What has impressed me in this biography I am reading is how FDR didn’t have too much of a plan at all. He was willing to try this and then that. Just like Lincoln in that he spread the influence of government but did not want to be a dictator.
Of course government never shrunk back to its old roles, but both men were uncomfortable with the methods they ended up using.
David Sirota demolishes this argument much better than I could:
A minority of 27 percent. Yes, I can come up with examples where about 27% of the population that are polled are crackpots. So, yeah, I’d call them crackpots. As to the other 22 percent “agree with provisos” you cannot count them among agreed until you know what the provisos are, which you don’t because the survey doesn’t say, which makes the data useless to a statistician, all of whom require the context of the question to interpret.
Historians agreed by the same proportion of 27 percent, 73 percent, not being confused at all, disagreeing.
Once again, only 27 percent agreeing in both groups is telling. This is not statistically different than one might expect from just political bias from the point of agreeing. But from the point of disagreeing, it is substantially telling that such large majorities cannot be buffaloed into push poll agreeing with whatever crap questions were asked: tellingly, the non-political aligned middle thinks it is mistaken.
Was sampling of all tenured economic Phds at accredited universities undertaken, or was this a select group? Answer, it was a select group of 90 such economists and 88 historians. That is a statistically invalid survey on its face. 500 is about the minimum you can use to get a valid survey http://www.math.temple.edu/~zachhh/ch6.pdf (see page 14). How Do Fears Change with Age? | Science Project lists margins of error for various sample sizes.
Then you combine the 10 percent margin or error with the fact that the “resolved” question in the OP “Did FDR Prolong the Depression?” was not asked at all in the question and the language of the question is of extreme importance in a survey, the survey is more meaningless. When you look at the actual survey questions, you see that they are written by Friedman, Schwartz et al, the usual right wing propaganda hacks and not noted for scholarship on public issue questions. (See Krugman on Friedman Who Was Milton Friedman? | Paul Krugman | The New York Review of Books) While Friedman was capable of scholarship, in his old age, he enjoyed being a propagandist more.
The reliance on polls of economists who have not studied the issue is meaningless. Rigorous economic analysis and published peer reviewed papers are more meaningful. The rigorous economic analysis by Cole and Ohanian that everyone relies on here isn’t really that: They assume that during Roosevelt’s term constant economic growth at a 1929 level is to be presumed, ignoring the fact that Roosevelt didn’t take office until March of 1933. And resuming productivity was not Roosevelt’s top priority. Roosevelt stated his goals of the New Deal http://www.nps.gov/fdrm/generation/newdeal.htm and getting people housed, clothed and fed were top. He did that. Millions of Americans would have been much worse off without government jobs to do just that. The problem with Chicago school economics is that it assigns no significant value to those goals when compared to the Chicago school’s goals of low inflation and no regulation, as though people had voted for the Chicago school, when they had not, instead of Roosevelt, whom they had voted into office.
Oh, come on. That’s ridiculous spin. The fact is, only 51% of economists disagreed outright with the proposition. The other 49% agreed with it in whole or in part.
The opinion of historians is irrelevant. They have no particular training in economics, so why should I listen to their opinion on economic policy? And I would certainly carefully examine their opinion based on the fact that historians as a profession tend to lean heavily to the left.
Look, there’s a lot we know about economics now that we didn’t know then - enough to know that some policies, such as the Smoot-Hawley Tariff which predated the New Deal and the various price controls implemented as part of the new deal, were absolutely destructive to the economy. Other policies, such as big spending on ‘jobs’ programs, probably helped in the short term. Those academics who agree ‘with provisos’ are probably thinking along these lines - it was a mixed bag, but on balance it certainly didn’t help much if at all.
The other half of economists think it helped. Given that this is a politically charged question, and economists can be as partisan as anyone, my guess is that they split down partisan lines.
But to characterize this as a ‘crackpot theory’ is ridiculous. It’s a serious question that has been studied at great length by economists, with no overwhelming consensus being found. That’s the complete opposite of a crackpot theory.
It’s not ridiculous at all. We have no idea what the “in part” is counting. Not at all.
Are they including the tax increases from 37 as part of the New Deal? Technically, they weren’t, but they’re often included anyway because those tax increases did come from FDR, even if they were a reversal of previous policy. And they inarguably lengthened the Great Depression. This is exactly the sort of information we need to verify the trustworthiness of the survey, and yet we can’t do it. Put in those qualifiers, and you’d certainly see different results.
As it stands, though, that survey just doesn’t prove what you want. Even if you think “crackpot” is too strong, it’s still markedly abnormal to claim that the negative effects of the NIRA, which was ruled unconstitutional fairly quickly, outweighed the extensive benefits from monetary expansion and the dropped gold standard, the benefits from the limited fiscal expansion, and the benefits from bank stability in the form of deposit insurance.
I know that conservatives think that they win when they can lie their way to within 49 percent. But here the 49 percent isn’t even asked a question with FDR in the terms of the question. Stop lying about that. The exact question is important. And you cannot accept those provisos, half your votes, if you don’t have the ballots to see the question. And you cannot use such a small sample and call it statistically meaningful, particularly in light of the historians tracking the same thing. You reject historians (handpicked and not randomly sampled at that) to economists, again, 90 handpicked economists. You treat this with the same respect that you would a random sample of over 1000 conducted by a peer reviewed science journal. The reason I call it crackpot is because it is utterly fixed for the above reasons, all of which is utterly unanswered in your begging me for mercy and to agree. A poll of 90 people, even if random, is next to worthless. A poll of 90 people hand picked off a list is laughable. Conservatism fails because conservatives like the ones in this thread consider such sloppy statistics to be some kind of science, without even having the ability to recognize these flaws turn the exercise into propaganda. A sophomore at my alma mater would get a C minus for making these kinds of errors. What kind of conservative relies on C minus material to set policy? The ones posting here.
Have all these rich conservatives sent actual questionnaires to a random sample of all economists tenured at accredited universities? No. We are talking about an initial cost of about $2,000 for photocopying and postage. Have we hounded any who haven’t sent it back out of this random sample? No, it wasn’t a random sample.
The reason that a liberal such as myself (that is a modern liberal) has such contempt for modern conservative thought is that modern conservatives consider C minus to be top notch if it agrees with their preconceived notions.
Are there peer reviewed articles that use computer models to compare other economic program possibilities for the Great Depression to the one actually used? Not cited by the thesis referred to by the OP. Are there rigorous analyses to support that conclusion? No, just an article to alumni about what two profs are doing. That isn’t science, that’s crap. It’s a bunch of Chicago school economists setting up a survey with questions written by the head Chicago school economist and sent to 90 other Chicago school economists (for all we know that is what they did). And even then 73 percent don’t agree completely, 23 percent having serious reservations, re-written as provisos. This isn’t scholarship, it’s propaganda. Only a conservative with the intelligence of Bill O’Reilly and the shame of Nancy Grace would pass this off as economic analysis. Milton Friedman of 1960 would give a rich alum’s kid a C minus on the paper. Only Milton Friedman the propagandist of the mid 70s and thereafter would applaud this crap.
As for discounting historians, in favor of a narrow sample of a narrow school of economists, that is just a convenient crackpot argument of the moment. The historians with a 10 percent margin of error, are still well in the majority in rejecting the thesis out of hand in interpreting the proposition. None have provisos. The 27 percent agreeing are well within the margin of error of conservatives in the general population. And even though the conservatives have embraced this study, you suddenly find half of those survey should be discarded entirely for the sole reason that you don’t put any credit in the opinion of a historian on a question that involves economics and history because Phd historians are suddenly unqualified to have opinions on historical matters that involve economics when both fields come into play, so you embrace a minority of 27 percent, including those with unspecified reservations to pretend you have 49 percent and call that a consensus. Is it a wonder that I think you’ve got confirmation bias?
The fact is that the entire world was in a worldwide depression and using the tools available at the time, Roosevelt kept the nation employed, clothed, housed and fed, preserved the US as one of a half dozen real democracies in the world and got the US ready to produce enough to beat Tojo and Hitler at the same time at opposite ends of the earth all from a wheelchair. Roosevelt reveled in the hatred that the crackpots kept coming his way for twelve years. He’s no longer around to do that reveling, but I am around to celebrate that Roosevelt is better than any conservative who can be compared to him. By the time I’m ancient at mid-century, the modern consensus that Roosevelt is one of our best three presidents ever (along with Washington and Lincoln) will remain exactly that. The conservatives who make crap up, like in the article referenced in this thread will be forgotten because they contributed what conservatives feel they owe society: nothing.
The Sacred Stone, you are arguing about something retarded.
How about we actually rehash the policies and see for ourselves? At the least, I’d like to address specifically the claims in post #5 (which makes a great job ignoring monetary policy, which is arguably the biggest factor in the government’s affect on macroeconomics)…
What is meant by: "They claim that the New Deal “cartelization policies are a key factor behind the weak recovery”? FDR’s policies encouraged cartels?
“They suggest that without Social Security, work relief, unemployment insurance, mandatory minimum wages, and without special government-granted privileges for labor unions, business would have hired more workers and the unemployment rate during the New Deal years would have been 6.7% instead of 17.2%.[55]” – minimum wages and unions can be very been counterproductive, but it’s really a matter of degree. (A $200/hr minimum wage will screw the economy up pretty quick, but $7/hr hardly affects it.) What did FDR actually do? – However, I don’t see how welfare increased unemployment. Unemployment is people who want to find a job, but can’t. Welfare makes people not want to find jobs, so it should reduce ‘unemployment’ (and channel borrowed money into people who’ll spend it, which does as much good as public works). This hate for welfare definately sounds like what a partisan conservative might say out of ideology.
In general, what did FDR do?
I’m trying to look at his monetary policy, which I feel is a huge factor. Supposedly he was great at loosening it. Looking at inflation data, that really doesn’t look like the case. There was moderate inflation for some of his years in office, but nothing to compensate for the huge deflation in '31, '32, and '33. Is this what people are referring to when they say “he didn’t go far enough?”
As was mentioned, despite the “new deal” experimentation, FDR persued a “tight money” policy, just as Hoover had done. The result was deflation-farm prices dropped and commerce ground down. Demand dropped, and industrial production dropped. WWII saved the whole game-all of a suddent the gov placed billions of $ in orders-and the economy responded by hiring and opening plants.
It is a sad fact, but WWII solved the Depression-none of FDR’s New Deal gimmicks had any appreciable effect on the depression (except by enshrining myths about how the government is so good at managing the economy).
Even if that’s true, what caused the WWII boom? Government (that is, military) spending!
Ed
You are wrong about FDR pursuing a tight money policy. Monetary policy is conducted by the Fed anyway but by leaving the gold standard in 1933 FDR allowed a looser monetary policy. From the Romer article:
So why was there little inflation? The economy obviously didn’t grow 40%. Did it all end up in bank reserves and mattresses, not lent out? In the end, it still looks like it wasn’t enough. (Or that his other policies really put a halt on the flow of money.)
The right wing needs to discredit the New Deal because it contradicts policy that is driven by free market ideology. The one lingering New Deal policy that has been hard to eliminate is social security, which serves as a reminder of Roosevelt’s impact on American society and the role of government. The only way the hard right can eliminate social security is to bankrupt the program and convince the public that it is part of the welfare state, unsustainable and un-American.
It is easy to make a claim about Roosevelt’s policies based on conjecture. It is more difficult to discredit the rise of a thriving middle class and the economic stability enjoyed by most Americans because of Roosevelt’s policies –-especially fiscal policy–after WWII.
The impact of the New Deal on economic recovery is debatable, but everyone agrees Roosevelt’s response to the war did lead to economic recovery, so either way he deserves credit.
The money was hoarded (by banks fearing “runs”). The real key to what was going on was the drop in real estate prices: prime farm land dropped in value (nobody wanted to produce food that was falling in value).
and homes dropped-my paternal grandfather bought his house in 1933 (for $11,000). It solde (new) in 1924 for over $24,000! That is deflation.
I will remind you that the Social Security program received decades of additional life because of reforms proposed by the Greenspan Commission - appointed by Ronald Reagan and passed overwhelmingly by Congress with big majorities of both parties. Since Reagan is certainly the most conservative postwar president, your argument starts to break down some.
As for bankruptcy, the biggest problem facing Social Security isn’t right wingers but demographics, as I’m sure you will have to admit.
Look, I haven’t made outlandish claims concerning Roosevelt here, so perhaps you ought to refrain from such yourself. I will give Roosevelt credit all day long for wartime leadership - but that doesn’t get him off the hook for everything he did in his administration. The man made plenty of mistakes, and both parties have learned from them, I hope.
In any case, if the economy stumbled and bumbled until war production ramped up in 1940, we can credit the emergency for getting people to work. And it would be helpful to look at what happened in the years prior to that - including what went down in the terrible Recession of 1937, where many of the gains of the New Deal were completely wiped out.
In addition to hoarding, hourly wages remained at or near the 1932 lows, putting an iron-clad ceiling on purchasing power. Indeed, the slow drop in unemployment was probably due in large part to continued low wages.
(Anecdote: It was quite common in the late '30s, especially for young people, to work a full-time job and still be unable to buy lunch.)
The minimum wage did not get put through until 1938, and was all of 35c an hour. Even at that level, there was ferocious opposition to the bill.
Yep - and with food expensive and cigarettes cheap, lots of people were smoking at midday to calm the hunger pangs.
Probably better to look to economists than historians for insight into that period. There was so much going on in Europe at that point that domestic events are pretty much a blank in the national memory.
I think it is more pent up demand from the war, combined with savings. During the war there were massive war bond drives, to help support the needed deficit spending. This was helped by the fact that most of production went into war material. It was difficult or impossible to buy a car or a big appliance. When the war was over, the reunited families had money to buy cars when they became available. Plus, there were veterans benefits which also helped inject money into the economy.
Truman, remembering the recession at the end of WW I from the sudden reduction in federal spending, deliberately stimulated the economy to assist in this, and did a very good job of it. I think economic theory was a bit more sophisticated than it was in 1933.
There is no way of giving a definitive answer to the question. The 1932 recovery in the stock market meant little. That is the difference between Wall St. and Main St. There was still 25% unemployment. If you are seriously interested in the question, read “The Defining Moment” by Jonathan Alter. FWIW, he felt that Roosevelt was too concerned with balancing the budget (really) to fully engage the Depression. And when recovery was under way in 1936 he started raising taxes and almost blew it. I was born in 1937 and my father said there was a second depression then and Alter confirms it. He feels that the NRA was an abject failure (soon declared unconstitutional and abandoned anyway), but that the CCC was a brilliant success since it not only put a half million people in the work force (it sounds like a drop in the bucket, but they had a significant multiplier effect) but also produced infrastructure that was valuable for several decades. Of course, the bridges and dams they built then are crumbling and this would be a good excuse to replace them now. Most of what he did was flying blind, but he was already to abandon something that didn’t work and try something new.
Many observers at the time believe he averted a revolution. We can never know, but maybe they were right.