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Depression research
Mar. 13th, 2009 11:17 amProdded by ![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
pklexton on this fj thread, I spent a good chunk of yesterday researching the Depression and parallels to current events.
Economists looking at the Depression have reached near-consensus on some things: Hoover's initial responses (sticking to the gold standard, trying to keep wages and commodity prices up, raising taxes) made things much worse. The Fed allowed the money supply to implode, ditto. And FDR's responses ranged from helpful (work-relief programs, fiscal stimulus, deposit insurance) to harmful (industrial policies intended to raise prices and wages for some, destruction of vast amounts of farm produce to raise prices in a time of hunger, even higher taxes.) The apparent willingness of FDR's band of young turks to try anything, their belief that restricting supply and raising prices would aid recovery, and their disinterest in respecting freedom of private enterprise -- until the rejection of FDR's Supreme Court packing idea -- discouraged investors for years. True recovery of employment, living standards, and investment didn't occur until the end of WW2, when war rationing and government control of the economy were relaxed in a kind of Big Bang of demobilization and deregulation that was expected to result in recession, but actually created a boom.
FDR's image as secular saint (my mother grew up adoring him, for example) is overblown. At least you can contrast him to other leaders of the time (Stalin, Hitler, Mussolini) who were dangerously attractive in their authoritarianism and credit him for avoiding the worst excesses in a time when many people thought centralized, technocratic planning was the wave of the future. But does he really deserve credit for this? The most fascist elements of his plans were limited by the Supreme Court and Congress.
Today there are some analogies to be drawn, but they are limited. This recession is unlikely to even get close the the Depression in depth; internationally the consensus supporting free trade and enterprise is holding. Nothing like the Hoover and FDR measures that made things worse is proposed, though the idea of raising taxes in a recession is still under consideration. Obama's Brain Trust is a lot more knowledgeable about economics than FDR's, but shares some of the technocratic central-planning tendencies.
[next: banking crisis]
pklexton on this fj thread, I spent a good chunk of yesterday researching the Depression and parallels to current events.Economists looking at the Depression have reached near-consensus on some things: Hoover's initial responses (sticking to the gold standard, trying to keep wages and commodity prices up, raising taxes) made things much worse. The Fed allowed the money supply to implode, ditto. And FDR's responses ranged from helpful (work-relief programs, fiscal stimulus, deposit insurance) to harmful (industrial policies intended to raise prices and wages for some, destruction of vast amounts of farm produce to raise prices in a time of hunger, even higher taxes.) The apparent willingness of FDR's band of young turks to try anything, their belief that restricting supply and raising prices would aid recovery, and their disinterest in respecting freedom of private enterprise -- until the rejection of FDR's Supreme Court packing idea -- discouraged investors for years. True recovery of employment, living standards, and investment didn't occur until the end of WW2, when war rationing and government control of the economy were relaxed in a kind of Big Bang of demobilization and deregulation that was expected to result in recession, but actually created a boom.
FDR's image as secular saint (my mother grew up adoring him, for example) is overblown. At least you can contrast him to other leaders of the time (Stalin, Hitler, Mussolini) who were dangerously attractive in their authoritarianism and credit him for avoiding the worst excesses in a time when many people thought centralized, technocratic planning was the wave of the future. But does he really deserve credit for this? The most fascist elements of his plans were limited by the Supreme Court and Congress.
Today there are some analogies to be drawn, but they are limited. This recession is unlikely to even get close the the Depression in depth; internationally the consensus supporting free trade and enterprise is holding. Nothing like the Hoover and FDR measures that made things worse is proposed, though the idea of raising taxes in a recession is still under consideration. Obama's Brain Trust is a lot more knowledgeable about economics than FDR's, but shares some of the technocratic central-planning tendencies.
[next: banking crisis]
