• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

New Deal economics

David_N

DP Veteran
Joined
Sep 26, 2015
Messages
6,562
Reaction score
2,769
Location
The United States
Gender
Male
Political Leaning
Liberal
Krugman obliterates the individuals who continue to claim that FDR made the depression worse.
http://krugman.blogs.nytimes.com/2008/11/08/new-deal-economics/?_r=1
Basically, the anti-FDR argument on the data is based on (a) considering people employed by the WPA “unemployed” (even though they were getting paid, and building public works that are in use to this day) plus (b) always focusing on 1938 — the year in which the economy suffered a serious setback from the progress of the previous four years.

Let me offer two pictures, beyond what Eric provides, to clarify things.

First, here’s real GDP (in logs) from 1929 to 1941, plus the trend. (That’s to bypass the employment nonsense). You can see that the economy made up a lot of the output gap before the 1938 setback, but by no means all.

depression_gdp.jpg

Now, you might say that the incomplete recovery shows that “pump-priming”, Keynesian fiscal policy doesn’t work. Except that the New Deal didn’t pursue Keynesian policies. Properly measured, that is, by using the cyclically adjusted deficit, fiscal policy was only modestly expansionary, at least compared with the depth of the slump. Here’s the Cary Brown estimates, from Brad DeLong:
carybrown.jpg
Net stimulus of around 3 percent of GDP — not much, when you’ve got a 42 percent output gap. FDR might have been more of a Keynesian if Keynesian economics had existed — The General Theory wasn’t published until 1936. Note in particular that in 1937-38 FDR was persuaded to do the “responsible” thing and cut back — and that’s what led to the bad year in 1938, which to the WSJ crowd defines the New Deal.
 
is there a reason you posted this 8 year old article?

Several posters continue to claim that the "new deal" made the great depression worse. The data of the article doesn't matter when discussing the great depression that happened decades ago.
 
Several posters continue to claim that the "new deal" made the great depression worse. The data of the article doesn't matter when discussing the great depression that happened decades ago.

like who?
 
Krugman obliterates the individuals who continue to claim that FDR made the depression worse.
http://krugman.blogs.nytimes.com/2008/11/08/new-deal-economics/?_r=1

None of which proves jack-squat. Without the New Deal, the recovery would have happened much sooner as businesses put money into their businesses instead of into the gov't. All the public works projects could have been paid for by taxing people who were working (spreading the tax load to everyone), instead of gutting our ability to produce by punitively taxing the people who had the financial ability to put people to work. Every apologist "study" I've ever seen has ignored the truth of what would have happened without the New Deal and instead focused on cherry-picking data to make the New Deal look like a good thing (as this study does).
 
None of which proves jack-squat. Without the New Deal, the recovery would have happened much sooner as businesses put money into their businesses instead of into the gov't. All the public works projects could have been paid for by taxing people who were working (spreading the tax load to everyone), instead of gutting our ability to produce by punitively taxing the people who had the financial ability to put people to work. Every apologist "study" I've ever seen has ignored the truth of what would have happened without the New Deal and instead focused on cherry-picking data to make the New Deal look like a good thing (as this study does).
None of which proves jack-squat.
It immediately disproves the absurd claim that the new deal somehow made the great depression worse, based on looking at the available data.
Without the New Deal, the recovery would have happened much sooner as businesses put money into their businesses instead of into the gov't.
Absolutely absurd claim. The great depression had led to a massive drop in people's savings, it was a crisis, everyone was hit, businesses were cutting back, laying workers off, people were digging into savings, banks were failing. It was a vicious downturn, and it would've gotten worse without the government stepping in. People weren't spending, which led to businesses losing sales, well, you know the cycle.. There's absolutely no reason that businesses would put money back into the economy when people don't have any money to spend.
All the public works projects could have been paid for by taxing people who were working (spreading the tax load to everyone), instead of gutting our ability to produce by punitively taxing the people who had the financial ability to put people to work.
What kind of nonsense is this? The new deal was built off of a deficit, you know, spending past tax receipts. And you seriously believe that placing a tax burden on millions of unemployed people/people who've lost everything would somehow fix the problem of low demand? This is what passes for nonsense.
I've ever seen has ignored the truth of what would have happened without the New Deal and instead focused on cherry-picking data to make the New Deal look like a good thing (as this study does).
So where's your data? Are you going to show the downturn that occurred in the late 30's right after FDR cut spending.
 
FDR might have, or might not have made the economy worse, but he put food on the table for many Americans during a very rough time.

He took action and should be commended for it

2nd guessing is always easy for the folks that were not there.
 
And you can prove this how?

Short of having a time machine and going back in time to change the course of history, all I have to work with is the facts that the New Deal didn't fix the problem, that gutting the finances of the people who had the ability to create jobs was a bad thing to do, that the GD only ended when we were pushed in a war economy (that was prior to our entering WWII, when we started providing material for the Brits, French, etc.). It was when we put people to work in the private sector that things finally turned around.
 
Short of having a time machine and going back in time to change the course of history, all I have to work with is the facts that the New Deal didn't fix the problem, that gutting the finances of the people who had the ability to create jobs was a bad thing to do, that the GD only ended when we were pushed in a war economy (that was prior to our entering WWII, when we started providing material for the Brits, French, etc.). It was when we put people to work in the private sector that things finally turned around.

the evidence is that the New Deal did fix the problem. Our economy started to recover just after FDR took office, and it recovered until he was pressured into cutting deficit spending, then when he realized that cutting deficit spending was a mistake, he increased spending and the economy started recovering again.

When people say that government action was the cause of the problem, what they mean is the fact that we didn't start stimulous spending until 4 years into the recession, then we cut back the spending way to early.
 
seems like you did a pretty decent job explaining your position in that thread, why start another one?

Its what he does. Repeats himself again and again and again.

How many threads on " Fiscal stimulus " do you think he's responsible for ?

Take a wild guess
 
None of which proves jack-squat. Without the New Deal, the recovery would have happened much sooner as businesses put money into their businesses instead of into the gov't. All the public works projects could have been paid for by taxing people who were working (spreading the tax load to everyone), instead of gutting our ability to produce by punitively taxing the people who had the financial ability to put people to work. Every apologist "study" I've ever seen has ignored the truth of what would have happened without the New Deal and instead focused on cherry-picking data to make the New Deal look like a good thing (as this study does).

Well... yes. A certain % of economists say this.

Just like a certain % of 'scientists' claimed until the bitter end that cigarettes did not cause cancer. And some small % of scientists always are contrarians. And the cynical side of me wonders how they can reach the conclusions they did. And wonders what happens when you follow the money behind such 'scientific minds'.

Having studied Economic History in the graduate program at UT-Austin (not exactly a hotbed of liberal thought)... I would characterize such assertions as ideologically-driven, revisionist, cowflop (there we are in Texas again... or Central Oregon).
 
Back
Top Bottom