An argument I think destroys the Conservative approach to the Great Recession

[moonshot925]

I really don’t think the Smoot–Hawley Tariff Act exacerbated the Great Depression because trade was less than 5% of the US economy in 1929 and 1930.

[gatorslap]

@jtgain

Unless you smoke, chew tobacco, don’t provide health care to your employees, or don’t have health care personally. Other than those tax increases, he hasn’t increased taxes.

When combined with his tax cuts, it’s very much a net decrease. And raising the tobacco tax is hardly the polar opposite of supply-side economics.

[Sitnam]

@Beware_of_Doug

Similar or not, history today begins with World War 2. Anything further back and you might as well be talking about ancient Egypt.

Sure that’ll work too, I’m told by Republicans The New Deal didn’t work so we went to war with The Great Depression going on, and yet when the soldiers came back 4 years later we were not in The Great Depression.

Our economy was booming with production paid for by…

[moonshot925]

The New Deal was a huge failure.

GNP and production did not reach 1929 levels until 1939 and 1940.

[gatorslap]

Increasing the gross national product was not the primary goal of the New Deal.

[Sitnam]

@moonshot925

The New Deal was a huge failure.

GNP and production did not reach 1929 levels until 1939 and 1940.

Again, paid for by? I want you to tell us what private free market enterprise pulled us out.

[moonshot925]

@gatorslap

Increasing the gross national product was not the primary goal of the New Deal.

FDR said the goal of his New Deal was “relief, recovery and reform”.

Recovery means increasing production, consumption, employment and investment but the New Deal was not successful at doing this.

[gatorslap]

Sure, the National Recovery Administration was largely a failure. But I don’t see how you can argue that the New Deal didn’t increase production, consumption, employment, or investment.

[septimus]

I’m not sure I can remember an SDMB economics thread with as much disinformation as this one. :smack: I’ll content myself by linking to a simple statistic.

@moonshot925

The New Deal was a huge failure.

GNP and production did not reach 1929 levels until 1939 and 1940.

In the linked graph you can see that the 1929 peak was equalled by the end of 1935.

Oh! Mr. moonshot925 objects to the use of constant dollars ? Raise your hand if you think he’d use nominal dollars in discussing the Great Boom of the Jimmy Carter years! :dubious:

[puddleglum]

The economy recovered from the nadir by 1935 but it did not return to trend until after WW2. Usually recessions and depressions are followed by extended periods of economic growth that returns the economy to trend. The great depression was followed by a recession in 1937. This was after 4 years of the New Deal. This shows that the new deal was a failure in dealing with the Great Depression.

[Beware_of_Doug]

@puddleglum

The economy recovered from the nadir by 1935 but it did not return to trend until after WW2. Usually recessions and depressions are followed by extended periods of economic growth that returns the economy to trend. The great depression was followed by a recession in 1937. This was after 4 years of the New Deal. This shows that the new deal was a failure in dealing with the Great Depression.

The '37 recession happened because Congress started pressuring FDR to balance the budget, so he cut back on programs that had been putting people back to work and money back into the economy - and hey presto! More people out of work and less money in the economy.

[XT]

That’s debatable, but if anyone is interested here is the Wiki on the '37 recession:

Recession of 1937–1938
From Wikipedia, the free encyclopedia
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Unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted.

The Recession of 1937–1938 was an economic downturn that occurred during the Great Depression in the United States.

By the spring of 1937, production, profits, and wages had regained their 1929 levels. Unemployment remained high, but it was slightly lower than the 25% rate seen in 1933. The American economy took a sharp downturn in mid-1937, lasting for 13 months through most of 1938. Industrial production declined almost 30 percent and production of durable goods fell even faster.

Unemployment jumped from 14.3% in 1937 to 19.0% in 1938.[1] Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels.[2] Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors, hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumers’ expenditures declined, thereby leading to further cutbacks in production.

Interpretations

Economists disagree about the causes of this downturn. Keynesian economists assign blame to cuts in federal spending and increases in taxes at the insistence of the US Treasury,[4] while monetarists, such as Milton Friedman, assign blame to the Federal Reserve’s tightening of the money supply in 1936 and 1937.[5] Austrian school economist Johnathan Catalan assigns blame to the relatively large expansion of the money supply from 1933 to 1937. He also notes that the money supply did not tighten until after the recession began.[6]

[Clothahump]

@gatorslap

Obama hasn’t raised taxes.

Really?

(CBS News) WASHINGTON - Responding to criticism that Republicans are opposed to tax cuts for only the wealthy, Grover Norquist, head of Americans for Tax Reform, said President Obama has raised taxes on low-income voters.

Eight tax increases in the health care law “directly hit low-income people,” Norquist said Sunday on “Face the Nation.” “The president didn’t keep his word when he said he wouldn’t raise taxes on people earning less than $200,000 a year.”

[septimus]

Obviously Mr. Glum is not constrained by Mr. Moonshot’s mistake. However …

@puddleglum

The economy recovered from the nadir by 1935 but it did not return to trend until after WW2.

It is impossible that you clicked on the graph I linked to, and still made this statement. Note that that graph actually shows a trend line, and shows GDP surpassing that line in 1936. Even if you insist on defining “trend” your own way, it would be very hard to overlook the sharp upward slope in GDP, beginning mid-1933, and continuing (with brief slight interruption 1937-8) till the graph’s edge in 1940.

[Beware_of_Doug]

We don’t often see graphs that break out the 1930s. Usually they’re a century-long trend with the 30s at the trough. That’s why writers so often use the old favorite phrase “the depths of the Depression,” which can mean any year beginning with 193_.

[Omg_a_Black_Conservative]

@Aeschines

I think we need higher taxes on the rich not so much for revenue purposes but to prevent the accumulation of capital in too few hands and the building of dynasties (i.e., the rich gaming the system for themselves).

[Hentor_the_Barbarian]

@puddleglum

The economy recovered from the nadir by 1935 but it did not return to trend until after WW2. Usually recessions and depressions are followed by extended periods of economic growth that returns the economy to trend. The great depression was followed by a recession in 1937. This was after 4 years of the New Deal. This shows that the new deal was a failure in dealing with the Great Depression.

This is just bullshit that is easily refuted by simply looking at the data. GDP under the New Deal rapidly reached and then exceeded its pre crash high, by 1936. The 1937 recession was a great experiment in easing up on recovery measures in favor of deficit reduction.

The data is crystal clear. The New Deal worked like gangbusters.

[moonshot925]

Well the indices I will use is industrial production.

Index of industrial production

1929 = 100
1930 = 83
1931 = 68
1932 = 58
1933 = 63
1934 = 68
1935 = 79
1936 = 94
1937 = 103
1938 = 81
1939 = 99
1940 = 114

So industrial production did reach the 1929 level in 1937 but it fell back down in 1938 and 1939.

http://digital.library.northwestern.edu/league/le0281ai.pdf

[moonshot925]

@Hentor_the_Barbarian

This is just bullshit that is easily refuted by simply looking at the data. GDP under the New Deal rapidly reached and then exceeded its pre crash high, by 1936. The 1937 recession was a great experiment in easing up on recovery measures in favor of deficit reduction.

The data is crystal clear. The New Deal worked like gangbusters.

GDP is consumption + investment + government spending + (exports − imports)

If the government spends a whole lot of money to stimulate the economy, and yet businesses invest little and consumers spend little, it may very well be that the GDP can still show a sizable upward trend based on the government expenditures.

[Frylock]

@Omg_a_Black_Conservative

Can you elaborate on this? I am not sure what about that post is unclear or surprising.