FDR pulled us out of the Depression. We need more FDR style policies to prevent ANOTHER Depression.
2004 study found FDR's 'misguided policies' delayed recovery.
By Paul Detrick
Business & Media Institute
10/28/2008 10:08:51 AM
Those who ignore history are doomed to repeat it.
In 2004, economists at the University of California, Los Angeles (UCLA), studied the policies of President Franklin Roosevelt’s New Deal and determined his policies prolonged the Depression by seven years.
Harold L. Cole and Lee E. Ohanian blamed anti-free market measures for the slow recovery in an article published in the August 2004 issue of the Journal of Political Economy.
Cole and Ohanian asserted that Roosevelt thought excessive business competition led to low prices and wages, adding to the severity of the Depression.
“[Roosevelt] came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies," Cole said in a press release dated Aug. 10, 2004.
The professors paid particular attention to the National Industrial Recovery Act (NIRA) and the effect it had on competition. Passed in June 1933, the NIRA required companies to write industry-wide fair competition codes that fixed prices and wages, established production quotas, and imposed restrictions on companies if they wanted to enter into alliances, according to OurDocuments.gov.
The Supreme Court declared the NIRA unconstitutional two years after it was passed, but Cole and Ohanian said that the act caused enough damage during those two years leading to even more regulation.
Roosevelt pushed on after the NIRA was declared unconstitutional with the 1935 National Relations Act (NRA), which sought to regulate private sector labor and management practices, according to the National Labor Relations Board.
The NRA swelled the strength of Labor unions in 1936 and 1937 and as a result Cole and Ohanian estimated that there were 14 million strike days in 1936 and 28 million in 1937.
But the negative influence of FDR’s policies on the economic crisis of his day has been virtually ignored by the news media – despite hundreds of comparisons to the Great Depression in 2008.
A recent Business & Media Institute report, “The Great Media Depression,” revealed the media compared current economic conditions to the Great Depression more than 70 times in the first six months of 2008. An additional tally found at least 157 more comparisons since July 1, 2008.
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6 comments:
God, you are wrong so much of the time - I'm sure it hurts.
Here's David Sirota on why you are wrong: "On deeper examination, I discovered that the right bases its New Deal revisionism on the short-lived recession in a year straddling 1937 and 1938. But that was four years into Roosevelt's term -- four years marked by spectacular economic growth. Additionally, the fleeting decline happened not because of the New Deal's spending programs, but because Roosevelt momentarily listened to conservatives and backed off them. As Nobel-winning economist Paul Krugman notes, in 1937-38, FDR "was persuaded to balance the budget" and "cut spending and the economy went back down again."
To be sure, you can credibly argue that the New Deal had its share of problems. But overall, the numbers prove it helped -- rather than hurt -- the macroeconomy. "Excepting 1937-1938, unemployment fell each year of Roosevelt's first two terms [while] the U.S. economy grew at average annual growth rates of 9 percent to 10 percent," writes University of California historian Eric Rauchway.
What about the New Deal's most "massive government intervention" -- its financial regulations? Did they prolong the Great Depression in ways the official data didn't detect?
Nope.
According to Federal Reserve chairman Ben Bernanke, "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression." In fact, even famed conservative economist Milton Friedman admitted that the New Deal's Federal Deposit Insurance Corp. was "the structural change most conducive to monetary stability since ... the Civil War."
OK -- if the verifiable evidence proves the New Deal did not prolong the Depression, what about historians -- do they "pretty much agree" on the opposite?
Again, no.
As Newsweek's Daniel Gross reports, "One would be very hard-pressed to find a serious professional historian who believes that the New Deal prolonged the Depression."
But that's the critical point I somehow forgot last week, the truism we must all remember in 2009: As conservatives try to obstruct a new New Deal, they're not making any arguments that are remotely serious.
- more here:
http://www.salon.com/opinion/feature/2009/01/02/sirota_fdr_depression/
I'll take FDR in a wheelchair over Reagan on a horse any day!
How do you explain that the European countries that did nothing but allow the free market to run it's course, recovered much sooner than we did?
BTW, the American public had no idea that FDR was on a wheelchair at all.
By the way, I did NOT say that all New Deal reforms were bad, only that some were.
FDIC was very necessary, but the NRA was a disaster and prolonged the depression.
This is the typical response to any criticism of the New Deal that falls back on the "So, you want Child Labor" arguement.
So you do want poor children working in factories!
watch this:
http://www.funnyordie.com/videos/d14fdef4f2/between-two-ferns-with-zach-galifianakis?rel=auto_related&rel_pos=4
Selling the poor children to medical science may be a better option, like in Monty Python's "The Meaning of Life" flick.
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