"Cure for failed stimulus -- Spend more" says Zandi

Reply Thu 2 Jul, 2009 01:06 pm
dyslexia wrote:

The Reagan legacy was George H W "read my lips" Bush.

Obama should have checked history before he promised no tax increases for the middle class.
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Reply Thu 2 Jul, 2009 03:19 pm
Roosevelt did spend us out of the great depression when the government gear up for WW2 so the problem was not that the government spendings in the first part of the 1930s did not work it was that it was just not enough.

We should turn on the printing press as we did in the late 30s and 40s and spend on inter--structure like we did for tanks and planes.
Reply Thu 2 Jul, 2009 03:32 pm
I disagree. Defense spending tends to produce some economic stimulus, but the type Roosevelt initiated does little or nothing or can have a negative effect. But a careful reading of history--a reading with a fully open mind--throws out the window the conventional wisdom that government intervention is the way out of recession.

No matter how many liberals or fiscally liberal conservatives believe it, the fact remains that we cannot spend ourselves into prosperity using money that we do not have.

The prevailing view in many quarters is that the stock market crash of 1929 was a failure of the free market that led to massive unemployment in the 1930s-- and that it was intervention of Roosevelt's New Deal policies that rescued the economy. It is such a good story that it seems a pity to spoil it with facts. Yet there is something to be said for not repeating the catastrophes of the past.

Let's start at square one, with the stock market crash in October 1929. Was this what led to massive unemployment? Official government statistics suggest otherwise. So do new statistics on unemployment by two current scholars, Richard Vedder and Lowell Gallaway, in their book "Out of Work." The Vedder and Gallaway statistics allow us to follow unemployment month by month. They put the unemployment rate at 5 percent in November 1929, a month after the stock market crash. It hit 9 percent in December-- but then began a generally downward trend, subsiding to 6.3 percent in June 1930.

That was when the Smoot-Hawley tariffs were passed, against the advice of economists across the country, who warned of dire consequences. Five months after the Smoot-Hawley tariffs, the unemployment rate hit double digits for the first time in the 1930s.This was more than a year after the stock market crash. Moreover, the unemployment rate rose to even higher levels under both Presidents Herbert Hoover and Franklin D. Roosevelt, both of whom intervened in the economy on an unprecedented scale.

Before the Great Depression, it was not considered to be the business of the federal government to try to get the economy out of a depression. But the Smoot-Hawley tariff-- designed to save American jobs by restricting imports-- was one of Hoover's interventions, followed by even bigger interventions by FDR. The rise in unemployment after the stock market crash of 1929 was a blip on the screen compared to the soaring unemployment rates reached later, after a series of government interventions. For nearly three consecutive years, beginning in February 1932, the unemployment rate never fell below 20 percent for any month before January 1935, when it fell to 19.3 percent, according to the Vedder and Gallaway statistics. In other words, the evidence suggests that it was not the "problem" of the financial crisis in 1929 that caused massive unemployment but politicians' attempted "solutions." Is that the history that we seem to be ready to repeat?

The stock market crash, which has been blamed for the widespread suffering during the Great Depression of the 1930s, created no unemployment rate that was even half of what was created in the wake of the government interventions of Hoover and FDR. Politically, however, Franklin D. Roosevelt could not have been more successful. After all, he was the only President of the United States elected four times in a row. He was a master of political rhetoric. If Barack Obama wants political success, following in the footsteps of FDR looks like the way to go. But people who are concerned about the economy need to take a closer look at history. We deserve something better than repeating the 1930s disasters.
Reply Thu 2 Jul, 2009 03:40 pm
foxfyre said
Code:a careful reading of history--a reading with a fully open mind

neat idea, you should try it sometime.
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Reply Thu 2 Jul, 2009 07:41 pm
An interesting if not somewhat factually bereft argument there Fox.

Deficit spending vs unemployment

You will find that while the government was doing deficit spending in the 1930s unemployment dropped every year. When they reduced the deficit in 1938, unemployment went up.

All someone has to do is actually look at the trends for the numbers.
Starting the argument with some "prevailing view" that has no basis in reality doesn't change the reality of the numbers.

Of course, you have to actually look at the numbers to have an open mind. Simply accepting the word of someone else without checking doesn't quite count as being open minded.

I realize Fox will never see this because she has me on ignore.
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Reply Fri 3 Jul, 2009 05:16 am
Whenever someone comes out with that "a careful reading of history" crap, i know that rape is eminent, that partisan ideology is the culprit, and that the truth will be the victim.
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