Lukey
Senator
If those prices are determined by a free market then we are better off...
Ideas for the agenda
- Thread starter Arkady
- Start date
Lukey
Senator
And the result was what we now call the Great Depression (and in Obama's case, the "End of the American Dream"). FDR's (and Obama's) policies prolonged the downturn, as the "depression" of 1920 shows:
http://www.realclearmarkets.com/articles/2010/09/22/1920_the_great_depression_that_wasnt_98679.html
Arkady
President
That hilarious right wing meme requires a great depth of ignorance. The Hoover recession had already stretched for almost four years, getting worse every year, before FDR took office. Then, immediately the economy began to grow again, and began what was, to that time, the longest growth cycle in American history. This was a time when the unemployment rate was declining faster than ever before in American history, and GDP was growing year after year at a rate unlike anything we've ever seen in our lifetimes. But right wing propagandists know they can count on conservatives being laughably ignorant of economic history, so they'll spew any old nonsense.
Lukey
Senator
The Great Depression was a severe worldwide economic depression in the decade preceding World War I. The timing of the Great Depression varied across nations, but in most countries it started in 1930 and lasted until the late 1930s or middle 1940s.[1] It was the longest, deepest, and most widespread depression of the 20th century.[2]
http://en.wikipedia.org/wiki/Great_Depression
Oops!
Arkady
President
Is you "oops" your way of acknowledging your mistake? Everything in my post was accurate and none of it was contradicted by your Wikipedia entry.
Lukey
Senator
Except for that whole part about FDR being elected and the economy immediately recovered. Maybe you missed the part of the Wikipedia entry where it says the Great Depression lasted throughout FDR's tenure...
Arkady
President
You misunderstand what I wrote. I didn't claim the Great Depression ended when FDR was elected. I said the economy began to grow when he was elected. It did. The Hoover recession went from August of 29 to March of 33 (the month FDR took office). This was followed by the longest growth cycle, to that point, in American history. That was a time of huge GDP growth and rapid unemployment decline. Then we got another recession in 37... Tied as the third-shortest recession in history, at that time. Then followed by a growth cycle that set a new record for length, and left us with basically non-existent unemployment.
http://www.nber.org/cycles.html
The thing to remember about FDR is that he followed three consecutive Republican presidents. As we know, from our own time, even a single Republican president can cause economic damage that takes years to fix. Three in a row is absolutely brutal. So, even the longest, strongest recovery in history, to that point, wasn't enough to completely climb out of the Great Depression FDR had been left. It took two growth cycles to emerge fully.
To put the strength of the FDR recovery in perspective, the strongest annual real GDP growth of the last quarter century was 5.00% in the late Clinton era. In 1937, under FDR, it was 43.21%.
http://www.multpl.com/us-real-gdp-growth-rate/table/by-year
Lukey
Senator
I understood perfectly what you said. I'm just telling you it isn't accurate.
That would have been known as "two recessions" then and not the Great Depression." The facts are that if there was growth it was tepid over the entire "recovery" (as it is now) and if unemployment came down it came down for the same reason Obama's has - long term unemployed dropping out of the work force. Your insinuation that FDR's economy was a raging surge of prosperity is simply not in concert with the facts!
Arkady
President
It's entirely accurate and I provided the links to substantiate what I said. If you don't understand them, then put in some effort. The growth was demonstrably not "tepid." The real GDP growth rate numbers bear that out. It was torrid. It's just that the growth was happening from such a very low baseline, after the catastrophe the Republicans had left, that even years of torrid growth weren't yet enough to fully undo the damage. That's not a claim that things were prosperous in the mid-to-late 30s. Times remained rough. But that's despite incredible GDP growth, like nothing seen in our lifetimes, and more rapid unemployment decline than anything any of us have experienced.
Lukey
Senator
Despite the "growth" you are touting, GNP didn't recover its pre-depression level until 1940 (when war spending inflated it) - and if you back out the government spending the private economy grew much slower than your figures. Government spending counts in current GDP and the government can deficit spend, which merely increases future taxes so it is a shift from the future to the present, yet you want to claim it as part of FDR's "miraculous recovery." It isn't.
The fact of the matter is that despite the statistics, the people living at the time thought the economy sucked (like they do today) because big government (spending and intervention) isn't part of what most people consider the "real" economy. And the real economy (business creation and private sector employment) suffered mightily under (both) FDR and Obama. If your characterization of the 30's was even remotely accurate it would be called the Great Recovery and not the Great Depression.
KnotaFrayed
Mayor
The problem is, they aren't. How many vehicles can you purchase that don't run on a very narrow variety of fuels? The problem is not competition amongst individual businesses, but monopolies on entire industries and then protectionism put into play. $4/gallon gasoline is "good" for those that profit from it, NOT good for America that must pay it because it made itself dependent upon it. Do you plan ahead for your day? How about for your retirement? How about for your expenses? Then why are so many resistant to the idea of planning ahead for other things like climate change, alternatives to transportation fuels and their cost which literally run through pretty much this society does from food production and delivery to the transportation of transportation fuels. After keeping "firemen" on diesel locomotives for years (because someone would be put out of a job), we got rid of a lot of rail rights of way only to find they might have been useful to hold on to, now, 40 years after Americans had to wait in lines to buy gasoline only on days that coincided with their license plate (odd or even) we're just now seeing a real range of vehicles that can more than double the fuel efficiency of just a decade and a half ago.
There is a mentality of some that says move the inevitable forward early to save time and the pain of having to learn the hard way, then there are those who won't do anything until they're hit over the head and still some that can be hit over the head, whine and moan about how much it hurts and still not connect dots.
$4 a gallon gas is not good for Americans although it could be a lot worse. What is good for Americans, not good for the oil industry, is that enough people are now taking the inevitable seriously enough that instead of just forking up $4/ gallon to literally burn in their gas tanks at 12 MPG, the have taken the first step big time which is to look for vehicles that use less fuel and to use them less where they can. Yes, that is a market based economy, but there is a massive amount of waste in time, money and suffering through long drawn out transitions that not only meet resistance from the industries that will lose out from the transition. They can always spend their dollars jumping into and joining the transition, but billions are spent to resist transition based on the perception it will make the wealthy who profit from the status quo less wealthy.
When one could not find a vehicle that got more than 22 MPG, there was little option to buying gasoline or diesel to run their vehicles. Sure they could shop for the best deal amongst suppliers that all are well aware of the dependency level of consumers. While price fixing is illegal in many states, the thing is, due to lack of alternative fuels and vehicles, the price for fuel can be set pretty much anywhere and unless the world comes to a full stop, people will pay it. We have seen it across the globe. Gasoline in the U.S. is relatively cheap compared to most other places, but where oil is basically the basis for a nation's GDP, but a spike like we saw to $4 in 2008 runs through the cost of everything and fast. That's the downside of a "market economy" that the promoters of a strict market economy won't bring up. Then there is the "logic" of some that depend upon regenerating natural resources that seem to have great difficulty in doing the math of their harvest versus what is needed for growth and regenerative periods required to keep their occupations sustainable. They worry about their jobs in the short term based on moratoriums to allow sufficient regeneration to occur, somehow forgetting or denying what happens when they take more than can be regenerated before they (harvest) take again. If a regenerative natural resource cannot keep up with how much of it is harvested, the harvesters are in real trouble.
We could stand to do a lot more thinking and less politicking.
KnotaFrayed
Mayor
Lukey, what you are saying does not make any sense. “Economy”, as in the “economy” of a nation or a global economy is defined by transactions (trade), not who’s doing it. The Great Depression was not being recovered from very quickly until WWII came along and employed a lot of people for the war effort, that effort (government spending (transactions)) was also funded by a combination of high marginal rate taxes and lots of people working (for the war effort) who in turn had money they then spent (transacted) on businesses that otherwise would not have gotten the business. Wealthy people don’t go out and buy 50 refrigerators to make up for those that can no longer afford them. An economy that depends upon billions of small transactions is not supported by the wealthy who don’t need 50 refrigerators or autos, even if they might buy more than the average consumer, it still does not amount to what is needed to drive an economy of trade amongst more than 200 million (adults). A “real” economy is where spending occurs, it matters little who is doing the spending as long as money is circulating and represents a value. There is no income tax revenue unless there is an income and there is no income unless there is a job. The government can take in a dollar and pay it to a defense contractor who then pays others for materials and labor for all manner of things like, shipping, fabrication and testing. Those people in turn pump their earned dollars back into the economy and also pay taxes on their income. 5% of zero is zero, 5% of $10 is 50 cents. 5% of $100 is $5.
Even at a very low rate of taxation and no change in the rates, the more income people make, the more tax revenue there is, that can then go toward things like defense (the largest single chunk of anyone’s tax dollars). The problem with defense is that it produces a lot of products we hope we don’t have to use and don’t normally have a real tangible ROI effect like investing in a school or something that not only gets an initial boost, but then builds on productivity rather than is lost in a heap of rubble and dust. It’s like borrowing money to either go out and buy beer which is literally pissed away or to go out and buy shovels to put people to work who then get paid and there is a value added to the money borrowed.
There is evidence that this nation has not only survived, but still thrived under much higher taxation on those that will still live in the lap of luxury even after paying taxes proportional to their net worth (if you possess 95% of your nation’s wealth, is there some legitimate complaint about paying 95% of its taxes?
The GI bill, with programs paid for by taxpayers (government) helped more Americans that ever achieve a higher level of education and buy their own real properties. When the “American Dream” was a much more modest and middle class one than the lifestyles of the rich and famous one it appeared to morph into beginning in the 80’s, CEO’s were still more wealthy than those they hired in the lower and middle wage income levels, but the difference between their pay and the pay of the average worker was MUCH less. http://www.epi.org/publication/ceo-pay-2012-extraordinarily-high/
Spending and going into debt, in of themselves are not the problem. What is, is the ability to pay the debts and keep the books somewhat balanced. Spending without taxing should be a no brainer, it's like spending without an income. Spending and taxing at least brings in income (revenue) to pay for spending, but it still has to be balanced to a reasonable level that can be paid off, like a mortgage, a car loan or a college loan and the spending (and borrowing so one can spend, is better if spent on something that produces some level of equity. Educating Americans is a good idea because it builds a type of equity as long as the loans don't kill the students and their ability to pay it back. College loans might do better if they were up to a certain amount and based on an educational institution's reputation for students matriculating and getting jobs after. Unfortunately handing out whatever amount a college asks for does not discourage what has occurred. Lots of for-profit "universities" that have their high tuitions met by student loans and unreasonable ROI in the amounts loaned.
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EatTheRich
President
I said? Where?
EatTheRich
President
Cash welfare benefits amount to 0.18% of the federal budget. Most of it is going to the military, to servicing debt, and to a lesser extent to Social Security and Medicare.
Lukey
Senator
Spouting hopium collectivist rationalization doesn't justify your collectivist approach. The fact of the matter is if collectivism worked, the USSR would be ruling the world today. It is typical of the Marxist viewpoint that all economic activity revolves around consumption and government need only centrally manage production to make the economy hum.
What you are basically saying here is that the rich (read savers) are a pox on the economy because they don't consume every dollar they earn, so government must take all those extra dollars from them via taxation and give them to people who will use them for current consumption or the economy will falter.
That is simply inconsistent with the facts. Government doesn't do a very good job of allocating investment (production) and the non-earners who get free stuff never learn the primary economic lesson that one must earn one's own way in life. The unproductive proliferate while the economy becomes sluggish due to all the government interference. This is precisely what has happened in Detroit, or any number of large cities that are teetering on the brink of bankruptcy. That is precisely what is playing out on a national level in all of the major developed welfare states. Running up ever more debt and/or printing money to keep the carousel going 'round is never going to work as it just keeps robbing the future to consume ever more in the present. That simply cannot go on forever.
Arkady
President
You put "growth" in quotations, as if somehow it's dubious. It's not. The growth was real, massive, and not questioned by any serious economist. It's just that it started from such a very low point that it took many years of incredible growth to erase all the prior losses, such that we weren't back in positive territory until 1937.
By the way, here are the real GDP numbers:
http://www.multpl.com/us-gdp-inflation-adjusted/table
As you'll see, we were back to 1929 levels by 1936, and the US didn't enter WWII until nearly the end of 1941. You cite GNP, instead, which is odd, since GDP is the measure of a country's economy, whereas GNP is the measure of a citizenry's production, which, obviously, is different. If American citizens were still losing money abroad, in the late 1930s, that's quite a stretch to blame on the US economy. The fact that GDP bounced back faster than GNP is, in fact, a demonstration of the strength of FDR's policies, since that's exactly what we'd expect if the US economy were recovering faster than the economies of most other major nations (such that although the economy within our borders was up, US nationals with foreign holdings were still taking hits from overseas).
As for what the people at the time thought, there's a reason FDR served longer than any other American president, and doubtless could have kept winning elections if he hadn't died. His last election he won by ten percentage points, winning all but 10 states, despite some controversy over him seeking another term. In '36, without the controversy over a third term, he won even more convincingly, by about 25 percentage points, winning all but two states. Unlike the people today, who have the luxury of being deluded by right-wing propaganda, the people of the time lived through the horror of the pre-FDR economy, as well as the stunning pace of improvement once he took office, so he was basically undefeatable at the ballot box.
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Lukey
Senator
I put growth in quotes because then, as now, much of it was due to massive government spending increasing consumption, and not the private economy expanding production. As for using GNP over GDP it does a better job of measuring the overall economic strength of a country. All the GDP increase shows over GNP is how effective FDR was at growing government. The bottom line, regardless of which measure you use, is that the recovery took a long time to reach the prior levels, as it has this time, because anti-capitalist interventions do not allow the economy to heal - they just maintain to the greatest extent possible, all the mal-investment and dislocations that led to the decline.
As for winning elections, yes the Democrats are very adept at using financial insecurities to control voters and win elections. Even now, more Americans blame business than government for the bad economic conditions. The Democrats fan that populist flame and use that misplaced blame to their electoral advantage, at least at the national level.
And what you call FDR's "stunning pace of improvement" is still what is commonly referred to as the "Great Depression" because then, as now, the "improvements" didn't feel like robust economic achievement. It felt like, well, despair (as now it feels like the "end of the American Dream"). And the only propaganda at work in this discussion it your suggestion that Hoover and Bush were some sort of free market capitalists whose economic policies were entirely the opposite of what their successors did.
Arkady
President
Growth is growth, whether it's private sector or public sector. Also, today, we've actually had federal spending growth that has been FAR below modern historical norms. That austerity is the reason that the current growth cycle has been so weak, whereas the FDR growth cycles were probably the strongest in all of American history. The Great Depression, started at the end of a period of horrible misrule by three consecutive Republican presidents, took a long time to climb out of. But that was a result of the depths of the pit they left America in, not the speed of the ascent during the FDR years.
Lukey
Senator
I have a pretty simple question for you that might lead us to the truth - is the current recovery better or worse than FDR's?
Arkady
President
It's worse, in the sense of slower improvement.