Writing a post, and having it be true are two very different things.Originally Posted by YardleyLabs
Writing an article, and having it be true are two very different things. Unfortunately, when studies are conducted to prove pre-existing political beliefs, the results are sadly predictable. The study mentioned is widely quoted. Unfortunately, other then its original publication in a regional Federal Reserve publication, it is seldom cited outside of conservative publications seeking to bolster arguments against any government intervention in dealing with the Great Bush Recession.
However, the article itself is a little loosy goosy. Much of its arguments begin from slower than predicted growth in employment following the beginning of Roosevelt policies. However, in concluding that employment growth was too low, the authors explicitly exclude consideration of public employment in temporary jobs with the WPA and similar programs, even though these employed 60% of those who were otherwise unemployed and produced infrastructure improvements that we continue t benefit from today.
They discard more widely accepted theories for the severity of the Depression based on their belief that these theories do not explain why similar levels of collapse were not experienced in 1920-21 when there was a mini financial crisis involving deflation. This argument is unconvincing since arguing inconsistency with only two data points gives no real basis for evaluating any hypothesis. A better observation might be that all of our economic theories have been "proven" only within very narrow bands of economic performance, and none appears to work well in periods of economic extremes.
Fundamentally, the authors argue that Roosevelt's policies kept wages too high for the armies of the poor living in "Hoover" cities throughout the country. Presumably, had more people been allowed to starve to death, they might have worked for less than the near starvation wages they otherwise received. Given that my father lived during that period in a single parent household earning $8/week to feed my grandmother (working 60 hours/week) and her seven children, I don't think the economic problem was workers who were earning too much.
I do not pretend to any expertise in Depression economics. Such analyses are of primarily historical importance since the fundamental structure of our economy has changed radically. The importance of such revisionist studies does not strike me as an effort at serious economic study. Rather, it seems to be an effort to debunk the perception that government intervention can ever be productive since that undermines one of the most fervent ideological tenets of the neo-con movement. The fact that those living at the time viewed conditions as improving as a direct result of public policy and re-elected Roosevelt to an unprecedented three terms only makes the refutation more important.
Apart from anything else, New Deal policies allowed the US to avoid the move toward fascism that overtook governments in Germany, Spain, and Italy (and would have overtaken France but for WWII). Those policies also allowed us to avoid the Communist takeover experienced in Russia. We were threatened by both and helping people to keep working and eating until the economy recovered was an important reason why.
This is your opinion, or spin, nothing more.
RK
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