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- Jul 15, 2012
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Keynesian economic policies reduced the severity of recessions,.
how is that possible? raising taxes destimulates the economy! and FDR prolonged depression for 10 years with that pure ignorance
If you look at this chart you should notice three things.
First, recessions became less severe after the election of Franklin Roosevelt, and the initiation of Keynesian economic policies.
Second, with two exceptions, every recession that began after Roosevelt's inauguration began under a Republican president.
Third, recessions began to get more serious after the inauguration of Ronald Reagan. Reagan, of course, scaled back Keynesian economic policies by cutting taxes on the rich, and encouraging companies to attack labor unions.
http://www.nber.org/cycles.html
The recession that happened from May 1937 to June 1938 happened because President Roosevelt made the mistake of reducing government spending and employment.
The recessions that happened under Richard Nixon and Jimmy Carter happened because of shortages of oil, and consequent increases in the world price of oil. Keynesian economic policies were not designed to deal with a shortage of an essential natural resource. Nothing can mitigate that. When it happens there will be an increase in unemployment, and increase in inflation, or both. Unemployment and inflation both increased in 1974 and 1980.
I have already pointed out that after the inauguration of Roosevelt, with the exception of May 1937 to June 1938 there was a steady decline in unemployment, and a steady increase in the per capita gross domestic product in 1996 dollars. Here are the websites again that document that.
United States Unemployment Rate 1920 ndash 2013 Infoplease.com
Singularity is Near -SIN Graph - Per-Capita GDP
In addition, under the Roosevelt administration, there was a steady increase in the top tax rate.
http://www.ctj.org/pdf/regcg.pdf
Your economic theories do not explain the economic history of the United States since 1932. The theories of John Maynard Keynes do. Most Americans benefit from a well financed public sector of the economy paid for by high taxes on the rich. We benefit from strong labor unions, and a high minimum wage. This is because those increase aggregate demand.
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