So what does it suggest that the Great Depression was the longest economic downturn of the 20th century? Remember, unemployment was still 17% in 1939. Does comparing it to different conditions over time lead to the conclusion that Roosevelt was the worst economic steward of all? :dubious:
Presumably not. You still have to figure out which similarities and which differences to take into account. And that’s why it’s so hard to know what might have happened under alternate scenarios.
Except, as noted, when it doesn’t. Such as the late 1970s and the entire 1930s.
Thanks for modeling this principle:
Interesting framing of the matter you’ve chosen: Cite 1939 unemployment statistics that exclude those on New Deal work relief programs. Where have I heard that before? Oh, yeah: Conservatives cherry-pick 1930s unemployment figures in continued assault on New Deal. For more on the misleading assault on the New Deal by conservatives citing these unemployment stats, see here.
For a more comprehensive discussion, see Talking Points Memo, here.Basically, what you’re doing is trying to pretend that the New Deal didn’t lead to reductions every year in unemployment, until the 1937 undoing of progress via the attempt at conservative fiscal policy. Furthermore, if you don’t exclude those who were actually employed on work relief programs, the New Deal successfully reduced unemployment to 10% before jumping back up after 1937, still following the same sort of course that the GDP graphs show.
True. But the latter is a minority view.
None of the nine American recessions prior to the Great Depression were followed by government job-creation programs.
Wow. Yet another deliberately mendacious piece from the sewer that is the WSJ opinion pages.
The 1937 recession happened immediately after FDR reversed his expansionary fiscal policies. He raised taxes and cut spending in an effort to balance the budget, and the economy took a tumble. And the “smart” writers of this “fact-based” argument decide to define the New Deal as 1933-1939, which means they include that huge 180 degree change in policy, and judge FDR accordingly, without spending even a word discussing it. It’s the 800 pound gorilla in the room, a chief piece of evidence from the Keynesians, and they act like it doesn’t even exist while they simultaneously use that downturn in the numbers to bolster their arguments.
Utter intellectual bankruptcy.
As the OP mentions, this entire thing erupts out of the swamp of what passes as modern day political discussion, especially on TV and blogs. After the subjects of Vietnam and the Cold War the liberal and conservative talking heads love to debate and distort the Great Depression more than anything, especially given the current atmosphere.
Of course, many things are left ignored – like, is there any reason to suspect we should be making one to one comparisons, diagnoses, and cures between 1935 America and 2009 America?
Or suppose the “conservative” talking point is correct, and WWII is what really pulled us out the of the muck and FDR was just getting in the way and more useless than tits on a boar hog. Well, during WWII the United States was the closest it’s ever been to a centrally planned economy. I don’t think this is the solution they had in mind…you know, if we don’t pull the fig leaf off and say that both conservatives and liberals back what may be called State Capital, as long as its massive hose of money goes to their pet causes and friends. I mean, that’s pretty much been the* point* of government for more than a hundred years. The serious money, anyway.
These palatial discussions can get confusing sometimes.
Wow, 49-51 in one survey. My, how definitive.
Yes, those Ivy-league economists are well-known for their dishonesty. :rolleyes:
I don’t know enough about this subject to argue it, but the New Deal wasn’t some consolidated, monolithic plan. It was a whole bunch of programs instituted over a long period of time.
So, when you say “the New Deal worked”, well, what worked? Surely not everything?
Some of them are, yes.
Welcome to the real world, where we point out deliberate misrepresentations and unconscionable ignorance no matter where it comes from. I’m not going to bury my nose in their asses when they demonstrate so perfectly that they’re not honest with their arguments. But hey, that’s just me.
There are other factual distortions in that piece, even bordering on hypocrisy, but you can plug your ears and scream IVYLEAGUEIVYLEAGUE if you think that’s more persuasive.
No, not everything worked. The market controls from the NIRA and other related programs were in fact actively counter-productive.
But the monetary expansion with the dropped gold standard worked, which Lantern has already cited. Deposit insurance stabilized the financial sector by helping to prevent the bank runs that were so devastating. That helped, too. And the moderate fiscal expansion helped as well, at least until 1937 when that expansion was reversed and the country plunged again into another severe downturn.
If you want to include that complete reversal of policy as part of the New Deal, then you can make a convincing argument that the New Deal lengthened the recession. However, that’s including in the “Neal Deal” two diametrically opposite policies: the moderately successful fiscal expansion and the actively harmful fiscal contradiction in 37 that led to another severe downturn. I don’t think it’s technically accurate to use the longer definition of the New Deal, but it’s not a serious issue if they’re honest about the changes in policy. The serious problems come up when the partisan hacks always use the extended definition and then deliberately fail to mention this complete reversal in policy. See furt’s useless cite above and the toothless appeal to ivy as a follow-up. That kind of nonsense is all they have.
Some of FDR’s policies certainly did contribute to lengthening the recession. No doubt about that. But it is absolutely a far-out viewpoint, bordering on wingnuttia, that the policies before 1937 were ultimately harmful on net.
Welcome the the SDMB, where anonymous posters dismiss 49% of economists (according to BG’s cite) as “far-out” and think they’re not laughable.
It would help if you would actually read what I wrote. Or if you’re having trouble with the economics jargon, I will be happy to explain any of it. Here’s what I said:
It’s fine to include the reversal of fiscal policy in 1937 in the New Deal, as long as you explain that that’s what you’re doing. That 50% from BG includes those people. In fact, closer to 75% of economists deny that the New Deal lengthened the Depression if you don’t allow them qualifiers, and even the 25% that’s left has a reasonable case depending on the time period you’re talking about. Those details, which you are ignoring, are essential to the discussion. You can’t reasonably discuss the New Deal without pointing out that the anti-Keynesian tax increases and cuts in government spending were a reversal of previous policy.
It is not fine to ignore this turn-around from FDR. Quite to the contrary, it is deliberately mendacious or unconscionably sloppy for an expert to ignore this fiscal policy change, since that is the heart of Keynes, which means it is a part of the foundation of modern macroeconomics. The professors you cited know this very well.
They ignored it, which makes their argument shit. That doesn’t automatically mean that the conclusions of their arguments are wrong, but it does mean that their reasoning to reach those conclusions is entirely untrustworthy. It’s a huge sloppy mistake from the stimulus opponents, one in an ever increasing list. Which is unfortunate, because there are some reasonable arguments to make against this stimulus. But your cite doesn’t include any, and in fact quite deliberately ignores the primary issue we’re facing today.
I am ignoring the economics jargon because it has nothing to do with the point which I was making, which can be found in post #3 of this thread and restated several times since: namely that we don’t know the answer to the OP’s question, and likely will not anytime soon, given that there is much so much disagreement among the experts. Since you yourself concede that those arguing the New Deal was unequivocally bad have “a reasonable case,” it would appear we agree.
If you want to debate the stimulus, that’s another thread. If you want to argue that those 25% are wrong, go ahead, but I will pass; heavy economics are beyond me. What is not beyond me, however, is recognizing the difference between something that is a matter of settled science and something that is still in significant dispute even among experts. I don’t need to know economics to see that the OP’s question falls squarely in the latter, any more than I need to know biology to know that the Theory of Evolution is pretty much universally accepted among Biologists.
After which you then cited two people who misrepresent the issue.
There is disagreement, yes. But the clear majority of the experts favor stimulus, and many of the “experts” who are against it are making elementary mistakes. I’m not saying you should automatically bow to the majority, but if you want to rely on arguments against the stimulus, you should look elsewhere instead of coughing up a blind appeal to ivy.
Ah, another blatant misrepresentation. I see the problem wasn’t exclusively jargon. But to be clear:
There is no reasonable case to be made that the New Deal was “unequivocally bad”. None whatever. That is utter bullshit, and completely contrary to what I said.
There is no reasonable case to be made that FDR’s policies from 1933-1936 were “unequivocally bad”. None whatever. That is utter bullshit, and completely contrary to what I said.
There is not a reasonable case to be made that FDR’s policies from 1933-36 were, on the whole, negative. The monetary expansion from the dropped gold standard, by itself, pretty much outweighs all the other mistakes that were made. Check Lantern’s previous cite. In addition to that, there was also deposit insurance, and a moderate fiscal expansion. FDR made some early mistakes, but also did an incredible amount of good.
But yes, it is reasonable to conclude that on net FDR’s policies from 1933-39 lengthened the Depression. On net. The policies were not unequivocally bad, not in this universe or any other, but on the whole, he might’ve lengthened the Depression, in part due to the contractionary fiscal policy that was opposite of his previous plan. I think on net he probably did more good than bad over that entire span of years, but his obvious mistake in 37 does change the equation.
I don’t really disagree with this, but next time, you might consider re-evaluating your cites when they come under fire instead of trying to defend them. You just might be citing a couple partisan hacks.
Thank you for agreeing with my central point, and addressing the OP.
All else is noise.
Well WWII ended the Great Depression. Would the New Deal have done so? No one can be sure.
All Depressions end eventually some with better outcomes than others. New Deal programs clearly ended what before were caused the visible poor. By 1960 we had pretty much ended the idea of visible poor people in American.
What WWII did was bring an equality to people we in America had never known. It became very unpatriotic to be on the black market. So while just five years prior we had an inequity in the populatons of America, that was stabalized.
What WWII did was see rations where suddenly even if you were rich you couldn’t get meat or domestic help. Oh sure you could get them but people with many servants were looked down on, as “Surely those servants could be put to better use in War time industries.” Plus poor people now could go and get better wages. Sure rich people could get meat at the cost of a black market and the social stigma of being unpatriotic. By in large they had to make do. This brought rich people down a few notches. And despite the Great Depression’s enormity there were still many that had money.
In fact due to the New Deals areas such as West Virginia’s Appalachia (virtually the whole state), the Tennessee River Valley and Mississippi’s “the Delta” actually saw their living standards GO UP, not down, due to the programs.
Read Catherine Reef’s “Poverty In America” for a good look on poor people and poverty in the USA from Jamestown through the 80s.
Unless you’re citing a bunch of classical economists, such as Smith, Say or Bastiat, none of whom were beholden to a political ideology in the modern sense of the word, no matter what pet economic theorist you want to hold up as an authority he (or, less commonly, she) will almost certainly be a partisan hack to a greater or lesser extent.
According to one of Roosevelt’s main economic advisers Henry Morgenthau Secretary to the Treasury from 1934 to 1945: -
In the links contained in Hentor the Barbarian’s Post #23 about conservatives cherry picking unemployment figures from the New Deal period, the adjustments made to the figures are mostly fairly minor and transform the figures by only a few percentage points up or down.
Whether you have a 10% or 15 % unemployment rate, this does not change the underlying reality of a severe and apparently intractable economic recession. Nor does it change the reality that until the arrival of WWII no improvements in the unemployment rate during the Roosevelt regime were ever sustained or came close to achieving the employment levels that were the norm in the years before the start of the depression.
http://www.huppi.com/kangaroo/Timeline.htm
This has a useful timeline of the Depression and a particularly useful table at the bottom. The first thing that’s important to understand is how gigantic a hole the economy was in when Roosevelt took office. The unemployment rate was an incredible 25% in 1933. It started improving immediately and was 14% in 1937. 14% sounds terrible in most contexts but if you compare to 1933 that’s a 11% decline in just four years which is pretty spectacular. So in its first few years the New Deal was extremely successful by any reasonable measure.
Then you had the 37-38 recession and the unemployment rate climbed to 19% again. However if you look at the budget numbers in that table it’s pretty clear what happened. The deficit was more than 5% in 1936. Then Roosevelt was forced to reduce it to 2.5% in 1937 and then just 0.1% in 1938 which lead to a sharp recession. When the deficit climbed to 3.2% in 1939 the economy recovered again with GDP growing by 8% and the unemployment rate falling to 17%. Incidentally I don’t know if these unemployment figures were adjusted for government-created jobs in which case the improvement would have been even sharper. Regardless they tell a pretty clear story about the positive impact of deficit spending during the depression.
Intractible? As was written in the first link I presented:
It can be only willful ignorance that pretends there was not marked annual improvement subsequent to the onset of the New Deal.