That’s a miserable way to survive; but one does what one must.
It was only virtually over in hindsight. If you were in the military in 1944 you would have thought that there was a good chance you weren’t going to make it thru. Even in July of 1945 the troops from Europe were being shipped to the Asian Theater to fight the Japanese. My uncle was on a troop ship passing thru Panama when he heard the news of the Japans surrender and still didn’t believe that there wasn’t going to be any mopping up to do.
What school was this? My dad lived thru it too and told me that the depression was basically over in 1939. The family was from West Texas and the family farm blew away in the dust bowel so our entire family traveled around in a beat up truck looking for work just like in the people in the movie “The Grapes of Wrath”.
Of course.
I was referring to the economy improving from so many people having jobs.
My Father was en route to the Philippines when they fell, and ended up in Australia.
I grew up in Little Rock, AR. My Father’s family would have been in Missouri or Arkansas. Perhaps recovery was different in different areas?
Did Arkansas ever recover? 
Better than Mississippi or West Virginia, at least. 
Originally Posted by **Si Amigo **
Originally Posted by carnivorousplant
For some reason I’m reminded of a line from The Painted House:
Quote by** John Grisham**
I’ve been in the Arkansas delta on the way to Stuttgart, and it was grim.
Wonderful land for agriculture, you would think the residents would be a bunch of wealthy farmers.
The Great Depression dragged on for years and years, and there was nothing the government could do about it. Then WWII came along, and suddenly there was no more unemployment, and the depression disappeared.
What changed?
This is a really inaccurate portrayal of the Great Depression. Just look at the first two graphs on the Wiki page. Under Hoover, it’s getting worse. The FDR’s new deal comes in, and things start to make a turnaround. Then the Republicans demand a reversal in 1937, and unemployment goes back up and GDP goes back down. FDR’s policies go back in effect a year later, and the trend reverses.
The US didn’t enter the war until 1941, and while there was some war spending through lend-lease, the trend is that we would have been out of the depression even without WW2.
Just this quote from the Op-linked article
By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.
leads me to infer on sight that it is RBS, because, IIUC, unemployment in that era was calculated/estimated very differently than it is today. I have been led to understand that those working on-the-ground in Roosevelt’s recovery efforts continued to be recorded as unemployed, but I could have misunderstood that point.
Nonetheless, comparing unemployment figures seems dubious at best – I assume they used raw numbers, because otherwise they would note that the figures were reconciled one way or the other.
I can see from the graphs that under Roosevelt’s employment programs thing improved for a while, but then got worse again after concerns about the debt forced him to cut the budget.
Then, right around 1941, unemployment dropped to nearly zero, and GDP doubled.
During the Depression, unemployment ranged from 15-20%. After 1941, it fell to almost nothing. Are you saying that would have happened anyway, without WWII?
So, you agree that government spending can reduce unemployment and raise GDP, and that cutting government spending can cause unemployment to rise and and lower GDP? Looks like we’re on the same page.
WWII was just government spending with some explosions attached. Think how much the economy would surge if we had put that spending into productive use instead of making things designed to be destroyed. That’s not to say WWII was a bad use of money, just that it doesn’t really matter where the spending is going to stimulate the economy.
We have to make at least a token effort to separate the effects of fiscal and monetary policy.
We can point to changes in the fiscal picture in 1933, but at the same time, there was a regime change in monetary policy. It was like the entire world shared a single monetary policy when so many countries were under the gold standard. FDR dumped the gold peg, cut the golden fetters on the economy. A similar change was happening internationally, and it looks very much like the economies that recovered most quickly were the ones that rejected the shiny metal most quickly. (A “perfect correlation” among the G5.) So how does spending fit into that? I guess we could make the argument that abandoning gold can make fiscal spending easier, but that’s a deeper argument, and it requires deeper evidence. We can’t just point to the spending under FDR without considering the monetary factor.
We have to make at least a token effort to separate the effects of fiscal and monetary policy. Yes, the conservatives of the time forced cutbacks in 1937 and the economy subsequently tanked. That’s absolutely true. But monetary policy was tightened at the same time. It’s not just a matter of comparison between more spending and less. More was happening than that, and we have to look at the specific nature of each change. If monetary policy has fundamentally deeper effects, then we might very well have seen a dip in 1937 regardless of what happened to spending. It’s just that politicians tend to take an everything-and-the-kitchen-sink approach to policy, and have a habit of doing a lot of things simultaneously. But by taking a tighter view of the Depression, we might get an idea of which cause was more important.
The same applies to more recent troubles. Comparing the statistical aggregates, the eurozone area and the US might very well have had similar levels of austerity. Yet the US recovery has been generally stronger. So what’s the difference? Pretty obviously central bank policy. The difference has been money, rather than spending.
The first general theory of entire economies (as opposed to markets within economies) was published in 1935. Before that, economists didn’t have a clear idea what to do. Sensibly, Roosevelt advocated policy experimentation. Some of the experiments went FUBAR.
The good stuff were leaving the gold peg, increasing spending and establishing the FDIC and SEC, thus fixing endemic problems in US financial institutions.
The bad stuff were tax increases and supply side policies. The supply side policies were intended to boost prices and wages, but they did so by contracting the supply of goods and increasing the cost of production. That what the National Industrial Recovery Act (NIRA) did. That’s what those 2 authors focused on. There is nothing like that being advocated today, to my knowledge. (Sure, there may be harmful policies but at an entirely different scale.)
The anti-competitive provisions of NIRA were struck down by the Supreme court in 1935. The authors of the study cited would have to contend with that fact. It’s possible: I’ve heard claims that in effect some of the effects stuck around for reasons that I’ve forgotten. One of the authors claimed that, “The economy was poised for a beautiful recovery…” That’s a flag. Bernanke noted in the 1980s that whole regions of the US were left without access to financial services due to massive bank failures spiraling out of control until March 1933. That is devastating and the 2007-2009 experience shows that loose monetary policy and loosened fiscal policy are not sufficient to establish a robust recovery (though after 2009 fiscal policy generally tightened once state and local spending is factored in).
If the authors are claiming that the economy might have recovered faster if Roosevelt kept his good policies and skipped his bad ones, that would be one thing. But the link at least doesn’t indicate that. I have not read the underlying paper, but there is something dubious about all this.
Well, we know that fiscal policy matters. Within the Eurozone monetary policy is held constant. What remains is a pretty tight relationship between fiscal contraction and economic collapse. Scatterplot here: I Guess It's a Form of Flattery - The New York Times
Anyway some careful econometric analysis over the next few years might be revealing. I’m especially interested in teasing out the effects of unconventional monetary policy at the lower bound. (Yes it’s a challenging task, but I’m hopeful; no, no snark is intended.)
I feel as though I began a thread on calculating a simple ballistic arc, and folks began discussing quantum mechanics. 
We should absolutely expect a correlation within the currency union. As you said, that means you are controlling for monetary policy, by definition, but unfortunately it still shows nothing about monetary offset for the eurozone in toto. The countries with the most expansionary fiscal policy would be putting pressure on the others, and the resulting correlation – which is real and significant just as we should expect – would essentially be a transfer from the austerians to the others. Nominal GDP/inflation for the currency union as a whole would still be determined by the central bank, and then national policies would strongly influence their relative slices. The Germans telling the PIGS to cut spending, given a contractionary monetary policy from Frankfurt, is equivalent to them saying that the pie will stay small, and that the Germans will take the largest slice.
A comparison of different monetary regimes is going to give an entirely different result.
People don’t take monetary offset seriously enough. This is issue number one, the single most important problem for Keynesians to confront. I could be wrong, but at this point I seriously doubt it. If they had any ammo, they should’ve fired it years ago. Instead they’ve been ignoring it for years.
The easiest way to tease out statistical issues would be an explicit target of nominal spending. But still, what we’ve already got right now should be pretty damn convincing to anyone who is paying attention.
Experts on economics are rather like Harris K. Telemacher in that they can tell you what is going to happen, but the likelihood that that will happen is comparable to a prediction concerning which way the wind will be blowing at 4 tomorrow afternoon. They are extremely good at analyzing what did happen, but in terms of applying that analysis to useful real-world strategies (as in learning from past mistakes in order to avoid them next time around), well good luck with that. Seems like there is a lot of this “opinion” stuff getting in the way all the time.