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That's what I get for not looking things up but counting on an aging memory. One thing, the 1933 budget was an FDR budget not a Hoover budget. I concede the point that Hoover did increase spending (but only marginally) :
That's very little additional spending considering that this was the worst Depression in the century and probably due to sheer growth in population.
In terms of debt, Hoover only ran up about 6 percent of debt 1929 GDP. FDR, on the other hand, ran up a lot of debt, about 47 percent of 1933 GDP.
Can we all agree that the answer to the OP's question, "Why did Hardings policies work to get us out of a depression and FDR's didn't?" is a two part answer:
A) Harding had a different type of recession, one where government policy squeezed to bring inflation down, while the Great Depression was brought on by overstretch in debt and investment. The two required two different types of responses.
B) FDR's policies were not a failure and resulted in a sharp rebound in both GDP and employment until 1937, at which time FDR reversed policies. In 1938, FDR resumed the previous policies and the recover resumed again. The only criticism of FDR's Keynesian stimulative policies was that they were too small. Had FDR spent the way he did during the peacetime the way he spent during the war, the Depression would have been over sooner.
lol no FDR did not reverse policies. He doubled down. He set wages again and took MORE money from the private sector. Only those with the increased fix wage can afford the newer prices that come with higher wages.
In 1937 the US again saw wages jump ahead of what they should have been. An eleven percent rise in the first six months on 1937 while the steel industry saw wages jumped THIRTY SIX percent from Oct 36 to May 37.
Companies that sought to retain employees in downturns no longer had the reserves to do so. "Levy on Profits Halts Expansion", a NY Times article explaining the ramifications, came out the day Mellon passed away in late 1936."
Private investment was at an all time low. Payments to SS didn't help. How could the private sector recover when their tax burden increased?
Agreed except that FDR was elected four times, unless you don't count the first as the New Deal, because it didn't exist yet. 1932, 1936, 1940 and 1944. They were each FDR landslides. (On the maps, red is FDR.)
Yes, one must laugh at the revisionist history. Or cry that people are dumber now to buy it.
Notice i said that he won 3 elections on the New Deal. Meaning that he ran on it as a campaign issue in '32 (inaugeral election), '36, and '40. I don't really think the New Deal was an issue in '44 (though i'll admit, i'm not sure...but i think there was more war emphasis).
So i think the difference is that you don't count '32 as him "running" on the New Deal, while i don't count '44 as him running on the New Deal.
Either way, it's a minor distinction. We agree pretty much on everything else. And yea...it's laughable how FDR, after saving capitalism DESPITE the damn capitalists, is now a big time failure in the eyes of the right wing. He ruined the economy and made everything worse.
Back then, the conservatives called him "a traitor to his class," since he was born upper crust. They never realized that he saved their asses from Socialism, which was very popular in the 30s among those that got the shaft.
That's what I get for not looking things up but counting on an aging memory. One thing, the 1933 budget was an FDR budget not a Hoover budget. I concede the point that Hoover did increase spending (but only marginally) :
That's very little additional spending considering that this was the worst Depression in the century and probably due to sheer growth in population.
In terms of debt, Hoover only ran up about 6 percent of debt 1929 GDP. FDR, on the other hand, ran up a lot of debt, about 47 percent of 1933 GDP.
Can we all agree that the answer to the OP's question, "Why did Hardings policies work to get us out of a depression and FDR's didn't?" is a two part answer:
A) Harding had a different type of recession, one where government policy squeezed to bring inflation down, while the Great Depression was brought on by overstretch in debt and investment. The two required two different types of responses.
B) FDR's policies were not a failure and resulted in a sharp rebound in both GDP and employment until 1937, at which time FDR reversed policies. In 1938, FDR resumed the previous policies and the recover resumed again. The only criticism of FDR's Keynesian stimulative policies was that they were too small. Had FDR spent the way he did during the peacetime the way he spent during the war, the Depression would have been over sooner.
I would be curious to see whose budget that was in 33 since FDR took office in March.
If you strip down the spending it was very sizable per capita plus inflation adjusted(deflation) and as a percentage of GDP it was very large.
Federal Debt as percentage of GDP was 16% by 1932 it was 33%. As far as deficit to GDP we had a surplus in 29 but by 32 we were 2.78% to GDP, the highest FDR got it was 4.76% in 1936 (not counting war).
The economy bottomed in 33, not far from what it was in 32, we were down almost 50% so it wasn't a surprise that we would start turning around.
I really don't give a lot of credit or blame to politicians, they basically ride the waves given to them. There are so many underlying trends that happen despite what goes on in DC. Net net I say politicians do more harm than good.
I don't know if you realize this, but Warren Harding died years before the Depression started.
Harding died in 1923 and the depression didn't start until 1929.
No there was a depression that was actually WORSE in some respects than the so-called "Great" depression called "The Forgotten Depression" which happened before the "great" depression. The reason it was forgotten was that it was over almost as soon as it started because President Harding did the RIGHT things in letting the market forces play out.
He cut BACK the size of government. He didn't GROW it like FDR did and OBAMA is doing which only makes things worse and makes the pain last LONGER. Both of these presidents are doing what NO RESPONSIBLE business owner or head of household would do which is to spend money they don't have!
President Harding did the OPPOSITE. He CUT taxes. He let businesses fail. Also comparing apples to apples the unemployment rates started out higher than they were during the "great" depression during "The Forgotten Depression". http://mises.org/daily/3788
It really doesn't take much of my time. Since these inane arguments repeat themselves, I have this stuff locked and loaded and ready to fire.
However, the main thesis of this thread is flawed. As I stated, the comparison between Harding's recession and the Great Depression were completely different causes and solutions, therefore, must be completely different.
In summary, Harding's recession was caused by high inflation and therefore, putting economic breaks is the appropriate solution. The Great Depression was lack of demand. Putting breaks on the economy, as Hoover did, made the Depression worse. FDR's mild Keynesian stimulus was the appropriate policy and apart from the misleading revisionists, clearly worked.
HUH? You say:
"FDR's mild Keynesian stimulus was the appropriate policy and apart from the misleading revisionists, clearly worked,"
I think NOT. If it worked it wouldn't have taken so long. It made things WORSE, FAR WORSE than they would have been.
If Obama had done what he promised during his campaign and brought the troops home and beyond that stopped the bail outs; had not reappointed Ben Bernanke as the Fed chair and had cut back rather than expanded the government we might have endured 6 months of pain but by now things would have totally recovered. People would be back to work and the economy would be STRENGTHENING by now.
Bottom line Keynes was WRONG. His theories don't work. End of story.
Of course if you spend money you can increase production for a little while but if you don't have any money to spend, going into debt just to increase the GDP for a little while isn't going to help the economy. The economy is not based on spending of consumers and buying homes like the so called "experts" who studied Keynes try to make us think. Anyone with a little common sense would see that.
The way to fix the economy is to get the government to LAY OFF small businesses and let the manufacturing sector get going again. Kill NAFTA and WTO so called "free trade" agreements that create incentives for big corporations to relocate overseas. We need to PRODUCE PRODUCTS HERE and GROW FOOD here once again --quality food that is not genetically engineered.
Yes there was. Trade was roaring before WW-II, the reason we had trade tariffs, to keep our guys and gals working.
Tariffs wouldn't have been paid if the quality wasn't there. Back in those days up through the 60's "Made in America" meant something and as was said before, the government wasn't so Da$n OPPRESSIVE as it is today.
I would be curious to see whose budget that was in 33 since FDR took office in March.
If you strip down the spending it was very sizable per capita plus inflation adjusted(deflation) and as a percentage of GDP it was very large.
Federal Debt as percentage of GDP was 16% by 1932 it was 33%. As far as deficit to GDP we had a surplus in 29 but by 32 we were 2.78% to GDP, the highest FDR got it was 4.76% in 1936 (not counting war).
You may have a point about 1933 but the debt to GDP ratio was because GDP dropped not because debt rose.
You may have a point about 1933 but the debt to GDP ratio was because GDP dropped not because debt rose.
However, there is no reason to believe Roosevelt followed the budget, according to this history page:
Quote:
The president called a special session of Congress on March 9. Immediately he began to submit reform and recovery measures for congressional validation. Virtually all the important bills he proposed were enacted by Congress. The 99-day (March 9-June 16) session came to be known as the "Hundred Days."
On March 12, 1933, Roosevelt broadcast the first of 30 "fireside chats" over the radio to the American people. The opening topic was the Bank Crisis. Primarily, he spoke on a variety of topics to inform Americans and exhort them to support his domestic agenda, and later, the war effort. During Roosevelt's first year as president, Congress passed laws to protect stock and bond investors.
Among the measures enacted during the first Hundred Days were the following:
# Emergency Banking Act (March 9), provided the president with the means to reopen viable banks and regulate banking;
# Economy Act (March 20), cut federal costs through reorganization of and cuts in salaries and veterans' pensions;
# Beer-Wine Revenue Act (March 22), legalized and taxed wine and beer;
# Civilian Conservation Corps Act (March 31). Three million young men, between the ages of 18 to 25, found work in road building, forestry labor and flood control through the establishment of the Civilian Conservation Corps (CCC);
# Federal Emergency Relief Act (May 12), established the Federal Emergency Relief Administration to distribute $500 million to states and localities for relief. Administered by Harry Hopkins for relief or for wages on public works, that federal agency would eventually pay out about $3 billion;
# Agricultural Adjustment Act (May 12), established the Agricultural Adjustment Administration to decrease crop surpluses by subsidizing farmers who voluntarily cut back on production;
# Thomas Amendment to the Agricultural Adjustment Act, permitted the president to inflate the currency in various ways;
# Tennessee Valley Authority Act (May 18), allowed the federal government to build dams and power plants in the Tennessee Valley, coupled with agricultural and industrial planning, to generate and sell the power, and to engage in area development. The TVA was given an assignment to improve the economic and social circumstances of the people living in the river basin; and the
# Federal Securities Act (May 27), to stiffen regulation of the securities business.
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