FDR Prolonged Depression 7 Years: UCLA

Discussion in 'Education' started by Philobeado, May 18, 2009.

  1. Philobeado
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    Philobeado Active Member

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    FDR's policies prolonged Depression by 7 years

    UCLA economists calculate FDR's policies prolonged Depression by 7 years.

    Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

    After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

    The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

    Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

    NIRA's labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor's bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

    Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

    "The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."
     
  2. midcan5
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    midcan5 liberal / progressive

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    My first question would be, what does that have to do with the price of eggs in China, my second question would be are you retarded or just stupid, my third question would be in regard to my second question, are you both.....


    Summary
    Timeline of the Great Depression
    The Great Depression, to 1935
    The Main Causes of the Great Depression
    Stiff upper lip.

    [ame=http://www.amazon.com/Great-Depression-New-Deal-Introductions/dp/0195326342/ref=sr_1_8?ie=UTF8&qid=1230302046&sr=1-8]Amazon.com: The Great Depression and the New Deal: A Very Short Introduction (Very Short Introductions): Eric Rauchway: Books[/ame]
    interesting for today
    Project Syndicate
     
  3. PoliticalChic
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    PoliticalChic Diamond Member

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    Here's my question.

    Would your obnoxious response to the post be based on a sensitivity to the fact that Democrat policies have had deleterious effects on numerous occasions?

    And specifically, the financial meltdown in which we find ourselves?

    Further, while there were many good results of the FDR reign, ending the depression was not one, and many sources state exactly what the post claims. Here's one:
    In 1935, the Brookings Institution (left-leaning) delivered a 900-page report on the New Deal and the National Recovery Administration, concluding that “ on the whole it retarded recovery.”
     
  4. Yurt
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    Yurt Gold Member

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    IOW, you have nothing but ad homs...
     
  5. Tech_Esq
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    Tech_Esq Sic Semper Tyrannis!

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    IMO, Roosevelt suffered from many of the same issues that Obama suffers from now.

    1. Even at the rate we are spending, it is not possible for the government to spend enough on "projects" to allow a recovery. (Unless, of course, you shrink the economy enough)

    2. Too many constituencies to make happy. With Roosevelt it the "no free trade" crowd and the unions. There is pressure on the Bama to kowtow to the same constituencies. Passing Smoot-Hawley made the Depression deeper. The Wagner act, made business less certain and sentenced a struggling recovery to crib death.

    3. Too much uncertainty for business. Roosevelt had his share as noted above, but Obama will add health care and Cap and Tax to the mix. Should cap and tax pass, it will make the effect the Wagner act had on that recovery pale by comparison.
     
  6. Sinatra
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    Sinatra Senior Member

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    Without WWII, Roosevelt would have been a far more marginalized in the history books - likely no better than a mediocre two-term president who left office with the Depression still dragging along.

    He had the benefit of a the then new medium of radio and WWII that rallied Americans strongly behind him despite his lack or adequate success up to that point.

    That being said, he led this nation well during that pivitol war, and gets solid props for that. America succeeded in spite of Roosevelt's domestic policies though, not because of them...
     
  7. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    They're right that FDR prolonged the Depression, though I would beg to differ with the ending year of the Great Depression being 1943. The Depression didn't end until after World War 2 ended.
     
  8. PoliticalChic
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    PoliticalChic Diamond Member

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    As far as the Depression, we are certainly on the same page, but there are more facets here that should be considered, and I can't recall the provenance of this quote, but I'd like to throw this in for consideration:
    "Who can now imagine a day when America offered no Social Security, no unemployment compensation, no food stamps, no Federal guarantee of bank deposits, no Federal supervision of the stock market, no Federal protection for collective bargaining, no Federal standards for wages and hours, no Federal support for farm prices or rural electrification, no Federal refinancing for farm and home mortgages, no Federal commitment to high employment or to equal opportunity - in short, no Federal responsibility for Americans who found themselves, through no fault of their own, in economic or social distress?"
     
  9. PoliticalChic
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    PoliticalChic Diamond Member

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    Right, usually the Dumbarton Oaks Conference, October of '44 is given as the main impetus:
    "Treasury Department crafted an international monetary mechanism designed to engender relatively free trade and, consequently, global prosperity"
     
  10. Bfgrn
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    Bfgrn Gold Member

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    As usual, there is never a human aspect to the solutions of critics of FDR or Obama, and no REAL perspective of what or was (or is) happening "on the ground"...

    The PEOPLE and their virtual survival is the FIRST and most important role of the government of WE, the PEOPLE...

    The idiotic notion that doing "nothing" was (or is) the best course is investing in an ideology that has no regard for WE, the PEOPLE or any lick of common sense...it is in essence exactly what right wingers like to accuse liberals of... living in a dream world...belief in utopia... "laissez faire utopia"


    "The admirable trait in Roosevelt is that he has the guts to try. ...He does it all with the rarest good nature. ...We have exchanged for a frown in the White House a smile. Where there were hesitation and vacillation, weighing always the personal political consequences, feebleness, timidity, and duplicity, there are now courage and boldness and real action."
    Hiram Johnson - Republican US Senator from 1917 to 1945
     

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