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I often hear that, and it's bunk. It's not like the U.S. went in and raided Germany and Japan for their funds and gave everyone free money. Germany and Japan were shattered by war's end. We actually SPENT money rebuilding both countries.
What got us out of the Great Depression was MASSIVE government spending. The U.S. government put people to work and gave them a paycheck -- as soldiers, domestic guard, factory workers, farmers, etc. People who hadn't had a job for 5 years suddenly had a paycheck, which they spent, which put money back into the economy. THAT is what ended the Depression.
True, the reason the government had to employ all those people was due to the War. But had the War not occurred, we could have used the same tactics for the same result. But conservatives within Congress wouldn't let FDR do it. They fought him tooth and nail over the New Deal.
Does massive government spending make for a healthy economy? Absolutely not. It's very dangerous to depend on that for a long time (look at the Soviet Union). But in times of crisis, massive government spending (including debt spending) can and does help to heal the economy. But once the economy is healthy again, you have to cut back spending and pay down the debt.
I often hear that, and it's bunk. It's not like the U.S. went in and raided Germany and Japan for their funds and gave everyone free money. Germany and Japan were shattered by war's end. We actually SPENT money rebuilding both countries.
What got us out of the Great Depression was MASSIVE government spending. The U.S. government put people to work and gave them a paycheck -- as soldiers, domestic guard, factory workers, farmers, etc. People who hadn't had a job for 5 years suddenly had a paycheck, which they spent, which put money back into the economy. THAT is what ended the Depression.
True, the reason the government had to employ all those people was due to the War. But had the War not occurred, we could have used the same tactics for the same result. But conservatives within Congress wouldn't let FDR do it. They fought him tooth and nail over the New Deal.
Does massive government spending make for a healthy economy? Absolutely not. It's very dangerous to depend on that for a long time (look at the Soviet Union). But in times of crisis, massive government spending (including debt spending) can and does help to heal the economy. But once the economy is healthy again, you have to cut back spending and pay down the debt.
Woulda coulda shoulda.
The reality is that Left-Wing Liberals have attempted to rewrite history; Most especially regarding FDR and his New Deal fiasco.
Here are the sobering statistics about your hero, FDR and his supposed "New Deal:"
Unemployment Statistics:
------------------------------------------------------
Before the Crash (Coolidge - 1928) 4.2%
At the start of the Great Depression (Hoover - 1930) 8.7%
Roosevelt in 2nd year of Office (1934) 21.7%
Beginning of 2nd Term, Roosevelt's New Deal policies in place for 5 years (1938) 19%
Just Prior to WWII (Roosevelt - 1940): 14.6%
US in WWII, and Effects of Lend-Lease Program (Roosevelt - 1942): 4.7%
US in WWII, full military production (Roosevelt - 1944) 1.2%
------------------------------------------------------
Source: U.S. Department of Labor, Bureau of Labor Statistics
It took WWII aid to Britain, the Lend-Lease Program, and finally entry into WWII to turn the numbers around. FDR? No more effective than Obama's redux of today.
The woulda-coulda-shoulda scenario I have always wondered is, what in the heck would have happened if WWII had not come along?
Military spending is probably one of the greatest domestic spending programs ever. Paying salaries, buying strictly American equipment and on and on. It's odd, I always thought, that people talk about cutting military spending in favor of domestic spending. Then they build bridges made of made steel imported from Asia.
The reality is that Left-Wing Liberals have attempted to rewrite history; Most especially regarding FDR and his New Deal fiasco.
Here are the sobering statistics about your hero, FDR and his supposed "New Deal:"
Unemployment Statistics:
------------------------------------------------------
Before the Crash (Coolidge - 1928) 4.2%
At the start of the Great Depression (Hoover - 1930) 8.7%
Roosevelt in 2nd year of Office (1934) 21.7%
Beginning of 2nd Term, Roosevelt's New Deal policies in place for 5 years (1938) 19%
Just Prior to WWII (Roosevelt - 1940): 14.6%
US in WWII, and Effects of Lend-Lease Program (Roosevelt - 1942): 4.7%
US in WWII, full military production (Roosevelt - 1944) 1.2%
------------------------------------------------------
Source: U.S. Department of Labor, Bureau of Labor Statistics
It took WWII aid to Britain, the Lend-Lease Program, and finally entry into WWII to turn the numbers around. FDR? No more effective than Obama's redux of today.
You think your statistics prove that the New Deal was a fiasco?
What those statistics prove is that a sustained program of government spending lowers unemployment. Slow increases in spending result in slow job growth. (1933-1940). Massive increases in spending result in rapid job growth (1940-1945). It also shows that the key to much of it is deficit spending. Rather than worrying about a balanced budget, in bad economic times, the government has to be willing to borrow money and run a deficit.
What ought to be self-evident is that rapid decreases in government spending will result in massive unemployment. Yet, I still hear some conservatives parroting the notion that massive cut backs in government spending will somehow "restore the economy". These people have learned nothing from history.
The New Deal was controversial and FDR was under constant pressure to do something about the budget deficit that was piling up. He made efforts to move closer towards a balanced budget around 1937 and the result was more lay offs and more people out of work. When it was apparent the USA was going to be involved in a world war again (1940) we simply stop worrying about balancing the budget and that's when the economy improved.
You probably think the American Revolution was a fiasco too.
Unemployment Statistics:
------------------------------------------------------
Before the Crash (Coolidge - 1928) 4.2%
At the start of the Great Depression (Hoover - 1930) 8.7%
Roosevelt in 2nd year of Office (1934) 21.7%
Beginning of 2nd Term, Roosevelt's New Deal policies in place for 5 years (1938) 19%
Just Prior to WWII (Roosevelt - 1940): 14.6%
US in WWII, and Effects of Lend-Lease Program (Roosevelt - 1942): 4.7%
US in WWII, full military production (Roosevelt - 1944) 1.2%
------------------------------------------------------
Source: U.S. Department of Labor, Bureau of Labor Statistics
What you're leaving out is that the New Deal was never fully implemented --- and even if it had, it wouldn't have been enough. If you lose a limb, you need more than a Band Aid.
Quote:
Originally Posted by MattOTAlex
It took WWII aid to Britain, the Lend-Lease Program, and finally entry into WWII to turn the numbers around.
You're contradicting yourself. How did WWII bring us out of the depression? Magic??? No. It did it by MASSIVE government spending (not the trickle prior to the War). The U.S. went into massive debt paying for the War. That brought us out of the Depression.
Economic health was sustained in the 1950s when we scaled back on government spending and converted the war machine into an industrial society. Add to that, a shattered Europe that was ripe for American goods.
But war doesn't improve an economy by magic.
Quote:
Originally Posted by MattOTAlex
No more effective than Obama's redux of today.
Obama isn't a progressive in any sense of the word. He's a moderate at best, and a disappointing one at that. He's still far too comfy with corporate and other special interest groups. Richard Nixon's economic policies were to the Left of Obama. There hasn't been a truly economic liberal American President since Truman.
The bailout was largely bungled and the consequences for those responsible has been shameful. But without the bailout, the crash a few years ago would have been far, far worse.
You think your statistics prove that the New Deal was a fiasco?
They sure do. The nation came out of the depression in spite of FDR, not because of him. The events of the 1930's proved that Keynesian economics do not work and that socialist government policies will prolong downturns, not shorten them. Too bad that the lessons of 75 years ago have been forgotten and that the same mistakes have been repeated. History does tend to repeat itself, that old adage still holds true.
You think your statistics prove that the New Deal was a fiasco?
What those statistics prove is that a sustained program of government spending lowers unemployment. Slow increases in spending result in slow job growth. (1933-1940). Massive increases in spending result in rapid job growth (1940-1945). It also shows that the key to much of it is deficit spending. Rather than worrying about a balanced budget, in bad economic times, the government has to be willing to borrow money and run a deficit.
What ought to be self-evident is that rapid decreases in government spending will result in massive unemployment. Yet, I still hear some conservatives parroting the notion that massive cut backs in government spending will somehow "restore the economy". These people have learned nothing from history.
The New Deal was controversial and FDR was under constant pressure to do something about the budget deficit that was piling up. He made efforts to move closer towards a balanced budget around 1937 and the result was more lay offs and more people out of work. When it was apparent the USA was going to be involved in a world war again (1940) we simply stop worrying about balancing the budget and that's when the economy improved.
You probably think the American Revolution was a fiasco too.
C'mon. Scrap the condescension and talk.
The government began the century spending 6.9% of GDP. Circumstances, war, and government policy ramped that up to 20% prior to WWII. Then WWII kicked it up to 53%. That was an increase of 7 fold when expressed as a function of GDP. Charts of Past Spending - UsGovernmentSpending.com
Let's say your side is right, and government spending is the key to national success. How much farther can we possibly go?
We're talking spending now, not debt. Debt, although important, for now is a separate issue.
These days government spending is at around 40%. We can't increase 7 fold again. Does it appear to you that we are about peaked out? What now?
Total spending; State, Local Fed.
Let's say your side is right, and government spending is the key to national success.
That wasn't Mark's argument now was it? You can hem and haw till the cows come home but the fact remains that government spending during the war years brought unemployment to near zero percent. The money spent sparked a massive increase in infrastructure and industrial capacity. That allow with the fact that industrial production for war material left very little in the way of consumer products, at the wars end, pent up consumer demand paid for the conversion from a war economy to one of the largest consumer economies in the world.
Quote:
These days government spending is at around 40%.
Most of which is not spent to increase industrial development, but rather to maintain some modicum of a sustainable existence for the populace.
Quote:
We can't increase 7 fold again.
Nonsense. There is absolutely nothing structural that would prevent reaching war time debt to GDP ratios if the money were actually spent to increase economic development rather than a modest attempt to maintain the status quo. The only thing lacking is the obtuseness of conservative non-thinkers.
That wasn't Mark's argument now was it? You can hem and haw till the cows come home but the fact remains that government spending during the war years brought unemployment to near zero percent.
No one is arguing that point. We agree on that. Go back and read again. There is no argument there.
Quote:
Originally Posted by ovcatto
.......There is absolutely nothing structural that would prevent reaching war time debt to GDP ratios if the money were actually spent ..........
You didn't read again. The subject is not debt to GDP. It is spending to GDP. I made that clear. It was clearly shown that spending - government spending - is now at 40% of GDP. I'm asking, "Now what"?
I'd be happy to hear your answer, but if you insist on incorporating insults into your answer you will continue to embarrass yourself and advertise your status as a non-reader while you accuse others of being non-thinkers.
People who argue that Keynesian economics don't work are at odds with 95% of all economists. Even Milton Friedman believed Keynes was essentially right. What he argued instead was that the government ran a risk of "crowding out" private investment by borrowing too much money.
I have a simple rule of thumb: If people reject Keynesian economics they better have some credential of their own if they want me to take their ideas seriously. Honestly, on its face arguing that massive cuts in government spending will create millions of new jobs (as some politicians tried to do in the last campaign) its just absurd. It barely deserves a response.
I don't think I've been condescending. I think what I'm expressing is frustration with people who play semantics games. Its a semantics game to assert the New Deal and Keynesian economics didn't end the Great Depression because "they are flawed" and than to go and admit that World War II did end it. Anyone should know, that World War II was Keynesian economics carried to the max. There will probably never be an example of such a thing again.
Quote:
The government began the century spending 6.9% of GDP. Circumstances, war, and government policy ramped that up to 20% prior to WWII. Then WWII kicked it up to 53%. That was an increase of 7 fold when expressed as a function of GDP.
Let's say your side is right, and government spending is the key to national success. How much farther can we possibly go?
We're talking spending now, not debt. Debt, although important, for now is a separate issue.
These days government spending is at around 40%. We can't increase 7 fold again. Does it appear to you that we are about peaked out? What now?
Official unemployment statistics have shown a decline in unemployment from 10% to 7.3% in the less than five years Obama has been in office. Of course, people will argue that "real unemployment is higher" and that many people are underemployed as "burger flippers" and such. It doesn't change the fact that significant improvement has occurred. We've gone from a declining national income to an increasing national income. I could also cite numbers showing improvement in the housing market, auto sales, and even exports. Our budget deficit is declining as well.
We don't need to increase government spending sharply at this point. I think what is needed is a little patience and a little bit of recognition that while the recovery from this recession has been slower than what we wanted, the recovery is real.
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