretary of Treasury, brought the point painfully home in his testimony before Congress

After years of heavy meddling in the economy by Hoover that itself contributed to bank runs. With the Harding approach it all would have ended much earlier.

well, had they been allowed to branch, that would have helped too. i recall once seeing a study between American banks, forbidden to cross state lines, and Canadian banks, which were, and their respective failure rates in the 30's; the spread was quite impressive.

I didn't claim that a tax cut got us out of the Depression. Lifting heavy regulations was more important.

guaranteed profits in WWII helped, too; as did the general loss of instability and uncertainty from FDR's anti-business approach (now think about that; a world-wide conflagration which destroyed millions of people, wrecked continents, forced the US into mass-slavery via a draft and put us all on strict rationing while curtailing civil liberties was less uncertain than FDR's New Deal)

 

[oldreliable67]

forced the US into mass-slavery via a draft

That's a bit extreme.

 

[cpwill]

:shrug: it's what it is. it's slavery we impose our ourselves, but its' slavery nonetheless.

 

[Slartibartfast]

:shrug: it's what it is. it's slavery we impose our ourselves, but its' slavery nonetheless.

Obligations are slavery than. I guess this means a parent is slave to a child in your view.

 

[cpwill]

the draft isn't merely an 'obligation'. helping someone on the side of the road is an 'obligation'. the draft is coercion and force; you will leave your life your family and everything else, you will live in camps, you will perform dangerous and difficult labor under hellish conditions and you will do exactly what we tell you to even if it costs you your life. i'm not saying i think the draft was the wrong call to make in 1942; i'm just not going to pretend it's anything but what it is.

 

[Slartibartfast]

the draft isn't merely an 'obligation'. helping someone on the side of the road is an 'obligation'. the draft is coercion and force; you will leave your life your family and everything else, you will live in camps, you will perform dangerous and difficult labor under hellish conditions and you will do exactly what we tell you to even if it costs you your life. i'm not saying i think the draft was the wrong call to make in 1942; i'm just not going to pretend it's anything but what it is.

It is an obligation of citizenship. It is something you (sometimes rightfully, depending on the circumstance, vietnam wasn't right) have to give up to become a full member of society. It is the same as taxes, jury duty, following the law, etc.

 

[cpwill]

:shrug: you can call it an obligation, 'doing the right thing', or whatever you please; it doesn't make it not enslavement.

 

[Slartibartfast]

:shrug: you can call it an obligation, 'doing the right thing', or whatever you please; it doesn't make it not enslavement.

Yes it does. There is no bodily ownership involved.

 

[oldreliable67]

Yes it does. There is no bodily ownership involved.

As a draftee in Vietnam in '67 and '68, I certainly felt that my body was 'owned' by the U.S. Army!

But I do agree with you: slavery is ownership, the draft, my feelings notwithstanding (especially since I stayed around for a second tour, which was entirely voluntary), is not.

But we are getting off the subject! Now back to our regularly scheduled program.....

 

[Slartibartfast]

But we are getting off the subject! Now back to our regularly scheduled program.....

Ok, I will butt out. :2wave:

 

[cpwill]

Yes it does. There is no bodily ownership involved.

really. so you are free to take your body elsewhere then? or will you be declared a deserter in a time of war and shot?


either way the point remains: in a situation where millions of workers were seized by the government, international trade collapsed or was threatned by attack by armed nations, and entire continents were wreacked; that was still a better environment for business than FDR's New Deal.

 

[Slartibartfast]

really. so you are free to take your body elsewhere then? or will you be declared a deserter in a time of war and shot?


either way the point remains: in a situation where millions of workers were seized by the government, international trade collapsed or was threatned by attack by armed nations, and entire continents were wreacked; that was still a better environment for business than FDR's New Deal.

Is a speeder allowed to ignore a fine? We all must follow the law.

 

[SFLRN]

Is a speeder allowed to ignore a fine? We all must follow the law.

I don't mean to butt in, I was honestly hoping the economic aspect of this thread was still being discussed, I suppose that is not the case. To your point, both the speeding ticket and the draft are forms of coercion. The difference is that a draft involves coercion without the citizen doing anything to merit the coercive response. Conversely, when someone breaks the law (let's say by shooting someone) the individual has clearly done something (broken the law) or showed a lack of restraint that justifies the coercive response. I don't really think we should all follow the law, especially when doing so harms no one else, and one can do so without any significant chance of being caught.