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"The stock market crash of October 1929 and the Great Depression were not the same thing"
Economic historian Amity Shlaes had an extremely valuable article in the Wall Street Journal on Saturday reminding us that "the stock market crash of October 1929 and the Great Depression were not the same thing." As she notes, it was the Depression's long duration that made things so bad. And the evidence is overwhelming that FDR's New Deal prolonged the Depression.
Roosevelt's first effort at raising wages to revive the economy, the National Recovery Administration, was declared unconstitutional. Next came the Wagner Act, which led to massive unionization. Wages increased and unemployment even dipped a bit, but productivity did not rise in commensurate fashion. This contributed to companies' struggles, as Lee Ohanian of UCLA has shown. Industrial production plunged. In 1938, John L. Lewis of the CIO attained the apogee of his power, but unemployment was again at that appalling two in 10.
The signal Washington emitted in these years was clear: Not Open for Business. A poignant moment came in August, 1937, when [former Treasury Secretary Andrew] Mellon died in Southampton, N.Y. When this star of their old firmament winked out, investors felt themselves in uncharted waters. Other negatives -- rising labor costs, regulatory tightening, a doubling of reserve requirements for banks -- suddenly seemed insurmountable. The market dropped from 189 in August to 120 by the next February, well below the lowest ebb in 1929.
Whole thing here. reason's interview with Shlaes here.
Abdul|9.23.08 @ 11:16AM|#
It was WWII that ended the Great Depression. What we need now is
a president who can involve us in a globe-spanning war to alleviate
our economic woes.
And I think we all know who that candidate is:
Draft Dick Cheney!
Lefiti|9.23.08 @ 11:22AM|#
"And the evidence is overwhelming that FDR's New Deal prolonged
the Depression."
What fucking loony-bin twaddle. You assholes better hope your
groupy morons pony up some cash because you're never going to make
money peddling this fairytale.
Alan Vanneman|9.23.08 @ 11:36AM|#
Amity's grip on causality is, shall we say, less than overwhelming. The "Roosevelt Depression" of 1938 was not due to Big John's apogee or the winking out of poor Andrew, but rather Roosevelt's decision to go with the "conservative" policy of cutting federal spending. It's very true that Roosevelt failed to end the Depression, but the only policy we know of that would have ended it is massive federal spending, which did end the Depression via World War II. It's "forgotten" by conservatives like Amity that deficit spending was anathema to conservatives back in the day. It wasn't until Reagan took over that Republicans decided that deficits didn't matter.
Lefiti|9.23.08 @ 11:36AM|#
Sure, a minority of economists believe that the New Deal didn't work and may have prolonged the depression, but overwhelming evidence? That's what's wrong with you fucking right-wing cultists. Any evidence that suppoorts your cherished dogmas is overwhelming. Buying into your rigid fundamentalism means ignoring anything that contradicts it. Assholes.
Waves of Fear|9.23.08 @ 11:39AM|#
It wasn't the car hitting me that broke my legs.... it was the curb that the car's impact threw me into at a high rate of speed. Even then, can we really blame the curb? I mean, if it wasn't for the momentum and the kinetic force, I'd have been fine.
Lefiti|9.23.08 @ 11:41AM|#
And fuck you Episiarch, you stupid mother fucker. Keep peddling that batshit crazy fucking bullshit. This place is a fucking lunatic asylum. Fucking morons. Fuck all of you assholes.
Potts|9.23.08 @ 11:41AM|#
Buying into your rigid fundamentalism means ignoring
anything that contradicts it.
And exactly how does this not apply to the dogmatic left?
Fundamentalists come in all stripes, dingbat.
TallDave|9.23.08 @ 11:46AM|#
Don't forget the Smoot-Hawley protectionist trade bill!
Or, as we'll be calling it next year, the Reid-Pelosi bill.
Barack Obama|9.23.08 @ 11:48AM|#
And I think we all know who that candidate is: Draft Dick
Cheney
Hey, Cheney only wanted to attack our enemies. I have also promised
to attack our allies!
It's time to start dropping 500-lb laser-guided Hope and Change
everywhere again! Yes We Can!
I'm Barack Obama, and I approved this message.
Neu Mejican|9.23.08 @ 11:50AM|#
Alan's got it.
Underwhelming, overwhelming, same diff, right?
Somehow the discussion of the scienceness of economics from
yesterday seems apt
I liked this discussion
http://leiterreports.typepad.com/blog/2004/10/is_economics_a_.html
Soviet Union|9.23.08 @ 11:50AM|#
It's very true that Roosevelt failed to end the Depression,
but the only policy we know of that would have ended it is massive
federal spending,
Da, Comrade. It worked wonders for us.
|9.23.08 @ 11:51AM|#
"The New Deal" is far too broad a term to be useful here. Did
the wage and price controls of 1933 restrain the recovery? Yep. And
then they ended. Did the WPA? Nope. The FDIC? Nope.
There were certainly policies that didn't work, and that were even
counter-productive. That's probably why the New Deal evolved so
much over time.
Neu Mejican|9.23.08 @ 11:53AM|#
but, but joe, it is not the particulars that matter it is the
battle of ideologies.
;^)
|9.23.08 @ 11:53AM|#
Go Lefiti!
And you Reasonoids thought I was an in your face leftist...
I shudder to say this with TAO no doubt lurking about ready to
pounce on evil elitists, but I can find no mention of Amity Shales
educational creds on her bio, she seems to be a financial
journalist, and I hate to say this but usually very few books by
journalists shake up the field of economics or provide what that
field would call "overwhelming" evidence to turn accepted
historical narratives on their head. Don't get me wrong, I have not
read the book, maybe it's utterly convincing, and maybe she has a
Phd from University of Idaho or something, but it's a bit
smelly...
http://www.amityshlaes.com/bio.php
Some Conservative Math|9.23.08 @ 11:56AM|#
It's "forgotten" by conservatives like Amity that deficit
spending was anathema to conservatives back in the day. It wasn't
until Reagan took over that Republicans decided that deficits
didn't matter.
No. Here's a helpful primer on conservative ideology:
Stronger military > higher deficits.
Lower taxes > higher deficits.
Lower deficits > social programs.
|9.23.08 @ 11:56AM|#
"Don't forget the Smoot-Hawley protectionist trade bill!"
I LOVE Smoot-Hawley, the all purpose libertarian depression/stock
market crash-explainer. And it is fun to say.
Smoot-Hawley. Smmmoooot-Hawley.
Neu Mejican|9.23.08 @ 11:57AM|#
The deity of the markets, the Alan Greenspan of the 1929s,
was Andrew Mellon.
Does Greenspan get to take some of the blame for the current
situation. I haven't heard people bad-mouthing him yet.
|9.23.08 @ 11:57AM|#
Steal money from some people to give to others, and if it doesn't seem to be doing enough, steal more. Alternatively, be in charge of the money supply, and print as much money as you need. If it doesn't seem to be doing enough, print more. Ideally, do both. Plenty of people will beg you to save them from the inevitable crashes, and if the worst happens you'll own all the big weapons anyway.
fyodor|9.23.08 @ 12:00PM|#
but, but joe, it is not the particulars that matter it is
the battle of ideologies.
Well if one's "ideology" is based on the observation that the
government generally makes such mistakes more often than not and
thus will likely make things worse by getting involved again, one
might hope to make that point without being dismissed as a mere
ideologue.
Neu Mejican|9.23.08 @ 12:01PM|#
MNG,
she seems to be a financial journalist, and I hate to say this
but usually very few books by journalists shake up the field of
economics or provide what that field would call "overwhelming"
evidence to turn accepted historical narratives on their
head
The thing is, one of the critiques of economics as a science is
that it doesn't seem to outperform common-sense ideas about
economic behavior. It's predictions are either obvious
folk-psychology-based guesses or so loaded with untenable "all
things being equal" assumptions that never obtain to make it
resemble alchemy or string theory more than science.
Given that, the understanding of experts is really not that much
more useful in explaining things than the understanding of
laymen.
Some would argue.
idiotface|9.23.08 @ 12:01PM|#
Does Greenspan get to take some of the blame for the current
situation. I haven't heard people bad-mouthing him yet.
Sarcasm? His rate cuts after the dot com bubble definitely have
something to do with the current situation. However, there's plenty
of blame to go around.
|9.23.08 @ 12:01PM|#
One problem libertarians have is that people know that there was
a time of relatively more laissez-faire policies and then there was
this awful event (the Great Depression), then there was this
massive government intervention (New Deal), and since then there
has been nothing like the awful event.
Ironically we "know" that there was this sharp turn to massive
intervention in part because libertarians have and still do bitch
about it all the time. So the Great Depression kind of becomes for
hard core libertarians what all that stuff we know about Joseph
Smith detailed on South Park is for Mormons.
|9.23.08 @ 12:02PM|#
Roosevelt's first effort at raising wages to revive the
economy, the National Recovery Administration, was declared
unconstitutional.
You can't say this administration learnt *nothing* from
history.
Barack Obama|9.23.08 @ 12:04PM|#
Steal money from some people to give to others
That's another Rovian attack from the failed Bush era. Let's get
past these tired scorched-earth politics of yesterday.
We need hope and change, not negative attacks. As my Communist
mentor Frank Marshall Davis used to say, "From each according to
his ability, to each according to his need."
I'm Barack Obama, and I approved this message.
fyodor|9.23.08 @ 12:04PM|#
I hate to say this but usually very few books by journalists
shake up the field of economics or provide what that field would
call "overwhelming" evidence to turn accepted historical narratives
on their head.
Is the "accepted historical narrative" that World War II brought us
out of the Depression?
I wouldn't want to question the accuracy or usefulness of THAT.
Fluffy|9.23.08 @ 12:04PM|#
It's very true that Roosevelt failed to end the Depression,
but the only policy we know of that would have ended it is massive
federal spending, which did end the Depression via World War
II.
OK, here's the problem with that line of argument.
As joe would tell you, there had been depressions before.
If only massive federal spending can end a depression, how did any
of those depressions end? Shouldn't they have been eternal?
Let's play correlation and causation for a second. I'll start by
pointing out that the Great Depression lasted longer than any of
the previous US depressions. Now I'll point to the New Deal, which
was contemporaneous with this "longer than ever before" depression.
Using this "Mr. Nice Guy" approach to evidence, I have now
demonstrated that the Great Depression was longer than any previous
depression because of the New Deal.
|9.23.08 @ 12:04PM|#
"Hooray! The left still loves me, even if economists hate
me!"
Uhh, you clearly don't understand what I was getting at. I love it
that libertarians can always be counted on to dig up SMOOT-HAWLEY
to explain their cross and garlic, the Great Depression. It's like
DEMAND KURV!
I doubt the tariff bill was a big hit with the left back then (but
I might be wrong). Historically it was not unheard of for American
business to favor tariffs.
|9.23.08 @ 12:04PM|#
I don't know how you prove the theorem. Since we never had another Depression that anyone worked out of. If anything, going by our one example, FDR didn't spend enough. The only thing to go on was that huge Federal spending on WWII is what got us out of it. We might have dropped back into it at the end of the war but for the Marshall Plan. Then the Cold War...
Neu Mejican|9.23.08 @ 12:05PM|#
Well if one's "ideology" is based on the observation that
the government generally makes such mistakes more often than
not
Devil's in the details.
It takes more than an assertion that "observation" demonstrates
this general trend. Governments do a lot of things...some positive,
some negative. An ideological perspective might skew your view of
which of the activities are important to consider...and might,
perhaps, bias your observations...perhaps.
BDB|9.23.08 @ 12:05PM|#
The right wing were the protectionists then, FDR was a free trader (as was every Democrat up until the 1980s).
Jimm Hoffa|9.23.08 @ 12:07PM|#
I doubt the tariff bill was a big hit with the left back
then (but I might be wrong).
Buddy, you got a lot to learn about the word "protectionist."
Sausage Swingin\' Libber|9.23.08 @ 12:07PM|#
We can all debate until we're blue in the face as to whether or not the New Deal prolonged the Great Depression. But can't we all agree that FDR was the original, government-cures-all elitist prick? You can have your New Deal . . . but no one will ever convince me that the man behind it was anything other than a malevolent, power-mad socialist.
|9.23.08 @ 12:09PM|#
Does Greenspan get to take some of the blame for the current
situation. I haven't heard people bad-mouthing him yet.
P Brooks | September 17, 2008, 1:19pm | #
My illiterate opinion is that Alan "Git 'cher free money here!" Greenspan should be dangling from a lamppost in front of the Federal Reserve Bank in DC. He *somehow* went from the guy who was supposed to take the punchbowl away, to the guy pouring Everclear into it.
But that's just me, and I don't count.
fyodor|9.23.08 @ 12:11PM|#
It takes more than an assertion that "observation"
demonstrates this general trend.
You gonna pay me to write a book about it?
I don't expect to convince you that that's the most accurate
interpretation one can take from observations of economic history
and the Great Depression. Just pointing out that that's what the
libertarian position is about, not merely mindless "ideology" as
you imply.
Neu Mejican|9.23.08 @ 12:11PM|#
P Brooks,
Re: Greenspan
Clearly I have been listening to the wrong people...and that
explains why I hadn't heard.
;)
Economics|9.23.08 @ 12:12PM|#
their cross and garlic, the Great Depression. It's like
DEMAND KURV!
Oh great, now I'm being compared to witchcraft.
And leftists wonder why people say they don't understand me.
Sausage Swingin\' Libber|9.23.08 @ 12:13PM|#
P Brooks . . . prescient and perspicacious. I have always thought it curiously ironic that the man that warned us of irrational exhuberance proceeded to exhuberantly gin up the irrationality. Alas, history is composed of such interesting novelties.
idiotface|9.23.08 @ 12:13PM|#
i still remember my grandmother bitchin about Roosevelt and him
saying, "my friends, the Jews" while campaigning for NY State Gov.
However, when the boat showed up with Jewish exiles from the
Holocaust; he sent the back.
so, yeh the guy was a prick.
adrian|9.23.08 @ 12:13PM|#
MNG: I think some (most?) libertarians blame the great
depression on the FED and the Gov. I don't see them thinking the
great depression followed from laissez-faire capitalism.
Also if this episode turns into great depression #2 are
libertarians vindicated? Being that the score would be 2-0 in Great
depressions before and after the FED?
Also, for keeping score, what is the conversion factor between
depressions to great depressions? 42?
Neu Mejican|9.23.08 @ 12:14PM|#
not merely mindless "ideology" as you imply
That was your inference not my implication.
However, lumping all things "New Deal" together and blaming them
for the depression requires that an ideological filter removes the
positive impact of those elements that were positive while an
ideological amplifier ramps up the causal force of the negative
elements.
This is not a mindless process by any means.
|9.23.08 @ 12:15PM|#
Let's not all forget that it was Fed Policy PLUS New Deal policy
that helped make the Great Depression extra painful.
Oh, by the way, I'm setting the price of gold to be $400 today.
What's that? That's not how the economy works? FDR thought it
was.
The More You Know|9.23.08 @ 12:16PM|#
The right wing were the protectionists then, FDR was a free
trader (as was every Democrat up until the 1980s).
Regardless of party, farmers and unions as a whole have always been
protectionists.
BDB|9.23.08 @ 12:19PM|#
William Jennings Bryan, early 20th Century avatar of rural America was against protection, remember?
Urkobold™|9.23.08 @ 12:23PM|#
THE URKOBOLD GIVES LEFITI AN OVERALL SCORE OF 6.5 FOR TROLLING.
HIS MOUTH-SPLUTTERING, FIST-CLENCHING PASSION TO ATTACK
LIBERTARIANS RISES TO ALMOST EDWARDIAN LEVELS, WHICH IMPRESSED THE
URKOBOLD SO MUCH THAT HE RATED LEFITI HIGH IN THE ARTISTIC
IMPRESSION* CATEGORY. HOWEVER, LEFITI'S OBVIOUS WEAKNESSES IN
TECHNICAL MERIT BROUGHT DOWN HIS TOTAL SCORE. THE URKOBOLD AWAITS
LEFITI'S NEXT ENTRY WITH OPTIMISTIC TREPIDATION.
*FROM THE GUIDE TO JUDGING COMPETITIVE TROLLING: There are
seven criteria for the artistic score: harmonious composition;
variation in vitriol; utilization of the caps lock and space bar;
trolling in time with the thread; carriage and style; originality;
and expression of the character of the trolling. For pairs
competition, there is an eighth element: unison trolling.
Guy Montag|9.23.08 @ 12:24PM|#
It is not important what happened. The only important thing is that it is the fault of some Republican.
Peter K.|9.23.08 @ 12:26PM|#
Amity Shlaes is a anti-regulation propaganditst. Thanks Amity
for the $700 billion taxpayer bailout.
Maybe we could have had a $700 billion tax cut instead of bailing
out the negligent, fraudulent, greedy CEOs of Wall Street?
Watch the markets work their magic!!! No one trusts each other so
no one will loan cash to each other. Marvelous!
Neu Mejican|9.23.08 @ 12:28PM|#
It is not important what happened. The only important thing
is that it is the fault of some Republican ideological
enemy.
|9.23.08 @ 12:31PM|#
Let's play correlation and causation for a second. I'll
start by pointing out that the Great Depression lasted longer than
any of the previous US depressions. Now I'll point to the New Deal,
which was contemporaneous with this "longer than ever before"
depression. Using this "Mr. Nice Guy" approach to evidence, I have
now demonstrated that the Great Depression was longer than any
previous depression because of the New Deal.
Since we haven't had any panics or depressions since then, you've
also proven the leftovers of the New Deal prevent depressions.
|9.23.08 @ 12:33PM|#
I like how Neu Mejican and MNG have been around here for a long time and still can't tell the difference between an ideology based on producing objectively better economic results and an ideology based on freedom and morality. They're sitting here seemingly thinking libertarianism needs for the New Deal to have failed at bringing us out of the Great Depression in order to be valid. How silly.
JMR|9.23.08 @ 12:37PM|#
Our cross & garlic is the Federal Reserve, and it's screwed up the money system, as is becoming obvious to all but the most obtuse lefties even if they disagree with libertarians on other areas. Our Founding Fathers had a bit of experience with paper money and bubbles, and we're repeating that history now because the "major" parties refused to learn it. But I'm sure it's all libertarians' fault.
Kolohe|9.23.08 @ 12:38PM|#
My pet theory on the Great Depression:
It was different in nature to all financial panics and recessions
that had happened before, because, for the first time, the
majority* of the people were no longer engaged in agricultural
employment.
*can't find a good link right now. And 'majority' is a bit of an
overstatement. The numbers are something like:
1870 50%
1900 40%
1925 10%
Lefiti |9.23.08 @ 12:43PM|#
Shove it up your shitpipe, "Urkobold". Unfunny hack blog. This is the last time I post here. Fucking neocon wingnut lunatic cuntbags.
Neu Mejican|9.23.08 @ 12:43PM|#
I like how Neu Mejican and MNG have been around here for a
long time and still can't tell the difference between an ideology
based on producing objectively better economic results and an
ideology based on freedom and morality.
I believe you are contrasting two races of libertarians here.
Libertarians do not hold a single world view and several distinct
ideologies walk around with the label libertarian. I don't believe
I hung any label on the ideology behind the argument that the new
deal caused the great depression. If I had I would have used an
economics-based term.
They're sitting here seemingly thinking libertarianism needs
for the New Deal to have failed at bringing us out of the Great
Depression in order to be valid. How silly.
Yes that is a silly thing you said.
I never said that.
|9.23.08 @ 12:45PM|#
Shove it up your shitpipe, "Urkobold". Unfunny hack blog.
This is the last time I post here. Fucking neocon wingnut lunatic
cuntbags
Good Riddance.
|9.23.08 @ 12:45PM|#
Shove it up your shitpipe, "Urkobold". Unfunny hack blog.
This is the last time I post here. Fucking neocon wingnut lunatic
cuntbags.
It is Edward! But where are the threats to sue?
Neu Mejican|9.23.08 @ 12:47PM|#
I actually think libertarians who couch their arguments in terms
of ethics and morality make a stronger case than those that attempt
to use "objective" outcomes arguments.
It is not a clean case with either strategy, but the ethical/moral
arguments require fewer contortions.
|9.23.08 @ 12:49PM|#
NM -
my appologies for attributing an opinion to you that you do not
hold.
Mr. Nice Guy, however...
Urkobold™|9.23.08 @ 12:50PM|#
[WHILE CLAPPING WITH MAD ABANDON] 7.5! LEFITI, WHILE LACKING SUBTLETY AND GRACE, OVERCOMES HIS FAILINGS WITH BRUTE FORCE.
|9.23.08 @ 12:51PM|#
One problem libertarians have is that people know that there
was a time of relatively more laissez-faire policies and then there
was this awful event (the Great Depression), then there was this
massive government intervention (New Deal), and since then there
has been nothing like the awful event.
One problem liberals have is that people know that there was a time
of relatively more privacy and freedom and then there was this
awful event (9/11), then there was this massive government
intervention (The Patriot Act), and since then there has been
nothing like the awful event.
|9.23.08 @ 12:55PM|#
I think a lot of libertarians hold both the ethical viewpoint and the objective viewpoint. Those with more developed economics education than many laymen are capable of grasping the limitations of their own field, and that is frequently factored into their findings. Journalists, not so much.
Neu Mejican|9.23.08 @ 12:57PM|#
Reinmoose | September 23, 2008, 12:49pm | #
NM -
my appologies for attributing an opinion to you that you do not
hold.
No problem.
I can see how it came about. Fyodor's comments provided fertile
context for the chain
NM says "ideological"
Fyodor responds using "libertarian"
NM responds sticking to "ideological"
Makes it easy to link "ideological" to "libertarian"
|9.23.08 @ 12:58PM|#
Ah, yes the conventional wisdom that WWII ended the depression.
Want to get rid of unemployment? All you have to do is start a
draft!
Seriously, why not just press 10 million men between the ages of
18-40 into a chain gang, print/borrow money to build a lot of
barrel factories, fill said barrels with more borrowed/printed
money and then drop them into the ocean. Viola! No more depression!
Look how high that GNP is!!! Who cares if we're rationing food and
basic supplies to the general public, the numbers say we're doing
great.
robc|9.23.08 @ 1:01PM|#
Okay, Im only about have way thru the comments and I havent seen
it pointed out yet but -
WW2 did not get us out of the great depression. War spending cant
improve the economy, it always hurts the economy, because spending
on worthless things doesnt help overall production. It may have
been necessary (and it was) but it was still wasteful. Both in $s
and in lives.
If the war helped the economy, why did we have shortages and
rationing during the war? Thats right, because the economy was
actually suffering during the war.
|9.23.08 @ 1:03PM|#
World War II did end the Depression, just not in a manner that anyone wants to replicate. Remove through death 400,000 men out of the workforce, maybe another 200,000 for severe disabilities, and then return the rest to factories that have been extensively re-tooled. Combine with 5 years of deprivation of material goods, and instant economic boom.
|9.23.08 @ 1:04PM|#
if there's an economic historian called "Amity Shlaes", she must
be annoyed at being confused with that shocking hack who had a
column in the FT once upon a time.
There is a case for saying that some FDR policies made things worse
(it's pretty silly saying anything general about the effect of "The
New Deal", since there were so many different policies that came
under this brand at different times), but I would have thought that
Reason would have been able to find someone more convincing to make
it.
robc|9.23.08 @ 1:06PM|#
Reinmoose,
They're sitting here seemingly thinking libertarianism needs
for the New Deal to have failed at bringing us out of the Great
Depression in order to be valid.
Utilitarians. What are you going to do with 'em?
I recommend hanging.
Neu Mejican|9.23.08 @ 1:07PM|#
robc,
Utilitarians. What are you going to do with 'em?
I recommend hanging.
But would that really produce the best results?
|9.23.08 @ 1:07PM|#
I wonder what the reaction from the left would have been if Bush
had proposed to add 12 new members to the Supreme Court after that
Guantanamo decision didn't go his way.
The court packing scheme is all I need to know about the morals and
integrity of those The New Deal and those proposing and
implementing it. Rather then propose amendments to the Constitution
to grant the government powers to do certain things, they would
just increase the size of the court and appoint 'yes' men to those
new seats. This makes him a complete scumbag in my eyes.
Any benefits from the New Deal have been outweighed by the damage
done by the excessive government power it allowed/encouraged. Those
on the left who deplore Bush's power grabs don't seem to understand
that many of them are rooted in the expansive, and previously
unheard of, New Deal interpretations of the commerce, general
welfare, and necessary and proper clauses.
robc|9.23.08 @ 1:09PM|#
NM
But would that really produce the best results?
Probably not, but Im pretty sure its the morally right thing to
do.
stuartl|9.23.08 @ 1:10PM|#
It is Edward!
Didn't Edward have a larger vocabulary? This one seems to have
spent too much time in the Navy.
robc|9.23.08 @ 1:10PM|#
This makes him a complete scumbag in my
eyes.
Considering what polio had done, I would call him an incomplete
scumbag.
What? Too soon?
Neu Mejican|9.23.08 @ 1:10PM|#
Cartoon catch phrase of Utilitarianism:
The right thing to do is that which produces the most happiness for
the most people (maximize happiness).
Cartoon catch phrase of libertarianism
The right thing to do is that which produces the most freedom for
the most people (maximize freedom).
If freedom = happiness then libertarians are just
utilitarians.
If freedome does not = happiness then they are something else.
Lord Jubjub|9.23.08 @ 1:11PM|#
One item that contributed a lot to the Great Depression in the U.S. was the even bigger depression in Europe. Europe was still recovering from the effects of WW1 and was dependent upon trade with the U.S. to keep expanding. Once the U.S. drop in buying power (in combination with Smoot-Hawley) cut off Europe's trade with the U.S., they began to default on loans that U.S. banks had made to them.
Guy Montag|9.23.08 @ 1:15PM|#
Don't forgrt the B-29's contribution to ending the Great Depression in WWII by destroying the industrial base that could compete with ours after the war.
|9.23.08 @ 1:15PM|#
Seriously, why not just press 10 million men between the
ages of 18-40 into a chain gang, print/borrow money to build a lot
of barrel factories, fill said barrels with more borrowed/printed
money and then drop them into the ocean. Viola! No more depression!
Look how high that GNP is!!! Who cares if we're rationing food and
basic supplies to the general public, the numbers say we're doing
great.
Barrel factories? This is the Twenty-first Century, dude; we can
build spaceships, and shoot the money into the sun!
Citizen Nothing|9.23.08 @ 1:16PM|#
"He opened up his eyes and he snapped out of the groove
He saw both sides of everything and found he could not move." --
James McMurtry
For some reason, whenever I hear that song I think of Neu Mejican.
And I say that with love.
|9.23.08 @ 1:16PM|#
Don't get me wrong, I have not read the book
But you are willing to impugn the argument it makes based solely on
her lack of academic credentials!
Keep hammering away at that fallacy, MNG. Someday we'll all swallow
the BS you peddle.
1960s grade school lies|9.23.08 @ 1:16PM|#
Saint Franklin saved the country.
Saint Woodrow was a holy man who reluctantly entered the US into
the War to End All Wars.
Saint Andrew opened up the south and west for expansion by
consolidating the Indians for their own good.
Neu Mejican|9.23.08 @ 1:22PM|#
I would like to state unequivocally that the Mr. Nice Guy vs.
The Angry Optimist argument over the validity of expert opinion has
gone on long enough.
Until one or the other can provide more meat to the issue of how
expertise interacts with validity, they are just flirting with each
other like characters in a sitcom that we all know will end up in
bed together at the end of season 3.
robc|9.23.08 @ 1:23PM|#
NM,
There is at best a weak correlation between freedom and happiness.
"Pursuit of happiness", on the other hand....
Another difference, utilitarians would give 1 unit of happiness to
two people by taking 1 from another person. This is a fair deal to
them.
A libertarian would (IMO) never do the same for freedom. Granting 2
people freedom by making another a slave is not an acceptable
trade.
|9.23.08 @ 1:25PM|#
Smoot Smoot Smoot Smoot. Hawley. Hey, it is fun!
Well if one's "ideology" is based on the observation that the
government generally makes such mistakes more often than not and
thus will likely make things worse by getting involved again, one
might hope to make that point without being dismissed as a mere
ideologue.
If "one" is going to limit's one's commentary to rules of thumb,
general cases, and vague platitudes about what is "more often than
not," and then make proclamations that needn't be informed by
actual knowledge of the spcific case, then one is going to be
dismissed as a mere ideologue.
I like how Neu Mejican and MNG have been around here for a long
time and still can't tell the difference between an ideology based
on producing objectively better economic results and an ideology
based on freedom and morality.
Perhaps somebody needs to read the post again, because the argument
is about economic results. As are just about every comment that
follows. But yeah, it's those mean ol' liberals, with their
insistence on staying on topic instead of talking about what you
think they should be talking about instead.
Seriously, why not just press 10 million men between the ages
of 18-40 into a chain gang, print/borrow money to build a lot of
barrel factories, fill said barrels with more borrowed/printed
money and then drop them into the ocean. Because none of the
money dropped into the ocean would circulate in the economy? As
opposed to spending on munitions and military salaries? Seems a
rather obvious point.
War spending cant improve the economy, it always hurts the
economy, because spending on worthless things doesnt help overall
production. It can in the short term. It's when the bills come
due that the pain starts.
If the war helped the economy, why did we have shortages and
rationing during the war? Because a great deal of the
increased production was sent to the war effort rather than to
consumers. You aren't seriously arguing that rationing means
production didn't increase, are you?
Had the war not ended, and the national and international economies
not return to normal growth states, the huge deficit spending that
ended the depression would likely have sent us back into economic
catastrophe.
If I am starving, and then get a credit card, spending that
borrowed money ends my starvation. If I then get a job and am able
to pay off the credit card, it wasn't the job that ended my
starvation, it was the credit card. Nonetheless, it also wasn't the
credit card that got me back on a stable financial footing.
|9.23.08 @ 1:28PM|#
I would like to state unequivocally that the Mr. Nice Guy
vs. The Angry Optimist argument over the validity of expert opinion
has gone on long enough.
In all fairness, I've always said that deferring to expert opinion
is preferred, HOWEVER, it is a fallacy to presume
that what one person is asserting is less credible because he lacks
a bunch of letters next to his name or experience in the
field.
This all started when MNG implied tarran didn't know what he was
talking about MERELY BECAUSE tarran isn't an economic
academic.
That's a variation of appealing to authority.
Neu Mejican|9.23.08 @ 1:29PM|#
robc,
robc | September 23, 2008, 1:23pm | #
NM,
There is at best a weak correlation between freedom and happiness.
"Pursuit of happiness", on the other hand....
Another difference, utilitarians would give 1 unit of happiness to
two people by taking 1 from another person. This is a fair deal to
them.
A libertarian would (IMO) never do the same for freedom. Granting 2
people freedom by making another a slave is not an acceptable
trade.
The colorist to my cartoon line drawings of utilitarians and
libertarians.
Now if we can get someone to add a third dimension we'll have the
playstation 1 rendering of the two philosophies.
;^)
|9.23.08 @ 1:30PM|#
Ok, here we go . . .
government schools teach us that FDR was a god.
government schools teach us that the New Deal brought us out of the
Great Depression.
government schools teach us that FDR was a wise and courageous
President in a time of war.
government schools are known to teach history that is both biased
and fallacious.
ergo
FDR was not a god.
The New Deal sucked.
FDR was not a heroic war leader - he sold out half of the world to
Uncle Joe at Yalta.
Never trust government peddled propaganda.
|9.23.08 @ 1:32PM|#
Because none of the money dropped into the ocean would
circulate in the economy? As opposed to spending on munitions and
military salaries? Seems a rather obvious point.
Uh, except all that money for building the barrel factories in the
first place. That's why that was part of the equation in the first
place. And once you build the munitions, it hardly matters whether
you shoot them or drop them into the ocean as it pertains to the
economy, right? Seems a rather obvious point.
Paul|9.23.08 @ 1:36PM|#
make money peddling this fairytale.
Never heard of the "Roosevelt Recession" eh?
|9.23.08 @ 1:38PM|#
Right, except for the tiny fraction of the spending that would
to the production of barrels, distinct from the value of the money
dropped in the ocean.
Which, it is rather obvious, is going to be a much smaller % of the
total value spent.
Printing money and dropping it in the ocean doesn't put any of that
money into circulation. Spending it instead, even on bombs, does
put that much value back into circulation.
Barrels = jeeps.
Money = everythinig else bought for World War II.
You certainly have the right handle, though.
Paul|9.23.08 @ 1:40PM|#
And fuck you Episiarch, you stupid mother fucker. Keep
peddling that batshit crazy fucking bullshit. This place is a
fucking lunatic asylum. Fucking morons. Fuck all of you
assholes.
I'm convinced.
Guy Montag|9.23.08 @ 1:40PM|#
Stretch,
Don't forget about the connected insiders, driving the boats, who
know where the money was dropped . . .
|9.23.08 @ 1:41PM|#
The argument you should be making, Stretch, is that the money
put into circulation via the war effort didn't come from thin air,
and eventually had to be paid back. From this, you could argue that
the benefit to the economy was outweighed by the cost of having to
pay it back, since a good portion of that value literally went up
in smoke, where it would have been spent, in the 1950s, on
productive purposes.
You'd still be wrong, though, because the social utility of moving
from a depressionary state to a growing economy outweighs the
utility of bumping up a growing economy by the same amount. But at
least that's a judgement call.
|9.23.08 @ 1:45PM|#
Because a great deal of the increased production was sent to
the war effort rather than to consumers. You aren't seriously
arguing that rationing means production didn't increase, are
you?
No, Joe, of course not. Only that if a production increase doesn't
actually produce anything for the people it can't rightly be
considered as a blanket "good" for the economy.
As I said, the numbers looks great, but so what? If I couldn't
afford meat yesterday because of the depression and a can't afford
meat today because of price controls and rationing, depsite the
fact that my factory has switched over to building bombs, has there
really been any benefit?
adrian|9.23.08 @ 1:45PM|#
no matter how you spin it this is just the broken windows theory
which has been proven incorrect (maybe).
Keynesians vs Rothbardians round #4779. FIGHT!
wikipedia
|9.23.08 @ 1:47PM|#
Perhaps somebody needs to read the post again, because the
argument is about economic results.
Yes, I recognize that quite well. Somewhere along the line
libertarians were equated with the great New Deal deniers on the
basis of effect, when in reality, libertarianism has nothing to do
with economic effect. You can ask Reason why it's posted in an
economic effect sort of way, and as I said earlier, many of us also
happen to think that economic liberty leads to better results, but
that's seperate from libertarianism.
FDR|9.23.08 @ 1:50PM|#
So what if Hoppe over at Mises.org gives a class comparing the
USA and Nazi Germany Recoveries from The Depression. So what if
people like Jim Powell write Economic Histories that show I
prolonged the Great Depression. I ended prohibition and for that...
you owe me your allegiance as your Emperor.
Sincerely,
FDR
PS
Uncle Joe says Wazzz Up Bitches!
|9.23.08 @ 1:55PM|#
Stretch,
A fair point about increased production not helping the real
economy if most of it is rationed, but consider: when rationing
ended, we had production all ramped up, and the standard of living
spiked through the roof in very short order. It is highly unlikely
that production would have been at such a level absent the spending
on the war effort.
Might it be said that World War Two helped the economy, but the
effects were only felt after we went back to normal economic
footing?
adrian, it isn't the broken windows theory, because none of the
spending on the war effort was going towards things that had been
previously destroyed for the purpose of justifying that
spending.
adrian|9.23.08 @ 2:00PM|#
joe, everything spent to cause destruction can be seen as
unproductive.
What you say about productivity could be true though but that is
different. We don't need war or government spending for that, just
throw everyone in jail who doesn't work 16 hours a day. GDP would
surely increase. Also wages could be halved to make us more
competitive with the rest of the world.
|9.23.08 @ 2:10PM|#
You'd still be wrong, though, because the social utility of
moving from a depressionary state to a growing economy outweighs
the utility of bumping up a growing economy by the same amount. But
at least that's a judgement call.
Except that we were already heading in that direction before the
war started, Joe. Unemployment was at it's lowest since the
depression began when we got into WWII Then comes the war which
forces people to deal with privation for another 4-5 years, while
borrowing heavily on the future and preventing any sort of
rational, bottom-up improvement in the lives of ordinary people. As
soon as the war is over, and the government stops all the
command/control nonsense, the economy booms and the population
actually receives the benefit.
You can certainly make the point that WWII was fantastic for
infrastructure, and in that way aided the post-war economy. But
that assumes that given an already recovering economy neither
private citizens nor the government would have spent that money
more rationally or efficiently on other improvements without the
war.
Look, if the government can spend it's way out of depression
through military actions, then it can do it without the focus on
the military, right? Then why didn't the New Deal work sooner? Why
was war necessary for the economy at all?
Your credit card analogy makes some sense, but it's limited. The
most the government can productively do is to borrow some money to
make sure people don't starve. Anything more, including many of the
New Deal programs and the bulk of WWII spending, are ultimately
counter-productive not only in the long-term when the bill comes
due, but also in the short term when information about potential
productivity of any given decision is distorted by
interference.
|9.23.08 @ 2:11PM|#
adrian,
joe, everything spent to cause destruction can be seen as
unproductive. I get that. My point is that the broken windows
theory doesn't quite describe this. We didn't break anything in
order to add those ships and rifles to our asset sheet.
Now, I agree with you that a great deal of the money that was spent
(and later needed to be paid back) went literally up in smoke - and
not just up in smoke itself, but destroying a lot more things of
value along the way.
Still, before 1946, that huge spending improved the economy -
because the bill didn't come due yet. When it did come due (in the
form of paying down the debt, and in the form of the Marshall Plan
and private investement necessary to rebuild what was destroyed),
it was really expensive, almost certainly a larger amount than the
economic value added to the economy by the spending. But by then,
we were out of the depression and into a strong growth period, so
paying $2X didn't hurt as much as the benefit of receiving $X a few
years earlier.
|9.23.08 @ 2:15PM|#
adrian, it isn't the broken windows theory, because none of
the spending on the war effort was going towards things that had
been previously destroyed for the purpose of justifying that
spending.
Well, if the broken window fallacy is simply meant to illustrate
the larger point of opportunity cost, war spending is a perfect
example of that.
Sam Grove|9.23.08 @ 2:25PM|#
No,
Lost value is LOST.
A healthy economy is not about how many people are working, but
about productivity.
Production that is to be destroyed is misallocated capital.
The market exists to satisfy our requirements and desires for
living. Most people do not work for that satisfaction it brings
them...particularly in the case of physical labor.
Just as I don't mop floors and wash dishes for the fun of it, but
for the result of clean floors and dishes. If I could have the
result without the labor, then that is how I would have it.
The misperception seems to be that the purpose of jobs is for the
distribution of wealth.
The purpose of jobs is the creation of wealth.
If we could create the wealth with, say robots, then most of us
would be jobless...in that we would no longer labor to satisfy our
requirements for living.
Therefore, war does not create wealth to satisfy our requirements
for living. War may be necessitated in order to defend ourselves,
but it also means we must surrender some portion of our wealth to
war making and not toward satisfying our requirements for living.
Thus, was may mean that we will eat less, recreate less, spend
less, etc.
But war does not provide any economic benefit.
Hence, the war did not end the depression. If anything, it will
have had some negative impact on the recovery that always comes
after depressions.
Visit mises.org and read up on U.S. financial history and "The
Great Depression"...Rothbard.
|9.23.08 @ 2:28PM|#
Stretch,
Let me put this together: Except that we were already heading
in that direction before the war started, Joe...As soon as the war
is over, and the government stops all the command/control nonsense,
the economy booms and the population actually receives the
benefit.
So what you're saying is that, at the beginning of the war, we were
in a Depression level economic circumstance (is "the lowest level
of unemployment since the Depression began" sort of like "the most
hygenic hooker in East St. Louis?), while at the end of the war,
our economy was booming. Obviously, the economy grew, at least
numerically, over the course of the war. Yes, it was debt-fueled
growth and the piper would later have to be paid, but still, the
economy grew during that period, moving from depression to boom.
Recall, there was no recession at the end of the war - we were in a
boom during the war, too, in numerical terms, and the post-war boom
was a continuation of that, not something that began after the war
ended. Getting off a war footing didn't coincide with a change in
GDP growth; it just changed who enjoyed the fruits of that
growth.
Look, if the government can spend it's way out of depression
through military actions, then it can do it without the focus on
the military, right? Then why didn't the New Deal work sooner?
1. The War involved a great deal more spending. 2. Time: we were
several years further removed from the crash and cascading economic
failures it precipitated. The pig had almost a whole additional
decade to work its way through the python. The same amount of
spending at the same time on productive, non-military ends would
almost certainly have done even more, though, I can agree with
that.
In general, I'm not much of a Keyensian. I pretty much agree with
your statement about government helping people through hard times,
rather than trying to end them. The Great Depression was a unique
event, though, and I'm not confident that it would have ended as
soon on its own. It wasn't just the sucky part of a business
cycle.
Sam Grove|9.23.08 @ 2:30PM|#
Still, before 1946, that huge spending improved the
economy
This is the Keynesian perspective.
Spending does not improve the economy.
Spending may be a sign of an improving economy.
Savings and investment in productivity are what improve an economy.
That is, if we mean by an improving economy, one that is growing
relative to the population.
|9.23.08 @ 2:33PM|#
Stretch,
Well, if the broken window fallacy is simply meant to
illustrate the larger point of opportunity cost, war spending is a
perfect example of that. You mean we might have gone that
deeply into debt on other stuff?
;-)
I understand what you're saying, but there's a very important
element to the broken windows fallacy - "we" break the windows for
the purpose of spending the money to replace them. In this case, we
didn't break the windows. We bought a lot of extra windows, because
someone out of our control was going around breaking them.
Overall, though, I can agree that the economic benefits, in raw
dollar terms, were less than the costs. I'm saying that there are
other considerations, most importantly the fact that the benefit
was received at a time of desperation, while the cost could be paid
off during a time of plenty, making the true benefit more important
than the true cost.
When I'm hungry and broke, the good a dollar does me exceeds the
harm done by dropping two dollars during a time of plenty - even
though, I agree, one is less than two.
|9.23.08 @ 2:35PM|#
This thread is now officially belungafied. I had to create a word to describe it. It's belungafied.
|9.23.08 @ 2:37PM|#
But war does not provide any economic benefit.
Hence, the war did not end the depression.
This is the Keynesian perspective.
Spending does not improve the economy.
You're both ignoring the time shifting here. Because the benefit
and cost happened almost a decade apart, and the benefits accrued
during a depression while the costs were paind during a boom, both
"World War 2 ended the depression" AND "World War 2 was a net loss
to the economy" can be true.
Sam Grove|9.23.08 @ 2:37PM|#
Savings and investment in productivity are what improve an
economy.
This is the key to why the depression was prolonged. Actions by
government, including the FED, signaled potential investors to
refrain from investing in productive activity.
The impact of Smoot-Hawley was to restrict potential markets.
Politicians (like FDR) were making signals of possible
nationalization of industries.
The FED kept a tight money supply.
Federal policies were aimed at keeping prices high for the benefit
of agricultural and dairy industries, while many were out of work
and could not afford the high prices, and much produce was
literally destroyed.
Sam Grove|9.23.08 @ 2:40PM|#
Correlation is not causation.
Several things helped end the depression. Among them, the FED
loosened up on the money supply, Smoot-Hawley ended, and the threat
of nationalization ended.
Investment in production returned.
robc|9.23.08 @ 3:09PM|#
joe,
We didn't break anything in order to add those ships and rifles
to our asset sheet.
Dresden, Tokyo, Hiroshima and Nagasaki beg to differ.
Yeah, yeah, it isnt the "classic" broken windows theory, but show
some flexibility.
robc|9.23.08 @ 3:14PM|#
joe,
The Great Depression was a unique event, though, and I'm not
confident that it would have ended as soon on its own. It wasn't
just the sucky part of a business cycle.
I think this is where you and I disagree. It was, originally, just
the sucky part of the business cycle, a little suckier than most,
admittedly. However, the policies meantt to "fix" it extended it,
instead of allowing the business cycle to turn on its own.
We were coming out of it when the war hit, which was also a down
time productivity-wise (measured as total production - war
production -- war production being a "waste"). After the war we
boomed, but that was a result of the business cycle being on an
upswing that had mostly been hidden by the war. If all that war
production had gone to make TVs and Autos and etc instead, imagine
how rich people would have been by the 1950s?
robc|9.23.08 @ 3:16PM|#
joe,
I understand what you're saying, but there's a very important
element to the broken windows fallacy - "we" break the windows for
the purpose of spending the money to replace them. In this case, we
didn't break the windows. We bought a lot of extra windows, because
someone out of our control was going around breaking
them.
In the original broken windows parable, its some neighborhood kid
breaking them, not "we". In other words, someone out of our
control. The "we" was added on as an extension of the logic.
Sam Grove|9.23.08 @ 3:18PM|#
Wikipedia:
"The end of the depression in the U.S. is associated with the onset
of the war economy of World War II, beginning around 1939."
But the U.S. did not get into WWII until 1941 and is was after the
attack on Pearl Harbor that the economy was mobilized for war
production.
I'm wondering how the depression was ended by a war economy that
began two years later.
From wikipedia|9.23.08 @ 3:20PM|#
First line of parable, in english:
Have you ever witnessed the anger of the good shopkeeper, James
Goodfellow, when his careless son happened to break a pane of
glass?
|9.23.08 @ 3:26PM|#
The post-war boom had, as someone above noted, a lot more to do with the many willing consumers in the world living in nations with destroyed industrial capacity than with us gearing up for the war. If the U.S. had sat out the war and the same result had occurred (probably unlikely, but this is just for example), we could have just as easily ramped up our industrial capacity to serve all of that demand at the end of the war.
Paul|9.23.08 @ 3:33PM|#
The FED kept a tight money supply.
Federal policies were aimed at keeping prices high for the benefit
of agricultural and dairy industries, while many were out of work
and could not afford the high prices, and much produce was
literally destroyed.
I believe this is Milton Friedman's general opinion. But what does
he know about economics?
|9.23.08 @ 3:53PM|#
robc,
Dresden, Tokyo, Hiroshima and Nagasaki beg to
differ.
Those were never on our asset sheet, so we (the United States) was
never breaking windows, nor required to pay for them.
The "windows" we "replaced" were actually the purchase of new
goods, that didn't replace anything. We did not take anything of
value that we possessed and break it.
It was, originally, just the sucky part of the business cycle,
a little suckier than most, admittedly. Except it wasn't. If
the stock market had dropped and investors had lost their money,
that would been just a recession, but because of the vast
over-leveraging, that crash wiped out value dispersed throughout
the economy. It wasn't just a case of there being less value
because the total value of the stock market went down, but it
ripped out infrastructure.
We were coming out of it when the war hit, which was also a
down time productivity-wise (measured as total production - war
production -- war production being a "waste"). War production
is not entirely a waste. Do you actually think that zero of the
borrowed dollars used to run the munitions plants and pay military
personnel circulated through the economy? That's nuts. Military
spending is inefficient in providing stimulus, but it still
provides a great deal.
If all that war production had gone to make TVs and Autos and
etc instead, imagine how rich people would have been by the
1950s? I agree, if that debt spending had gone to things less
likely to go up in smoke, the same amount of spending would have
had even more of a stimulatory effect.
|9.23.08 @ 3:54PM|#
Sam Grove,
FDR began ramping up military spending well before 1941, in
anticipation of our involvement. Remember lend-lease?
|9.23.08 @ 4:10PM|#
War spending, robc, is a waste, in the sense that the money
spent minus the taxes collected minus the value destroyed in the
war is going to produce a negative number. I don't disagree at
all.
However, in 1941 and 1945, all that was going on in our economy was
the money being spent. It was deficit spending, so the taxes were
deferred, and we experiences very little loss of value.*
Except for, obviously, the horrible cost in human lives, but since
we don't count the value of the people as an asset when measuring
national wealth, we don't subtract the monetary value of those
lives from GDP.
Which is a big reason why GDP isn't the most important thing, but
it's how we measure the economy.
War and Broken Windows|9.23.08 @ 4:53PM|#
But the U.S. did not get into WWII until 1941 and is was
after the attack on Pearl Harbor that the economy was mobilized for
war production.
Lend Lease. We made 2/3 of the Soviets' trucks.
We were coming out of it when the war hit, which was also a
down time productivity-wise (measured as total production - war
production -- war production being a "waste").
Depends partly where the bombs fall. If my country makes bombs and
they all fall on your country and then you buy our stuff to fix it,
that's good for my country's economy. It's like the kid in the
story is a shill for the glassmaker. Overall, of course, it's bad,
which may be one reason why Europe is still fairly poor compared to
the U.S.
The post-war boom had, as someone above noted, a lot more to do
with the many willing consumers in the world living in nations with
destroyed industrial capacity than with us gearing up for the
war.
That, and GATT.
robc|9.23.08 @ 4:57PM|#
joe,
While we dont count human lives as assets DIRECTLY, any of our boys
who died on Omaha Beach wasnt producing any goods in 1948.
There was an indirect loss in GDP in the late 40s onward due to all
the guys who didnt come home.
We did not take anything of value that we possessed and break
it.
There were lots of natural resources that ended up on the bottom of
the ocean. All the labor that went into turning iron into planes
and ships went down with them. Thats a lot of "broken
windows".
Heck, every bullet fired was one not fired at a deer of used to add
happiness to a target shooters life.
War And Broken Windows|9.23.08 @ 4:57PM|#
War spending, robc, is a waste, in the sense that the money
spent minus the taxes collected minus the value destroyed in the
war is going to produce a negative number. I don't disagree at
all.
No, it's a waste even if nothing is destroyed, because it's an
unproductive use of assets. It's like making a bunch of unneeded
windows.
Of course, in practical terms there's value in deterring a
threat.
robc|9.23.08 @ 5:05PM|#
WABR,
Of course, in practical terms there's value in deterring a
threat.
Absolutely. WW2 had to be done, the price had to be paid. But, lets
not also act like it was a positive for the economy, it was a big
negative.
I was going to make the analogy the other day on a thread in
response to joe making the comment that while allowing all these
companies to fail would have been the way to go without the
cascading effect (I dont remember your exact argument joe, so if I
got it wrong, its just my memory) that is was, to me, sort of like
WW2. I think we have to take the economic hit now. Yes, it will be
very, very, very, very bad to let a big chunk of our financial
sector collapse. However, its a sacrifice Im willing to make for
the better good of America, and its a small one compared to the
guys who charged onto the beaches at Normandy.
It would have been better/cheaper ($s and lives) to do something
about Hitler earlier. It would have been better/cheaper to do
something about out financial situation earlier. Now, we just have
to deal with the situation we are in and do what is right, even if
it hurts real bad.
|9.23.08 @ 6:07PM|#
If my country makes bombs and they all fall on your country
and then you buy our stuff to fix it, that's good for my country's
economy.
No, it is not. It is good for the bombing country's productivity
numbers relative to the bombed country's productivity numbers. But
the consumers of the bombing country themselves -- the end purpose,
after all, of the economy -- are worse off than if the bombing
didn't happen. Not only was wealth that would be better spent
supplying their demands spent instead on products destined to be
destroyed, but the consumers no longer have the ability to buy
things from the bombed country.
Would the US be better off today if Europe had no
industrial capacity? Of course not. The fact that Europe can
produce things along with the US means that we can each concentrate
on our respective comparative advantages and both be better
off.
Supplying the devastated nations of the world is not the first best
case. It is, to be sure, the second best case -- the worst case of
course is being the devastated nation itself.
Syd|9.23.08 @ 6:11PM|#
The market dropped from 189 in August to 120 by the next
February, well below the lowest ebb in 1929.
On the other hand, 120 is about triple what it fell to in 1932-3,
so there was some recovery. Industrial production was up
considerably as well.
|9.23.08 @ 6:53PM|#
"I hate to say this but usually very few books by journalists
shake up the field of economics or provide what that field would
call "overwhelming" evidence to turn accepted historical narratives
on their head."
That's what I wrote TAO. Later I said, hey, maybe this is the rare
exception, but not having time to read every book or article in the
world I'm not exactly going to change the well accepted historical
consensus on the New Deal and the Great Depression because
"journalist Amity Shales has a book that provides overwhelming
evidence that black is white."
Now, where is the fallacy in that, logical or empirical?
NM
I made my case about deference to experts in the debate with Tarran
a few nights ago. I stand by what I said there.
|9.23.08 @ 6:54PM|#
And NM this actually goes back to TAO having his period early because I made a generalization about members of the Assemblies of God denomination (that they are fundies).
|9.23.08 @ 7:23PM|#
Dang, lefiti melts down and I missed it. Oh well. Kudos to the
Urkobold.
Neu,
Regarding Greenspan, McCain and deregulation:
http://tinyurl.com/4jrwvx
MJ|9.23.08 @ 9:29PM|#
While some New Deal programs were relatively better than others (and many were so unbelievable that something like that would happen in this country as opposed to Stalin's USSR)that, one must remember that the New Deal was not a well thought out, intellectually coherent plan. It was the intellectual equilvalent of firing a shotgun at the problem of the Depression, fire enough projectiles (regulations and spending programs) at the target and some of them are bound to hit and do some good. This approach was part of why the New Deal failed in practical terms (but succeeded in propaganda terms). The Roosevelt adminstration kept changing the rules so often and so radically that businesses were never able to get a sure enough undestanding of the situation to do business with any confidence. The problem with the New Deal was not simply the policies it promoted but the whole atmosphere of uncertainty it fostered.
|9.29.08 @ 5:30AM|#
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