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Old 11-24-2011, 04:11 PM
 
29,939 posts, read 39,517,970 times
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Quote:
Originally Posted by florida.bob View Post
I guess you are saying I defer to the knowledgeable. Yep, I think you got it finally.
No, I'm saying you're arguing that command economies work. MTA is saying command economies work. Every person arguing that FDR didn't prolong the GD is saying command economies work.

China, Soviet Union, Cuba, Iran, North Korea were/are all command economies.

The SU changed names and went to a more market based economic system. China did the same thing. Cuba, not so much. North Korea, well, they speak for themselves.

The GD would have lasted a few years at best and people would have gone back to work had FDR not intervened every step of the way. The robust growth wasn't turning the economy around. It technically brought the US out of depression but that's merely a measure of if money is changing hands or not. People weren't working in the private sector nearly in the amounts that are need to bring about real and sustained growth. What brought about that was WWII and a War Economy.

That would be the one place where a command economy can work, when you're in a world war...

Quote:
Under the powers delegated by such statutes, the President may seize property, organize and control the means of production, seize commodities, assign military forces abroad, institute martial law, seize and control all transportation and communication, regulate the operation of private enterprise, restrict travel, and, in a variety of ways, control the lives of United States citizens. Furthermore, Congress may modify, rescind, or render dormant such delegated emergency authority.
http://fpc.state.gov/documents/organization/6216.pdf

You'll need to kill a lot of people and win the war while summarily going straight back to a market based system for all that to work. A continous and sustained command economy is impossible to implement. There are too many market forces that bureaucrats and men in white suits can account for not to mention bureaucrats are usually economically illiterate overall (you might have a few good men/women).
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Old 11-24-2011, 04:14 PM
 
Location: Stillwater, Oklahoma
30,976 posts, read 21,696,113 times
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Quote:
Originally Posted by monkeywrenching View Post
even though FDR was elected 4 times, his unemployment rate kept going up and up until WWII started..
Wrong. Unemployment over all went slowly down under FDR but was still at a double digit level when WW2 started.
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Old 11-24-2011, 04:44 PM
 
Location: Old Bellevue, WA
18,782 posts, read 17,394,287 times
Reputation: 7990
I've always had the pet theory that demographics played a huge & virtually unrecognized role in the ending of the great depression. One of my relatives grew up during the depression and several years ago wrote down his experiences growing up, which he was kind enough to send me and I read. He and his three brothers grew up on the farm and all went off to fight in WWII. They left as callow youths and came back as men who had taken on the world and won. We call them the 'greatest generation,' which I believe is deserved, but don't give them any credit for economic results. It was a unique era. The nation was bonded, perhaps as never before and definitely as never since. It was a unique time of personal responsibility combined with creativity and reaching for the stars.
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Old 11-24-2011, 04:46 PM
 
29,939 posts, read 39,517,970 times
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Quote:
Why had wages not fallen as they had in previous contractions? One reason was that President Herbert Hoover prevented them from falling. He had been appalled by the wage rate cuts in the 1920-1921 depression and had preached a “high wage” policy throughout the 1920s. By the late 1920s, many business and labor leaders and academic economists believed that policies to keep wage rates high would maintain workers’ level of purchasing, providing the “steadier” markets necessary to thwart economic contractions.

Many of the tariff increases in the Smoot-Hawley Tariff were quite large; for example, the tariff on Canadian hard winter wheat rose 40 percent, and that on scientific glass instruments rose from 65 percent to 85 percent. Overall on dutiable imports the tariff rate rose from 40.1 percent to 53.21 percent. There was some explicit retaliation for the American tariff increases such as Spain’s Wais Tariff. Some other countries’ planned tariff increases were encouraged and probably expedited by the action of the United States.

Hoover’s fiscal policy accelerated the decline. In December 1929, as a means of demonstrating the administration’s faith in the economy, Hoover had reduced all 1929 income tax rates by 1 percent because of the continuing budget surpluses. By 1930 the surplus had turned into a deficit that grew rapidly as the economy contracted. By the end of 1931 Hoover had decided to recommend a large tax increase in an attempt to balance the budget; Congress approved the tax increase in 1932. Personal exemptions were reduced sharply to increase the number of taxpayers, and rates were sharply increased. The lowest marginal rate rose from 1.125 percent to 4.0 percent, and the top marginal rate rose from 25 percent on taxable income in excess of $100,000 to 63 percent on taxable income in excess of $1 million as the rates were made much more progressive. We now understand that such a huge tax increase does not promote recovery during a contraction. By reducing households’ disposable income, it led to a reduction in household spending and a further contraction in economic activity.

President Roosevelt came into office proposing a New Deal for Americans, but his advisers believed, mistakenly, that excessive competition had led to overproduction, causing the depression. The centerpieces of the New Deal were the Agricultural Adjustment Act (AAA) and the National Recovery Administration (NRA), both of which were aimed at reducing production and raising wages and prices. Reduced production, of course, is what happens in depressions, and it never made sense to try to get the country out of depression by reducing production further. In its zeal, the administration apparently did not consider the elementary impossibility of raising all real wage rates and all real prices.

The AAA immediately set out to slaughter six million baby pigs and reduce breeding sows to reduce pork production and raise prices. Since cotton plantings were thought to be excessive, cotton farmers were paid to plow under one-quarter of the forty million acres of cotton to reduce marketed production to boost prices. Most of the payments went to the landowners, not the tenants, making conditions desperate for tenant farmers. Though landowners were supposed to share the payments with their tenant farmers, they were not legally obligated to do so and most did not. As a result, tenant farmers, and especially black tenants, who were more easily discriminated against, received none of the payments and less or no income from cotton production after large portions of the crop were plowed under.

The NRA was a vast experiment in cartelizing American industry. Code authorities in each industry were set up to determine production and investment, as well as to standardize firm practices and costs. The entire apparatus was aimed at raising prices and reducing, not increasing, production and investment. As the NRA codes began to take effect in the fall of 1933, they had precisely that effect. The recovery that had seemed so promising in the summer largely stopped, and there was little increase in economic activity from the fall of 1933 through midsummer 1935.

Unhappy with the lack of union power, however, Senator Robert Wagner, in the summer of 1935, authored the National Labor Relations Act to ensure that union members could force other workers to join their unions with a simple majority vote, thus effectively monopolizing the labor force. Internal dissension and the new Congress of Industrial Organizations’ (CIO) development of strategies to use the new law kept labor unions from taking advantage of the new act until late in 1936. In the first half of 1937, the CIO’s massive organizing drives led to labor union recognition at many large firms. Generally, the new contracts raised hourly wage rates and created overtime wage rates as real hourly labor costs surged.

Several other factors also pushed up real labor costs. One factor was the new Social Security taxes instituted in 1936 and 1937. Also, Roosevelt had pushed through a new tax on undistributed corporate profits, expecting this to cause firms to pay out undistributed profits in dividends. Though some firms did pay out part of the retained earnings in larger dividends, others, such as the firms in the steel industry, also paid bonuses and raised wage rates to avoid paying their retained earnings in new taxes. As these three policies came together, real hourly labor costs jumped without corresponding increases in demand or prices, and firms responded by reducing production and laying off employees.

Between August 1, 1936, and May 1, 1937, in three steps, the Fed doubled reserve requirements for all classes of member banks, wiping out much of the excess reserves, especially at the larger banks. The banks, burned by their lack of excess reserves in the early 1930s, responded by beginning to restore the excess reserves, which entailed reducing loans. Within eighteen months, excess reserves were almost as large as before the reserve requirement increases, and, necessarily, the stock of money was lower.


By June 1937, the recovery—during which the unemployment rate had fallen to 12 percent—was over. Two policies, labor cost increases and a contractionary monetary policy, caused the economy to contract further. Although the contraction ended around June 1938, the ensuing recovery was quite slow. The average rate of unemployment for all of 1938 was 19.1 percent, compared with an average unemployment rate for all of 1937 of 14.3 percent. Even in 1940, the unemployment rate still averaged 14.6 percent.

One of the most coherent explanations, which pulls together several of these themes, is what economic historian Robert Higgs calls “regime uncertainty.” According to Higgs, Roosevelt’s New Deal led business leaders to question whether the current “regime” of private property rights in their firms’ capital and its income stream would be protected. They became less willing, therefore, to invest in assets with long lives. Roosevelt had first suspended the antitrust laws so that American businesses would cooperate in government-instigated cartels; he then switched to using the antitrust laws to prosecute firms for cooperating. New taxes had been imposed, and some were then removed; increasing regulation of businesses had reduced businesses’ ability to act independently and raise capital; and new legislation had reduced their freedom in hiring and employing labor. Public opinion surveys of business at the end of the 1930s provided evidence of this regime uncertainty. Public opinion polls in March and May 1939 asked whether the attitude of the Roosevelt administration toward business was delaying recovery, and 54 and 53 percent, respectively, said yes while 26 and 31 percent said no. Fifty-six percent believed that in ten years there would be more government control of business while only 22 percent thought there would be less. Sixty-five percent of executives surveyed thought that the Roosevelt administration policies had so affected business confidence that the recovery had been seriously held back. Initially many firms were reluctant to engage in war contracts. The vast majority believed that Roosevelt’s administration was strongly antibusiness, and this discouraged practical cooperation with Washington on rearmament.

Government spending on the war effort exceeded the expansion in real GNP. These figures are suspect, however, because we know that government estimates of the value of munitions spending, to name one major area, were increasingly exaggerated as the war progressed. In fact, the extensive price controls, rationing, and government control of production render data on GNP, consumption, investment, and the price level less meaningful. How can we establish a consistent price index when government mandates eliminated the production of most consumer durable goods? What does the price of, say, gasoline mean when it is arbitrarily held at a low level and gasoline purchases are rationed to address the shortage created by the price controls? What does the price of new tires mean when no new tires are produced for consumers? For consumers, the recovery came with the war’s end, when they could again buy products that were unavailable during the war and unaffordable during the 1930s.
Great Depression: The Concise Encyclopedia of Economics | Library of Economics and Liberty

Last edited by BigJon3475; 11-24-2011 at 04:57 PM..
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Old 11-24-2011, 07:07 PM
 
22,679 posts, read 24,669,137 times
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Quote:
Originally Posted by chickenfriedbananas View Post
And if you read the historical data, you'll know that the budget was kept in fairly good stead until about the year 1981. Compare the debt/GDP ratio in 1981 to the ratio in 1989. Also, look and see the years before Reagan.

http://upload.wikimedia.org/wikipedi...Debt_Trend.svg

Conservatives simply can't bring themselves what the facts tell us: Reagan, H.W. Bush, and W. Bush were disasters for the national budget. Instead of cutting social programs, which actually put money into the national economy, we need to ration military spending, which dumps money overseas into expensive rebuilding projects or rewards a select few military contractors here.
Nice MEME................D good............R horrific.

Uh, ever heard of a little thing called BALANCE OF POWERS???

Blame both parties if you are sane and not wrapped up in ideology...........both parties stink.
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Old 11-24-2011, 11:36 PM
 
Location: Foot of the Rockies
90,297 posts, read 120,966,390 times
Reputation: 35920
Quote:
Originally Posted by Loveshiscountry View Post
I understand you may not know the REASONS why crops were being plowed under but to say you've never heard of crops being plowed under amazes me.

FDR not only told farmers to destroy crops he paid them for it.

Digital History (http://www.digitalhistory.uh.edu/database/article_display.cfm?HHID=471 - broken link)

"Because the 1933 crops had already been planted by the time Congress established the AAA, the administration ordered farmers to plow their crops under. The government paid them over $100 million to plow under 10 million acres of cotton. The government also purchased and slaughtered six million pigs, salvaging only one million pounds of meat for the needy. The public neither understood nor forgave the agency for destroying food while jobless people went hungry."

I still don't understand the crystal ball thing. History tells us quite a bit.

Maybe you don't understand the complexities of economics, dunno.
Friedman - Free to Choose
Watching that cleared up quit a few things for me and spurred me to research more. It is on you tube. It is long but broken down into easy to follow parts. Being able to explain economics in a manner the average Joe can understand is just one area where Milton Friedman excelled.
Sorry, I didn't say that no crops were plowed under or that I never heard of that. I've lived in rural Illinois; I'm quite familiar with that, also with set-aside programs.

I will remind you that Roosevelt did not assume the presidency until March of 1933. So the fact that crops had already been planted by the time the AAA was established is hardly shocking. You seem to not care that FDR was the one who established the "surplus food" program to give farmers a market for their crops.

Food Stamps: 1932-1977: From Provisional and Pilot Programs to Permanent Policy

Here is an article about paying farmers not to grow crops from 2009.

Agricultural Subsidies | Downsizing the Federal Government

If you don't get the crystal ball remark, there's not much I can do about it. Anyone who believes tripe like "the depression would have ended sooner does not understand that one cannot predict the future, let alone the past.
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Old 11-25-2011, 06:52 PM
 
Location: Texas
37,971 posts, read 17,921,644 times
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Quote:
Originally Posted by Katiana View Post
Sorry, I didn't say that no crops were plowed under or that I never heard of that. I've lived in rural Illinois; I'm quite familiar with that, also with set-aside programs.
lmao Then why did you ask?

Quote:
Originally Posted by Katiana View Post
I will remind you that Roosevelt did not assume the presidency until March of 1933. So the fact that crops had already been planted by the time the AAA was established is hardly shocking. You seem to not care that FDR was the one who established the "surplus food" program to give farmers a market for their crops.
I care more that the control freak FDR plowed crops under because as king he knew the answer was the same for everyone. If he hadn't there would have been much less need for government controlled assistance.
Little Johnny set the house on fire and as it burned down he helped try and put it out. oh yeah everythings better now right?


Quote:
Originally Posted by Katiana View Post
If you don't get the crystal ball remark, there's not much I can do about it. Anyone who believes tripe like "the depression would have ended sooner does not understand that one cannot predict the future, let alone the past.
Understood the crystal ball remark is a talking head point with no substance.
Anyone who believes tripe like "similar circumstances with similar policies will result in different results" does not understand cause and effect.
Quit scratching the surface and do some research. Understanding the business cycles booms and busts are caused by government is the first step. Stop going back to failed policies that have proven to be failures time and time again is the second step.

Austrian economics told us to expect the stock market crash, it told us to expect the dotcom crash it told us to expect the housing crisis. It told us the exact reasons and it was correct. But don't let that sway you. The reasons were the same each time. Lucky guesses right?
Because your head is in the sand and you choose to ignore those facts don't group others into that world of denial.

If one makes informed decisions they have a better chance at succeeding. Study hard and make good grades. Then one can get a degree and earn good money. I guess that is tripe on predicting the future right?
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Old 11-25-2011, 07:07 PM
 
Location: Foot of the Rockies
90,297 posts, read 120,966,390 times
Reputation: 35920
No one can say with certainty what would have happened in different circumstances.

"For All Sad Words Of Tongue And Pen, The Saddest Are These, 'It Might Have Been'."

It's an intellectual exercise at best.
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Old 11-25-2011, 09:01 PM
 
7,381 posts, read 7,703,909 times
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In case no one has posted this previously:

"If FDR Prolonged The Depression, Why Was he Elected 4 Times?"

When you rob Peter to pay Paul, you can always count on the support of Paul.
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Old 11-25-2011, 09:21 PM
 
69,368 posts, read 64,221,636 times
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Quote:
Originally Posted by knowledgeiskey View Post
Yikes



Someone needs to brush up on American government.

The president can write bills, but it has to be passed by congress. As long as congress approves it, any of the two branches can write legislation.
Quote:
Originally Posted by pghquest View Post
Yikes.. Someone need to tell you that Congress is two branches, the House and Senate?

Who the hell said either branch cant write it?
Quote:
Originally Posted by florida.bob View Post
Come on, that's not even a decent attempt at deflection. Your limited knowledge was exposed, own up and move on.
Lets return you two to elementary school so you can be embarassed again
The President of the United States

Most people view the President as the most powerful and influential person in the United States government. While he does wield a great deal of political might, his effect on the law-making process is limited. Only Congress can write legislation; the President may only recommend it. If he does so, then a member of Congress may introduce the bill for consideration.
Quote:
Originally Posted by florida.bob View Post
I guess you are saying I defer to the knowledgeable. Yep, I think you got it finally.
If that was true, you wouldnt be sitting here high 5ng someone who didnt know this because the President can NOT write bills to vote on.

Last edited by pghquest; 11-25-2011 at 09:44 PM..
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