Quote:
Originally Posted by ccjarider
The history of the 30's proves exactly why you are wrong in analysis.
The New Deal helped reduce some harsh aspects of the Great Depression but it was World War II that made a real difference. As European nations went to war, American factories began to make war goods to sell.
After Pearl Harbor ten million American men went into the military opening up huge demand for workers to supply goods to war machine. Just like that, the Depression was over.
It is true however that war requires large deficit spending.
After the war most of the rest of the world was in ruins allowing the American economy to set the pace for the rest of the world. Further, the resulting aftermath of pent up private demand in the US insured that depression would not return. Gov't subsidized "make work" and tarrifs perhaps altered a few of the affects of depression but did not end it.
Anyway- back to topic, I spend several weeks a year all over Asia. I know you are wrong on many points you have offered here.
Have a great day!
Time to move on and end this thread.
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Your point was that (in basic) government can't cure economic problems:
FDR's New Deal almost cut unemployment in 1/2 from it its 25% high in 1932, to something like 14% in 1935.
Then a 1936 election got a congress more concerned with deficits than unemployment, and it bwegan to climb again- though nowhere to the laissez-faire levels under Hoover.
And yes, it took WWII to end the Depression. But what was WWII- a major government spending program which was funded as the New Deal was not.
As far as tariffs, in the US they date from 1790- The Hamilton Plan, which protected industry from foreign competition. This was the economic program for the US (and it generated almost 1/3 our governmental revenue in the period.
However, as I'm sure you know, in 1946 we signed on to a "new" idea that had been en vogue in the UK for almost a century- GATT (The General Agreement on Tariffs and Trades)- an idea based on 18th century Econ-type David Ricardo (no relation to Ricky) that said production would flow to the most advantageous spots. Dave was thinking in terms of natural resources, etc. But since he had been farting dust for over a century when we signed on to GATT in 1946, he was sorta out of the loop as far as transportation and scocietal development on a global basis had been proceeding.
Under GATT nothing changed- at first- WWII had destroyed factories overseas, and anyway our tariffs were still high. However, by the late 60's that was changing. We had helped (via the Marshall Plan) rebuild Europe, and the Asian nations were rapidly industrializing.
We had also been lowering our tariffs- far more than our foreign competetors- during said period. The result of this has been called "The Great U-Turn", which is the title of a book by a couple of Harvard Economists, Barry Bluestone and Bennett Harrison. They relate how the US Government decided that it would be best for our economy to void the deal between labor and management that had been in effect here since 1946.
By 1973, in the Tokyo Round of GATT, we eliminated our tariffs from being ANY factor, and became "free traders". At that point began our great de-industrialization, which saw (and continues to see) ALL industrial jobs offshore for cheap labor.
The funny thing was just as we did this, our competetors began raising both tariffs, and creating laws to bar American products. Take Harley Davidson cycles, for example: We finally negioated with the Japanese (in the early 90's) to lower their tariffs on Harleys.
So what did our free trade pals do? Promptly passed a law that forbade importation of motorcycles which produced a noise level at precisely the decible level Harleys make.
Coinkydink, huh?
A guy (SMU Economist named Ravi Batra) who was a former free trader, saw what was happening and in the mid-1990's changed his evil ways. He discovered in the econ data a disturbing fact that could not be happening in the US (as it had never happened previously)- yet was:
Real Wages, the ONLY source of money for 80% of Americans had fallen by 25% since 1973. He deduced the obvious: "Industry, not trade, determines a country's wealth." And that Free trade policy had exported our industrial base, replacing it with lower paying service sector jobs- MCjobs as they are known.
So, Batra correctly deduced that free trade would kill the US economy.
Not because they did it better overseas, but because they could do it cheaper. And that was only because they paid workers at far lower wage rates. So, David Ricardo's ideas were not the factor controlling where production was set-up:
Algebra I was. Wigets (an econ term for any good) made at cents per hour would always cost less than those made at dollars per hour.
So to be competitive, the lesson was clear: We would also have to pay our workers in "cents per hour", not dollars.
And we are well on the way......
Batra's book about this came out in 1995, just as NAFTA was being debated in Congress. The reaction by the economic community was to howl, to "Question my {Batra's} patriotism".
They had to do that as it was the only avenue open to them. The facts which Batra used came from the same facts they themselves used, so they could not impune his sources.
So, they and the media- which is a funny thing: at the time 60% of Americans as a whole were anti-NAFTA, 95% of editorial writers and pundits were pro-NAFTA- ignored Batra and his ideas sumed up in his 1995 book, a NYT bestseller, called "The Myth of Free Trade."
I suggest you or anyone interested read the ideas and predictions in this 1995 book, and compare them to the jive you hear on CNBC, CNN or any other media outlet (we could diverge into the media and Akre v Fox News, a 2003 case out of Fla Appelate Court (2nd District), but that's a major sub-topic to this), and see which side has been proven correct by the passage of time; see which argument better describes today's US economy.
It's well worth the time.
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