UCLA: FDR Prolonged the Depression

[PoliticalChic]

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!

 

[CrusaderFrank]

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

 

[PoliticalChic]

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

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...?)

 

[CrusaderFrank]

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

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...?)

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

 

[geauxtohell]

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

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...?)

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.

OMG- another liberal icon bites the dust...

LMAO. You wish.

 

[PoliticalChic]

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

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...?)

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.

OMG- another liberal icon bites the dust...

LMAO. You wish.

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...

 

[Greenbeard]

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.

 

[Oddball]

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!

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

Great Myths of the Great Depression

 

[william the wie]

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.

 

[Oddball]

Do you have some links to show the class?

 

[Toro]

The study only focuses on NIRA. That is wrong because the New Deal was more than NIRA.

There can be little doubt that NIRA was horrendously bad economics, and probably contributed to a weaker recovery than otherwise would have been, however,

During Roosevelt's first two terms, the U.S. economy grew at average annual growth rates of 9 percent to 10 percent, with the exception of the recession year of 1937-1938. As economist Christina Romer (now director-designate of the Council of Economic Advisers) writes, these rates were "spectacular, even for an economy pulling out of a severe recession."

Thus, at the very least, the New Deal did not prevent a "spectacular" rate of recovery. More, we have reason to believe some of Roosevelt's policies enabled it.

For a start, New Deal intervention saved the banks. During Hoover's presidency, around 20 percent of American banks failed, and, without deposit insurance, one collapse prompted another as savers pulled their money out of the shaky system. When Roosevelt came into office, he ordered the banks closed and audited. A week later, authorities began reopening banks, and deposits returned to vaults.

Congress also established the Federal Deposit Insurance Corporation, which, as economists Milton Friedman and Anna Jacobson Schwartz wrote, was "the structural change most conducive to monetary stability since ... the Civil War." After the creation of the FDIC, bank failures almost entirely disappeared. New Dealers also recapitalized banks by buying about a billion dollars of preferred stock. ...

New Deal policies not only made recovery possible but got it going. Roosevelt reduced the dollar's value to $35 per ounce of gold (approximately 60 percent of its former value) and, as Romer notes, overseas investment flooded into the country, attracted by these cheaper dollars and stable banks and pushed, as time went on, out of Europe by Hitler's advance. Along with the flood of investment came an increase of durable-goods expenditures and construction -- and private sector jobs.

The increase of jobs also counts as at least a partial success for the New Deal. Excepting 1937-1938, unemployment fell each year of Roosevelt's first two terms. In part, the jobs came from Washington, which directly employed as many as 3.6 million people to build roads, bridges, ports, airports, stadiums, and schools -- as well as, of course, to paint murals and stage plays. But new jobs also came from the private sector, where manufacturing work increased apace. ...

Still, the New Deal fell far short of perfection. It's quite possible that the economy might have grown even faster than it did and that the 1937-1938 recession might have been averted had Roosevelt avoided some key errors and placed more confidence in fiscal stimulus.

Early on, the New Deal put too much public power in private hands. Conservative critics now focus on the National Recovery Administration, which created government-licensed cartels so that industries could self-regulate. Modern NRA critics have good historical company: Many New Dealers disliked the NRA, and Roosevelt himself eventually admitted it was "pretty wrong." The NRA established boards to set prices, wages, and conditions of work. These boards were supposed to have representatives from management, labor, consumers, and government -- but in practice fewer than 10 percent had labor representatives, even fewer had consumer representatives, and the government representative was normally someone from the ranks of management. One New Dealer noted only two cases when the government enforced codes of behavior on businessmen against their wishes.

As a result, as the historian Andrew Wender Cohen points out, the NRA boards provided legitimacy for businessmen wanting to coerce each other -- as happened when a group of smaller-scale kosher butchers made trouble for the mighty Schechter group -- and generally afforded businessmen an opportunity to collude in price-fixing. Which is why the NRA became unpopular and moribund before the Supreme Court found it unconstitutional early in 1935.

But the case against the NRA is not a case that America would have been better without the New Deal: It is a case that the New Deal would have been better without the NRA -- a position at which many New Dealers had arrived by some time in 1934.

Learning From the New Deal's Mistakes | The American Prospect

Milton Friedman once said that the creation of the FDIC was the single most important policy to end the Depression. Friedman isn't exactly a progressive icon.

Thus, to focus only on NIRA is simply a mistake.

 

[william the wie]

Do you have some links to show the class?

Don't know an online source but you can eread "Sway" at any bookstore. I'm reading through two behavioral economics books now and I am hoping to pick up four more this week I am trying to tweak my portfolio strategy. When I get caught up on that then I intend to brainwash myself with audio tapes at the local Samadhi tank farm. Sorry at the moment I am more interested in getting my own head out of my ass on the subject of investment. That post was done in hopes of getting someone to post a more detailed one-up reply that I could learn from.

 

[geauxtohell]

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...

Either way, it's irrefutable that FDR got the United States out of the depression. Furthermore, the depression was much more than an economic collapse. It was also a massive drought in the Midwest. Comparing it with other nation's "depressions" is apples and oranges.

With the benefit of retrospect, some economists might project that the New Deal wasn't 100% efficient. That's not surprising. It's also not terribly convincing. Economics is not an exact science and, simply focusing on policy ignores other factors of the presidency, and in the end, the results are all that matters.

FDR was the only person that was willing and able to get us out of the depression. Hoover believed in non-intervention and greatly compounded the problem. The whole "do nothing and the invisible hand of the market will fix it!" mentality had been tried with disastrous results.

 

[Skull Pilot]

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...

Either way, it's irrefutable that FDR got the United States out of the depression. Furthermore, the depression was much more than an economic collapse. It was also a massive drought in the Midwest. Comparing it with other nation's "depressions" is apples and oranges.

With the benefit of retrospect, some economists might project that the New Deal wasn't 100% efficient. That's not surprising. It's also not terribly convincing. Economics is not an exact science and, simply focusing on policy ignores other factors of the presidency, and in the end, the results are all that matters.

FDR was the only person that was willing and able to get us out of the depression. Hoover believed in non-intervention and greatly compounded the problem. The whole "do nothing and the invisible hand of the market will fix it!" mentality had been tried with disastrous results.

Too bad the only way FDR got us out of the depression was WWII.

Just because the depression ended while FDR was in office does not necessarily mean that FDR ended the depression.

 

[geauxtohell]

Too bad the only way FDR got us out of the depression was WWII.

That was part of it. It wasn't all of it.

Just because the depression ended while FDR was in office does not necessarily mean that FDR ended the depression.

As the President, he gets credit for everything that happens or fails to happen in this country. FDR was in office when the depression started and was in office when the depression ended. He was so enormously popular that he was elected by the American people four times. Obviously the people who really matter, those who lived through the matter have a different opinion.

It's funny watching you guys constantly trying to bash FDR's tangible accomplishments. It's silly.

 

[sparky]

the article doesn't explain this>

 

[sparky]

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

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...?)

how does the above jive with our social contract without radical change PC?

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence,[1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

 

[Skull Pilot]

Too bad the only way FDR got us out of the depression was WWII.

That was part of it. It wasn't all of it.

Just because the depression ended while FDR was in office does not necessarily mean that FDR ended the depression.

As the President, he gets credit for everything that happens or fails to happen in this country. FDR was in office when the depression started and was in office when the depression ended. He was so enormously popular that he was elected by the American people four times. Obviously the people who really matter, those who lived through the matter have a different opinion.

It's funny watching you guys constantly trying to bash FDR's tangible accomplishments. It's silly.

It's funny that people are still blaming bush too then. Especially if the president gets the credit (blame) for everything that happens while he is in office.

 

[geauxtohell]

Too bad the only way FDR got us out of the depression was WWII.

That was part of it. It wasn't all of it.

Just because the depression ended while FDR was in office does not necessarily mean that FDR ended the depression.

As the President, he gets credit for everything that happens or fails to happen in this country. FDR was in office when the depression started and was in office when the depression ended. He was so enormously popular that he was elected by the American people four times. Obviously the people who really matter, those who lived through the matter have a different opinion.

It's funny watching you guys constantly trying to bash FDR's tangible accomplishments. It's silly.

It's funny that people are still blaming bush too then. Especially if the president gets the credit (blame) for everything that happens while he is in office.

Bush is still relevant as we are still early in the Obama administration and he was the last guy that held the office for 8 years.

That being said, Obama is in charge now and he can't make a habit out of blaming Bush. However, it's totally appropriate to point out that Bush's mismanagement of Afghanistan is part of the reason we have problems there today.

FDR, on the other hand has been dead for almost 70 years. I guess it took that long for the grateful members of the greatest generation who, for the most part, revered him to die off and leave their spoiled and ungrateful children to nitpick the policies of a man who had the fortitude to lead us through one of the greatest crisis' in American history.

Like I said, I don't get it. I am a DEM, but I would never for a second claim that Lincoln wasn't among the greatest presidents in American history.

Then, if you want to go into nuance, you have to dig to find things to knock FDR for while being more than happy to give Reagan credit for bringing down the USSR which is a stretch.

 

[editec]

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!

You know the definition of a Convention of Economists, PC?

It's a room with filled with 500 men with watches, NONE of whom can give you the correct time.

So an economist at UCLA thinks FDR made the depression worse? I certainly do not doubt that. And there's probably another UCLA economist in the same department who completely disagrees, too



If these economist (all of them) actually KNEW how economies worked, don't you think they'd ALL already be billionaires?

Economics is NOT chemistry, it's not physics, it's not mechanical sciences. It's NOT a hard science, its a SOCIAL science (with a lot of highly dubious numbers)

If economics was the kind of science that could make pronouncments that could be duplicated in a lab by other economists, then our economy wouldn't be the mess it is.

Economist are more like historians than accounts, dude.

Accountants can have any other accountant come to the exact same conclusion if they have the same books.

Economist can't even agree what the numbers are, let along what they mean.