UCLA: FDR Prolonged the Depression

Discussion in 'Economy' started by PoliticalChic, Jul 11, 2010.

  1. PoliticalChic
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    PoliticalChic Diamond Member

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

    “Roosevelt's role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century's second-most influential figure.”

    1. 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.

    2. …we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
    3. …Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933….Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found.

    4. "President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

    5. 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.

    6. "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."
    FDR's policies prolonged Depression by 7 years, UCLA economists calculate / UCLA Newsroom

    (emphasis mine throughout)

    OMG- another liberal icon bites the dust...
    we need emergency intervention for our liberal friends!
     
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  2. CrusaderFrank
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    CrusaderFrank Diamond Member

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    Can you imagine 8 years of 17% average unemployment? The only thing Great about FDR was how he grew the government. That's it! He sucked at everything else.

    For years I have been telling mindless FDR was Great Zombies that their Stockholm Syndrome is not my problem and it's good to see a university finally catching on
     
  3. PoliticalChic
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    PoliticalChic Diamond Member

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    You know, CF, whenever there is a post with pretty strong anti-lib data or thought, we find no takers from the left.

    Understandable...

    But I sort of have the feeling that I should kind of smooth out the criticism.

    He was, after all the right man for the job, re: WWII.

    And, I don't recall the source of the following, but you might agree with much of it:

    "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?"

    Not too many of our Presidents have been all good or all bad...(until now...?)
     
  4. CrusaderFrank
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    CrusaderFrank Diamond Member

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    America went 150 years without offering any of that and still became the Number 1 economic and military power on the planet.

    Think about it.

    FDR's fought a war against one dictator only to hand Eastern Europe to another

    Think about it
     
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  5. geauxtohell
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    geauxtohell Choose your weapon.

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    I'll bite and the response is obvious:

    A bunch of guys crunching the numbers 70 years after the fact isn't terribly inspiring.

    The bottom line is that FDR got us out of the depression and no one else at the time seemed to be able to do that.

    Monday morning quarterbacking it might be a nice academic exercise, but it means jack and squat really. Even if the paper pushers are correct, it means that FDR's policies weren't as efficient as they could have been. In reality, making projections doesn't equate to 100% truth. Who knows what would have happened without FDR. Furthermore, aside from FDR's policies there is the whole other facet to the job, leadership, that a bunch of economists can't account for.

    Though it is continually amusing to watch the GOP try and re-write history to detract from one of the greatest Presidents in American history.

    LMAO. You wish.
     
    Last edited: Jul 11, 2010
  6. PoliticalChic
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    PoliticalChic Diamond Member

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    Either you didn't read the article, or you didn't understand it.

    I have my suspicions.

    To the point, 'FDR got us out of the depression,' this may be more your speed:

    Mark Steyn presciently noted, in late October of 2008, other nations had economic Depressions at the start of the 1930s; the US had a Great Depression, earning that added sobriquet due to its needless longevity.


    BTW, 'sobriquet' means nickname...
     
  7. Greenbeard
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    Greenbeard Gold Member

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    The paper referenced in the OP seems to be based entirely on the idea that Title I of the National Industrial Recovery Act was counterproductive, it's not about the rest of the New Deal proper or even the use of fiscal stimuli. An interesting historical argument but it doesn't suggest that the broader implications some in this thread are attempting to draw are warranted.
     
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  8. Oddball
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    Oddball BANNED Supporting Member

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    Another outstanding piece on this topic, that has been around awhile:

    Great Myths of the Great Depression
     
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  9. william the wie
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    william the wie Gold Member

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    Or to point out something that goes down poorly the Austrian school's explanation of the 1930s only became understandable in the last decade through neuro-economic advances.

    Different regions of the brain light up for social and economic interactions involving the same activities; the posterior superior temporal sulcus for social behavior and the nucleus accumbens for economic behavior.

    Neurologically Hayek's claim that the economy tanked due to earlier asset inflations means that inflation/stimulus transfers behaviors from the social to the economic sphere. That dissolves the social glue that makes economic behavior possible and profitable. That assumption and the assumption that deflation transfers behaviors the other way has not been proven but it does fit economic history better than any other theory tried so far and it does support the OP.
     
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  10. Oddball
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    Oddball BANNED Supporting Member

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    Do you have some links to show the class? :)
     

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