The Death of Keynesian Economics

[Toro]

All real-world economics is Keynesian economics to some degree now.

i'd agree, but granted that, i say economics is becoming quantitatively and politically less real-world.

The discipline of economics has become less real world, but the economic underpinnings of how we organize our society is heavily influenced by Keynes, and there aren't many economists who challenge that.

 

[loosecannon]

All real-world economics is Keynesian economics to some degree now.

that doesn't strike you as a sad commentary? Maybe even terminal?

 

[code1211]

when will rightwing extremists understand that trickle down economics is a fantasy.

Actually, the Right Wing Extremist is not concerned about trickle down if I understand the Right Wing Extremists. I think they just view it as a jungle where the most fit survive and the others perish. I'm thinking these must be the Libertarians.

Since wealth is created by those with the ideas and the initiative and the creative approaches and the brilliance, the wealth that they create will start with them. Whether it trickles down or radiates out or blooms forth is only words. It starts with the movers and the shakers and the rest of us try to get our piece of the pie.

When you condider that there were less than a billion people on the planet for thousands of years subsisting and now there is a world wide middle class that is growing, the fact that wealth has been created is not even debatable.

The synergy between all of the societal forces, Government, Industry and Services combine to create an atmosphere of tranquility in which to pursue those more civilized goals.

The creative and wise among us who are driven rise to leadership in each of these categories. The rest of us follow or are drawn along in the wake.

If you view the hierarchy as vertical, then "trickle down" is perfectly accurate.

i think the keynesian observation is one of a circular economy rather than hierarchical for the purposes of following the money. from this perspective, the idea that wealth is created by the brilliant is not wholly supported. its demonstrated in insular underdeveloped economies where the brilliance of the participants is ineffective to create wealth, because there's insufficient commerce to make that happen. brilliance is only a catalyst, alas, and consumers and suppliers constitute the reaction from where wealth comes.

Too true. If Henry Ford was a resident of a tropical island with a population 1000, his ability to organize a work force to build 100 cars per day would never have been realized.

Within a society, the possiblity that this talent could be used becomes a factor.

If there is a caste system that prevents him from acting on it or the resources are not available or the government is obstinate or prejudice of some type finds him ostracized, then he cannot bring his ideas to fruition.

However, in a country and society like ours, the ideas and ambition of the leaders are free to flourish. It's lucky for the rest of us that there are those that take the trouble to realize their dreams.

I've said it before. The only difference between me and those poor bastards we watch on TV every night as refugees and victims is where I was born.

 

[antagon]

All real-world economics is Keynesian economics to some degree now.

that doesn't strike you as a sad commentary? Maybe even terminal?

i think keyne's observations brought economics down to earth in the first place. rather than observing markets as some calculation like the monetarists, you could put human names on the participants in a keynesian model... and it isn't skewed toward political support for market-financed, big business interests or a finance-centric economy. i think the monetarists and kooks (libertarians, austrians, whatever they care to be called), who cfrank is cheering to the forefront do support these latter perspectives, and i don't find them real-world at all.

does that spell terminal?

 

[Foxfyre]

When up to six credit hours of university level curriculum is devoted to study of Keynes and his theories as well as to the often contentious interpretations of this theories, those who have actually studied Keynes are probably arguing something much different than those who boil it down into a simple 'spend ourselves rich' philosophy.

Keynes did have some good ideas and some that were even practical in the short term.

Bigger and more expensive and more encompassing government is popular with those in government because they can therefore increase their own power, prestige, influence, and personal fortunes. Such is a highly corrupting system both for those in government and the beneficiaries of that government who are thus paid to keep voting the same people back into power.

But the basic principle truth remains that government will never EVER spend our money as wisely as the people will collectively spend their own money because 1) having the ability to do so is so corrupting and 2) the few people in government cannot possibly have the expertise necessary to understand all the components that go into stocking the shelves of a single supermarket.

Walter Williams once explained it like this:

. . . .Our economic system consists of billions of different elements that include members of our population, businesses, schools, parcels of land and homes. A list of possible relationships defies imagination and even more so if we include international relationships. Miraculously, there is a tendency for all of these relationships to operate smoothly without congressional meddling. Let's think about it.

The average well-stocked supermarket carries over 60,000 different items. Because those items are so routinely available to us, the fact that it is a near miracle goes unnoticed and unappreciated. Take just one of those items -- canned tuna. Pretend that Congress appoints you tuna czar; that's not totally out of the picture in light of the fact that Congress has recently proposed a car czar for our auto industry. My question to you as tuna czar is: Can you identify and tell us how to organize all of the inputs necessary to get tuna out of the sea and into a supermarket? The most obvious inputs are fishermen, ships, nets, canning factories and trucks. But how do you organize the inputs necessary to build a ship, to provide the fuel, and what about the compass? The trucks need tires, seats and windshields. It is not a stretch of the imagination to suggest that millions of inputs and people cooperate with one another to get canned tuna to your supermarket.

But what is the driving force that explains how millions of people manage to cooperate to get 60,000 different items to your supermarket? Most of them don't give a hoot about you and me, some of them might hate Americans, but they serve us well and they do so voluntarily. The bottom line motivation for the cooperation is people are in it for themselves; they want more profits, wages, interest and rent, or to use today's silly talk -- people are greedy.

Adam Smith, the father of economics, captured the essence of this wonderful human cooperation when he said, "He (the businessman) generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. ... He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain." Adam Smith continues, "He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." And later he adds, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.". . . .

Economic Miracle

 

[antagon]

i dont think it is a matter of the government spending monies better that we in the private sector might, as much as it is a matter of the community interests not provided through adam smith's self-interest observation being in the purview of the government. in our respective spheres of influence, we each outperform the other.

smith points out that trade for the public good is a losing act, but it is the act that the government is left to.

 

[Toro]

All real-world economics is Keynesian economics to some degree now.

that doesn't strike you as a sad commentary? Maybe even terminal?

No, not really.

Keynes advocated social programs as counter-cyclical policy to dampen economic volatility. Unemployment insurance and welfare increase when the economy goes into a recession, buoying demand and softening the downturn. That is embedded in every single developed country in the world. I don't think there is an economist alive - well a credible economist anyways - who would argue that we should get rid of income support programs during a recession.

 

[Foxfyre]

All real-world economics is Keynesian economics to some degree now.

that doesn't strike you as a sad commentary? Maybe even terminal?

No, not really.

Keynes advocated social programs as counter-cyclical policy to dampen economic volatility. Unemployment insurance and welfare increase when the economy goes into a recession, buoying demand and softening the downturn. That is embedded in every single developed country in the world. I don't think there is an economist alive - well a credible economist anyways - who would argue that we should get rid of income support programs during a recession.

Unemployment insurance however is built into the system on the theory that it will pay for itself. It isn't free market because it is mandatory, but it has been accepted on the theory that it does promote the general welfare for the temporarily idle work force to not be forced into bankruptcy and it technically is supposed to make additional welfare unnecessary.

It can be counter productive because the guaranteed safety blanket discourages saving for a rainy day and encourages some irresponsible financial management and it encourages some abuse by those who don't really want to go back to work but draw the benefit anyway. Those of us who are self employed do sock back part of our earnings to cover those times when there is no work and if we don't need it, it is ours to spend as we choose. In the case of unemployment taxes if you don't need them they are swallowed up by the government and you never see them again.

And theoretically unemployment insurance could be provided by private companies too as health insurance and disability insurance and most other insurance is.

It bascally comes down to whether one believes the government nanny state is the way to go or letting the people manage their own resources is the way to go. There are valid arguments for both sides.

 

[CMike]

It's really very simple.

Who manage's the people's money better?

The people who make the money or the government whom confiscates it and allocates it the way it sees fit?

 

[Bfgrn]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

Right wing revisionists have lied to us for generation about the overwhelming success of the New Deal. Because they want to recreate the plutocracy of the Gilded Age. Reagan and Bush Jr. have accomplished that. The wealth disparity in America today is back to that era, an America with a handful of powerful aristocrats and the rest of America poor.
-------

The latest salvo came Monday morning in a piece by two economists, Harold L. Cole and Lee. E. Ohanian: "How Government Prolonged the Depression."

Defenders of the New Deal will find much to argue with in Cole and Ohanion's account, but for simplicity's sake, I am going to zero in on just one point -- the impact of the New Deal on unemployment.

Cole and Ohanian:

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office.

How can one make this claim? Unemployment reached 25 percent in the Great Depression, and fell steadily until World War II (although there were some bumps up along the way). Ah, but the revisionist position is that unemployment did not fall as much as it should have. And this argument is based on an interesting interpretation of the available data. As Amity Shlaes, currently the premier anti-New Deal historical revisionist writing for a popular audience, explained proudly in her own Wall Street Journal opinion piece in November, "The Krugman Recipe for Depression," a necessary step is to not count as employed those people in "temporary jobs in emergency programs."

That means, everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs, doesn't get counted as employed in the statistics used by Cole, Ohanian and Shlaes.

Let us reflect, for a moment, on what the men and women employed by those programs achieved (aside from earning cash to buy food and pay for shelter, of course). In his paper, "Time for a New, New Deal," Marshall Auerback (pointed to by economist James Galbraith) summarizes:

The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.

In other words, millions of men and women earned a living wage and self-respect and contributed mightily to the national infrastructure. But, according to the statistics as interpreted on the Wall Street Journal editorial page, they were unemployed.

The right-wing New Deal conniption fit - How the World Works

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

Rather than apples to conservatives' fuzzy math - let's go to the great equalizer, the Census Data, and specifically Census document HS-29 (available in PDF). Quoting directly from Census data, here are the unemployment rates and total number of official unemployed at the beginning and end of the presidential terms since the Great Depression:

ROOSEVELT PRE-WWII NEW DEAL
1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)
Unemployment Rate Change: -9.0
Total unemployment percentage change: -36.7%

ROOSEVELT WWII
1941 Unemployment Rate: 9.9% (5.5 million total unemployed)
1944 Unemployment Rate: 1.2% (670,000 total unemployed)
Unemployment Rate Change: -8.7
Total unemployment percentage change: -87.9%

TRUMAN
1945 Unemployment Rate: 1.9% (1.0 million total unemployed)
1952 Unemployment Rate: 3.0% (1.8 million total unemployed)
Unemployment Rate Change: +1.1
Total unemployment percentage change: +81.0%

EISENHOWER
1953 Unemployment Rate: 2.9% (1.8 million total unemployed)
1960 Unemployment Rate: 5.5% (3.8 million total unemployed)
Unemployment Rate Change: +2.6%
Total unemployment percentage change: +110.03%

KENNEDY
1961 Unemployment Rate: 6.7% (4.7 million total unemployed)
1963 Unemployment Rate: 5.7% (4.0 million total unemployed)
Unemployment Rate Change: -1.0%
Total unemployment percentage change: -13.6%

JOHNSON
1964 Unemployment Rate: 5.2% (3.7 million total unemployed)
1968 Unemployment Rate: 3.6% (2.8 million total unemployed)
Unemployment Rate Change: -1.6%
Total unemployment percentage change: -25.6%

NIXON
1969 Unemployment Rate: 3.5% (2.8 million total unemployed)
1974 Unemployment Rate: 5.6% (5.1 million total unemployed)
Unemployment Rate Change: +2.1%
Total unemployment percentage change: +82.0%

FORD
1975 Unemployment Rate: 8.5% (7.9 million total unemployed)
1976 Unemployment Rate: 7.7% (7.4 million total unemployed)
Unemployment Rate Change: -0.8%
Total unemployment percentage change: -6.6%

CARTER
1977 Unemployment Rate: 7.1% (6.9 million total unemployed)
1980 Unemployment Rate: 7.1% (7.6 million total unemployed)
Unemployment Rate Change: 0.0
Total unemployment percentage change: +9.24%

REAGAN
1981 Unemployment Rate: 7.6% (8.2 million total unemployed)
1988 Unemployment Rate: 5.5% (6.7 million total unemployed)
Unemployment Rate Change: -2.1%
Total unemployment percentage change: -19.0%

BUSH I
1989 Unemployment Rate: 5.3% (6.5 million total unemployed)
1992 Unemployment Rate: 7.5% (9.6 million total unemployed)
Unemployment Rate Change: +2.2
Total unemployment percentage change: +47.2%

CLINTON
1993 Unemployment Rate: 6.9% (8.9 million total unemployed)
2000 Unemployment Rate: 4.0% (5.6 million total unemployed)
Unemployment Rate Change -2.9
Total unemployment percentage change: -36.3%

As you can see, in terms of the unemployment rate - that is, the percentage of the total workforce not working - the pre-WWII New Deal era saw the single largest drop in American history. Yes, I'll say that again for conservatives, just to make sure they get it: The PRE-WWII New Deal era from 1933-1940 - not the WWII era - saw the largest drop in the unemployment rate in American history. And by the way, that even includes the recession of 1937-1938. You can see it right here in graphical format:

Now, it is certainly true that the percentage drop of total unemployed was bigger in WWII than it was in the pre-WWII New Deal era. But as the data show, even by that metric, the pre-WWII New Deal era saw the second largest percentage drop in total unemployed in the 20th century, going from 12.8 million unemployed in Roosevelt's first year in office to 8.1 million unemployed at the end of his second term in 1940. That's a 36.7 percent drop - larger than the Clinton era (36.3%) and, yes conservatives, larger than the Reagan era (a mere 19%). At the absolute minimum, that would suggests the New Deal was a positive - not negative - economic force (and empirically more positive than, say, Reagan's free-market agenda). Again, here it is in graphical format:

These are the hard and fast numbers conservatives would like us all to forget with their claim that history proves massive spending packages like the New Deal will supposedly harm our economy.

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

FDR US Unemployment 1932: 24.1%, 1933: 24.9, 1934: 21.7%, 1935: 20.1%, 1936: 16.9%, 1937: 14.3%, 1938: 19.0%, 1939: 17.2%. 8 year Average = 19.8%

Hitler Invades Poland WWII declared 9/1/39

1940 unemployment: 14.6%

So all we needed for FDR great results was for someone to start a World War.

Terrific.

Frank, everyone is entitled to his own opinion, but not his own facts. Your unemployment figures don't match the US Census Data, and specifically Census document HS-29 (available in PDF). BECAUSE right wing revisionists don't include everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs.

So those American citizens, the millions of men and women who earned a living wage and were able to keep their self-respect and contributed mightily to the national infrastructure don't count in your right wing horror story.

So conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown, and also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock........DIDN'T HAPPEN...

 

[psikeyhackr]

All real-world economics is Keynesian economics to some degree now.

Keynes added another layer to the onion of information on the subject but that doesn't mean that politicians will use the information correctly though it does mean some people will blame him for the problems when they screw things up by misusing the knowledge.

Economics is about power. We here Game Theory mentioned a lot less then Keynesianism. I think the word Keynesianism has been turned into propaganda and the powers that be don't want everyone understanding economics or accounting.

Game theory - Wikipedia, the free encyclopedia

But Keynes was born in 1883. He was 25 years old when Ford introduced the Model-T. So the 20th century is about what technology has done to economics. On the basis of the economists I have talked to they are technological morons. They think technology can be judged by money. Then they manage to ignore the depreciation of all of the junk for the last 60 years. Planned Obsolescence is just a new tactic in the economic power game. A way to scam someone that knows less. But it is a globally stupid strategy with technology this complicated and nearly 7 billion people.

I wonder what the global depreciation of computers and smart phones is? Don't ask an economist.

Growth Matters: The Myth of Planned Obsolescence

psik

 

[CrusaderFrank]

Bfgrn, even today counting unemployed is not an exact science and data sets may differ.

1932:
24.1
23.6

1933:
24.9
24.9

1934:
21.7
21.7

1935
20.1
20.1

1936
16.9
16.9

1937
14.3
14.3

1938
19.0
19.0

1939:
17.2
17.2 (Hitler invades Poland 9/1/39, rescuing FDR failed economic Plan)

1940:
14.6
14.6

My number are on top BFGR's are on the bottom, they differ in 1932, so again Bfgrn is huffing and a puffing but

"Girl you thought he was a man
But he was a muffin
He hung around till you found
That he didn't know nuthin

Girl you thought he was a man
But he only was a-puffin
No cries is heard in the night
As a result of him stuffin"

Pick a data set, any Great Depression data set and they all tell the same story, Hitler's Invasion of Poland pulled FDR's Communist loving chestnuts out of the fire.

 

[antagon]

It's really very simple.

Who manage's the people's money better?

The people who make the money or the government whom confiscates it and allocates it the way it sees fit?

the several individual's interests aren't the same as the cumulative interest of those individuals. as none are obliged to care for the latter, such is the role of government. government which makes and issues the money also taxes those private constituents who earn and spend it in the economy under the auspices of facilitating this same economic activity through physical and social infrastructure.

who better manages an economy's money supply?

the government that prints it or the individuals and interests which hoard it?

 

[CrusaderFrank]

Right wing revisionists have lied to us for generation about the overwhelming success of the New Deal. Because they want to recreate the plutocracy of the Gilded Age. Reagan and Bush Jr. have accomplished that. The wealth disparity in America today is back to that era, an America with a handful of powerful aristocrats and the rest of America poor.
-------

The latest salvo came Monday morning in a piece by two economists, Harold L. Cole and Lee. E. Ohanian: "How Government Prolonged the Depression."

Defenders of the New Deal will find much to argue with in Cole and Ohanion's account, but for simplicity's sake, I am going to zero in on just one point -- the impact of the New Deal on unemployment.

Cole and Ohanian:

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office.

How can one make this claim? Unemployment reached 25 percent in the Great Depression, and fell steadily until World War II (although there were some bumps up along the way). Ah, but the revisionist position is that unemployment did not fall as much as it should have. And this argument is based on an interesting interpretation of the available data. As Amity Shlaes, currently the premier anti-New Deal historical revisionist writing for a popular audience, explained proudly in her own Wall Street Journal opinion piece in November, "The Krugman Recipe for Depression," a necessary step is to not count as employed those people in "temporary jobs in emergency programs."

That means, everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs, doesn't get counted as employed in the statistics used by Cole, Ohanian and Shlaes.

Let us reflect, for a moment, on what the men and women employed by those programs achieved (aside from earning cash to buy food and pay for shelter, of course). In his paper, "Time for a New, New Deal," Marshall Auerback (pointed to by economist James Galbraith) summarizes:

The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.

In other words, millions of men and women earned a living wage and self-respect and contributed mightily to the national infrastructure. But, according to the statistics as interpreted on the Wall Street Journal editorial page, they were unemployed.

The right-wing New Deal conniption fit - How the World Works

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

Rather than apples to conservatives' fuzzy math - let's go to the great equalizer, the Census Data, and specifically Census document HS-29 (available in PDF). Quoting directly from Census data, here are the unemployment rates and total number of official unemployed at the beginning and end of the presidential terms since the Great Depression:

ROOSEVELT PRE-WWII NEW DEAL
1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)
Unemployment Rate Change: -9.0
Total unemployment percentage change: -36.7%

ROOSEVELT WWII
1941 Unemployment Rate: 9.9% (5.5 million total unemployed)
1944 Unemployment Rate: 1.2% (670,000 total unemployed)
Unemployment Rate Change: -8.7
Total unemployment percentage change: -87.9%

TRUMAN
1945 Unemployment Rate: 1.9% (1.0 million total unemployed)
1952 Unemployment Rate: 3.0% (1.8 million total unemployed)
Unemployment Rate Change: +1.1
Total unemployment percentage change: +81.0%

EISENHOWER
1953 Unemployment Rate: 2.9% (1.8 million total unemployed)
1960 Unemployment Rate: 5.5% (3.8 million total unemployed)
Unemployment Rate Change: +2.6%
Total unemployment percentage change: +110.03%

KENNEDY
1961 Unemployment Rate: 6.7% (4.7 million total unemployed)
1963 Unemployment Rate: 5.7% (4.0 million total unemployed)
Unemployment Rate Change: -1.0%
Total unemployment percentage change: -13.6%

JOHNSON
1964 Unemployment Rate: 5.2% (3.7 million total unemployed)
1968 Unemployment Rate: 3.6% (2.8 million total unemployed)
Unemployment Rate Change: -1.6%
Total unemployment percentage change: -25.6%

NIXON
1969 Unemployment Rate: 3.5% (2.8 million total unemployed)
1974 Unemployment Rate: 5.6% (5.1 million total unemployed)
Unemployment Rate Change: +2.1%
Total unemployment percentage change: +82.0%

FORD
1975 Unemployment Rate: 8.5% (7.9 million total unemployed)
1976 Unemployment Rate: 7.7% (7.4 million total unemployed)
Unemployment Rate Change: -0.8%
Total unemployment percentage change: -6.6%

CARTER
1977 Unemployment Rate: 7.1% (6.9 million total unemployed)
1980 Unemployment Rate: 7.1% (7.6 million total unemployed)
Unemployment Rate Change: 0.0
Total unemployment percentage change: +9.24%

REAGAN
1981 Unemployment Rate: 7.6% (8.2 million total unemployed)
1988 Unemployment Rate: 5.5% (6.7 million total unemployed)
Unemployment Rate Change: -2.1%
Total unemployment percentage change: -19.0%

BUSH I
1989 Unemployment Rate: 5.3% (6.5 million total unemployed)
1992 Unemployment Rate: 7.5% (9.6 million total unemployed)
Unemployment Rate Change: +2.2
Total unemployment percentage change: +47.2%

CLINTON
1993 Unemployment Rate: 6.9% (8.9 million total unemployed)
2000 Unemployment Rate: 4.0% (5.6 million total unemployed)
Unemployment Rate Change -2.9
Total unemployment percentage change: -36.3%

As you can see, in terms of the unemployment rate - that is, the percentage of the total workforce not working - the pre-WWII New Deal era saw the single largest drop in American history. Yes, I'll say that again for conservatives, just to make sure they get it: The PRE-WWII New Deal era from 1933-1940 - not the WWII era - saw the largest drop in the unemployment rate in American history. And by the way, that even includes the recession of 1937-1938. You can see it right here in graphical format:

Now, it is certainly true that the percentage drop of total unemployed was bigger in WWII than it was in the pre-WWII New Deal era. But as the data show, even by that metric, the pre-WWII New Deal era saw the second largest percentage drop in total unemployed in the 20th century, going from 12.8 million unemployed in Roosevelt's first year in office to 8.1 million unemployed at the end of his second term in 1940. That's a 36.7 percent drop - larger than the Clinton era (36.3%) and, yes conservatives, larger than the Reagan era (a mere 19%). At the absolute minimum, that would suggests the New Deal was a positive - not negative - economic force (and empirically more positive than, say, Reagan's free-market agenda). Again, here it is in graphical format:

These are the hard and fast numbers conservatives would like us all to forget with their claim that history proves massive spending packages like the New Deal will supposedly harm our economy.

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

FDR US Unemployment 1932: 24.1%, 1933: 24.9, 1934: 21.7%, 1935: 20.1%, 1936: 16.9%, 1937: 14.3%, 1938: 19.0%, 1939: 17.2%. 8 year Average = 19.8%

Hitler Invades Poland WWII declared 9/1/39

1940 unemployment: 14.6%

So all we needed for FDR great results was for someone to start a World War.

Terrific.

Frank, everyone is entitled to his own opinion, but not his own facts. Your unemployment figures don't match the US Census Data, and specifically Census document HS-29 (available in PDF). BECAUSE right wing revisionists don't include everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs.

So those American citizens, the millions of men and women who earned a living wage and were able to keep their self-respect and contributed mightily to the national infrastructure don't count in your right wing horror story.

So conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown, and also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock........DIDN'T HAPPEN...

You didn't bother to check the data set, right or did you just check 1932?

Hellllooooo!

Pollocks and de Koonings sell for millions, why did they need Gubbamint subsidies?

VanGogh sold one painting in his life, would he have been a better artist on a Gubbamint Cheese Diet?

Helllllllllllooooooooooooooo!

 

[antagon]

there's no doubt that WWII put the great depression to rest. analyzing labor statistics before and after labor law revisions like the FLSA is not a valid way to make that point.

 

[loosecannon]

All real-world economics is Keynesian economics to some degree now.

that doesn't strike you as a sad commentary? Maybe even terminal?

i think keyne's observations brought economics down to earth in the first place. rather than observing markets as some calculation like the monetarists, you could put human names on the participants in a keynesian model... and it isn't skewed toward political support for market-financed, big business interests or a finance-centric economy. i think the monetarists and kooks (libertarians, austrians, whatever they care to be called), who cfrank is cheering to the forefront do support these latter perspectives, and i don't find them real-world at all.

does that spell terminal?

I think Toro was speaking of something altogether different.

 

[uscitizen]

"Pick a data set, any Great Depression data set and they all tell the same story, Hitler's Invasion of Poland pulled FDR's Communist loving chestnuts out of the fire. "


And many of the WPA projects and such pulled our way thru WW2. Hydro power powered Aluminum plants for aircraft production and refining Uranium for the bombs.

Tens of millions or more people STILL benefit from WPA era projects. Las Vegas, the Pacific NW, Tenessee, California, etc.

 

[loosecannon]

When up to six credit hours of university level curriculum is devoted to study of Keynes and his theories as well as to the often contentious interpretations of this theories, those who have actually studied Keynes are probably arguing something much different than those who boil it down into a simple 'spend ourselves rich' philosophy.

Keynes did have some good ideas and some that were even practical in the short term.

Bigger and more expensive and more encompassing government is popular with those in government because they can therefore increase their own power, prestige, influence, and personal fortunes. Such is a highly corrupting system both for those in government and the beneficiaries of that government who are thus paid to keep voting the same people back into power.

But the basic principle truth remains that government will never EVER spend our money as wisely as the people will collectively spend their own money because 1) having the ability to do so is so corrupting and 2) the few people in government cannot possibly have the expertise necessary to understand all the components that go into stocking the shelves of a single supermarket.

Walter Williams once explained it like this:

. . . .Our economic system consists of billions of different elements that include members of our population, businesses, schools, parcels of land and homes. A list of possible relationships defies imagination and even more so if we include international relationships. Miraculously, there is a tendency for all of these relationships to operate smoothly without congressional meddling. Let's think about it.

The average well-stocked supermarket carries over 60,000 different items. Because those items are so routinely available to us, the fact that it is a near miracle goes unnoticed and unappreciated. Take just one of those items -- canned tuna. Pretend that Congress appoints you tuna czar; that's not totally out of the picture in light of the fact that Congress has recently proposed a car czar for our auto industry. My question to you as tuna czar is: Can you identify and tell us how to organize all of the inputs necessary to get tuna out of the sea and into a supermarket? The most obvious inputs are fishermen, ships, nets, canning factories and trucks. But how do you organize the inputs necessary to build a ship, to provide the fuel, and what about the compass? The trucks need tires, seats and windshields. It is not a stretch of the imagination to suggest that millions of inputs and people cooperate with one another to get canned tuna to your supermarket.

But what is the driving force that explains how millions of people manage to cooperate to get 60,000 different items to your supermarket? Most of them don't give a hoot about you and me, some of them might hate Americans, but they serve us well and they do so voluntarily. The bottom line motivation for the cooperation is people are in it for themselves; they want more profits, wages, interest and rent, or to use today's silly talk -- people are greedy.

Adam Smith, the father of economics, captured the essence of this wonderful human cooperation when he said, "He (the businessman) generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. ... He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain." Adam Smith continues, "He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." And later he adds, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.". . . .

Economic Miracle

While that is true, and it is an extremely important point for a good number of reasons that is a justification for rational market theory. A theory that manages to make sense at the most rudimentary levels only because the economy gleans from it's organs that which isn't contributing to the whole in an automatic way.

But we are way past rational markets as is evidenced by our bubble economies, excessive debt and the frazzled and absurd condition of our government finance schemes.

Smith was speaking merely of the goods and services economy in the mercantile era. Fully 40% of our economy today is more of a casino style, often predatory economy. To a large degree it's only contribution to society is to suck life from it by any means possible.

 

[loosecannon]

All real-world economics is Keynesian economics to some degree now.

that doesn't strike you as a sad commentary? Maybe even terminal?

No, not really.

Keynes advocated social programs as counter-cyclical policy to dampen economic volatility. Unemployment insurance and welfare increase when the economy goes into a recession, buoying demand and softening the downturn. That is embedded in every single developed country in the world. I don't think there is an economist alive - well a credible economist anyways - who would argue that we should get rid of income support programs during a recession.

That is only one of the several ways in which Keynes' philosophy is now endemic to our economy. Keynes opened up the door for monetarist and monetarism has infected almost every aspect of our economy. Even trickle down economics finds it's roots in Keynes' ideas.

 

[loosecannon]

It's really very simple.

Who manage's the people's money better?

The people who make the money or the government whom confiscates it and allocates it the way it sees fit?

the several individual's interests aren't the same as the cumulative interest of those individuals. as none are obliged to care for the latter, such is the role of government. government which makes and issues the money also taxes those private constituents who earn and spend it in the economy under the auspices of facilitating this same economic activity through physical and social infrastructure.

who better manages an economy's money supply?

the government that prints it or the individuals and interests which hoard it?

It doesn't matter, it IS the governments money.