Tuesday, November 25, 2008

Obama and FDR

Here are the unemployment figures from Franklin Delano Roosevelt's years in office. All numbers are from "Info Please". I have no idea why they only listed the even-numbered years, but this is enough for you to get the picture:

1932 - 23.6%
1934 - 21.7%
1936 - 16.9%
1938 - 19%
1940 - 14.6%
1942 - 4.7%
1944 - 1.2%

"The Day That Will Live In Infamy", when the Japanese attacked Pearl Harbor, was December 7, 1941. That got the country onto a wartime footing and virtually eliminated unemployment (along with many of FDR's economics experiments.) There were already a few signs of a recovery in the making by 12-7-41, but scattered experts are starting to question the wisdom of FDR's big government economic recovery plans.
FDR's New Deal took a generic recession and turned it into a prolonged depression.
One of the main reasons the recovery took so long? (Besides punitive tariffs that virtually shut down worldwide trade?) Nobody knew what sort of crazed recovery experiment FDR And His Band Of Merry Meddlers would throw at them next. Most people were afraid to invest in anything, for fear that the rules would change in the next "experiment".

Two UCLA economists have studied FDR's track record, and decided that FDR's New Deal experiments with the economy prolonged the Great Depression for 7 years.

Here's my favorite quote from the link above: "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."

Here's a video of the Obamessiah, parachuting in from Chicago to announce his Economic Recovery team. Of particular note is Timothy F. Geithner, president and CEO of the Federal Reserve Bank of New York, who will serve as Secretary of the Treasury.

Here's the Washington Post on Mr. Geithner: "Like (Hank) Paulson, Geithner believes that the Treasury should be given vast powers to develop experimental strategies for responding to the crisis and the flexibility to abandon them if they don't work.
May God have mercy on our souls. What's the next trick we're going to pull from the FDR playbook, punitive tariffs "to perteckt Amurrican jobs"????? (Well, yeah, The Obamessiah has already said that he plans to renegotiate NAFTA, and the Colombia Free Trade Agreement appears to be on life support. Please hit the Colombia Free Trade Agreement link. It's a good one.)

So, if you read the UCLA wisdom, do you think FDR's 7 years of Bold Experimentation ended the Great Depression? Or do you think it was the events of December 7, 1941?

Please remember....the Japanese are now our allies. We can't count on them to bail us out by bombing us this time.


Dr Ralph said...

We may not have the Japanese to bail us out but al-Qaeda did their best a few Septembers ago.

While I won't disagree that a large part of what finally "ended" the Great Depression's high unemployement was our entry into WWII, the fact is, by your own figures, unemployment dropped from 23% to 14% between 1932 and 1940. Still high, but an improvement of over 33%.

Re: two economists from UCLA saying FDR "prolonged" the Depression.


That's impressively large percentage of consensus. As the joke goes, for every economist, there exists an equal and opposite economist. And they’re both wrong.

A couple more jokes:

An economist returns to visit his old school. He's interested in the current exam questions and asks his old professor to show some. To his surprise they are exactly the same ones to which he had answered 10 years ago! When he asks about this the professor answers: "the questions are always the same - only the answers change!"

Q. Why do Economists provide estimates of inflation to the nearest tenth of a percent?

A. To prove they have a sense of humour.

Q: How many economists does it take to change a light bulb?

A: Hell, you need a whole department of them just to prepare the research grant.

More economist jokes.

The Whited Sepulchre said...

The al-Qaeda event marked the beginning of what will probably be known as "The Bush Boom", which went from 2002 to 2006.

I grew up reading that FDR's New Deals and Alphabet Soup of government entities were what put people back to work. Starting with Thomas Sowell, though, and especially Shales' "The Forgotten Man", I've reconsidered that opinion in a big way. I honestly think everybody, once again, is scared shitless to invest in ANYTHING until they decide which industries/institutions Paulson and Co. are going to smile on next. And what do you want to bet that Obama's people are going to redo the exact same Smoot-Hawley tariff mistake?

Here's my favorite economist joke (copied from another site, to save time....)
A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?