Capitalism / Consumerism ?
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Stan Shannon wrote:
FDR began a more friendly attitude towards business well before the US entered WWII, American industrial might was beginning to be felt prior to the massive spending on the war.
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded.
Stan Shannon wrote:
If the US had never entered the war, the recovery would have been just as profound (ignoring any attacks on the mainland, of course). Obviously spending on the war caused full employment.
You are contradicting yourself.
Stan Shannon wrote:
But that employment was for non-productive purposes just as it would have been if it had been done earlier.
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
Stan Shannon wrote:
The issue of private demand is valid. But it could no longer be held back with the needs of defending the world being so pressing. It had to be released. It was being purposefully held back before that.
This is tinfoil hat nonsense. Government spending boosted private demand by putting people and firms to work.
Stan Shannon wrote:
We are about the relearn all these lessons the hard way.
That is way too optimistic a perspective. People like you never learn.
John Carson
John Carson wrote:
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded
Yeah, it recovered all the way to ... what? ... 17% unemployment? Wow, thats what I call progress.
John Carson wrote:
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
I agree that a certain level of infrastructure spending is entirely productive. But there is a limit to how much is actually needed. You cannot just keep building infrastructure and expect it to be something people actual need to use. Most of FDR's projects were simply not needed and did nothing to advance the economy. The only true productive form of spending, the kind that really builds an economy, is that produced by private industry.
John Carson wrote:
Government spending boosted private demand by putting people and firms to work.
No it didn't. It inhibited it. Every time the economy was poised to take off, it was beaten back into submission by FDR.
John Carson wrote:
People like you never learn.
I am perfectly willing to allow you and Obama to teach me the lessons that I, and the world, need to learn.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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John Carson wrote:
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded
Yeah, it recovered all the way to ... what? ... 17% unemployment? Wow, thats what I call progress.
John Carson wrote:
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
I agree that a certain level of infrastructure spending is entirely productive. But there is a limit to how much is actually needed. You cannot just keep building infrastructure and expect it to be something people actual need to use. Most of FDR's projects were simply not needed and did nothing to advance the economy. The only true productive form of spending, the kind that really builds an economy, is that produced by private industry.
John Carson wrote:
Government spending boosted private demand by putting people and firms to work.
No it didn't. It inhibited it. Every time the economy was poised to take off, it was beaten back into submission by FDR.
John Carson wrote:
People like you never learn.
I am perfectly willing to allow you and Obama to teach me the lessons that I, and the world, need to learn.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
Yeah, it recovered all the way to ... what? ... 17% unemployment? Wow, thats what I call progress.
It recovered from 25%. That is progress. And, as I have already said, it recovered more slowly because of a lack of government spending, a situation that was corrected in WWII. It also briefly got worse when Roosevelt prematurely tried to reduce the deficit in 1937.
Stan Shannon wrote:
I agree that a certain level of infrastructure spending is entirely productive. But there is a limit to how much is actually needed. You cannot just keep building infrastructure and expect it to be something people actual need to use. Most of FDR's projects were simply not needed and did nothing to advance the economy. The only true productive form of spending, the kind that really builds an economy, is that produced by private industry.
This last sentence is voodoo (and contradicts the first sentence). Both government spending and private sector spending involve a mix of consumption spending and investment spending. If the private sector won't spend, the government must spend in its place or income and employment fall.
Stan Shannon wrote:
No it didn't. It inhibited it. Every time the economy was poised to take off, it was beaten back into submission by FDR.
Let's look at government spending and national income through the 30s. National income on the left, government spending on the right. Year GDP Total Gov't Spending 1929 103.6 11.70 1930 91.2 12.06 1931 76.5 12.19 1932 58.7 12.44 1933 56.4 12.62 1934 66.0 12.81 1935 73.3 14.78 1936 83.8 16.76 1937 91.9 17.22 1938 86.1 17.68 1939 92.2 19.05 1940 101.4 20.42 Here we see a precipitous decline of GDP from 103.6 billion in 1929 to 56.4 billion in 1933. Government spending barely changes --- it increases by less than 1 billion. Then from 1933 to 1940, government spending grows by 8 billion and GDP grows by 45 billion, with the lion's share of the growth obviously being in the private sect
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Thanks for humoring me and my straw-man. I'd appreciate it if you indulged a few more elementary questions. Does contemporary macroeconomic theory place a measure of goodness on investing in liquid vs illiquid assets? Does it prefer equities over realized periodic returns?
73Zeppelin wrote:
Since you raised the point, then under the current economic crisis, Joe the Worker who is ferretting away his savings is contributing to the immediate problem at the moment. Savings in an economy undergoing deflation worsens the problem.
I guess to myself and other savers who are in a good position to ride out this recession because of our cash on hand this seems to be a bit of and Ivory Tower attitude toward the problem. And, it doesn't take much to see that companies that did save during the boom times are in a better long term position than those that failed to do so. Personally, I look at people who bought into the equities scheme and feel bad that it may set them back many years. What does classical macroeconomics have to say about considerable savings rates during good times? I suspose, I could use Intel as example to prove both points of view :). 1) They saved billions of dollars in the recent years and 2) have elected to use this time when they are running below capacity to upgrade and invest in their plants.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
Slightly OT I always liked your sig Chris especially given my circumstances. I was married for 28 years, most of which I allowed my wife to manage the money. Basically she pyramided up debt by obtaining new credit to the point where it all blew up one day, and was the primary cause of demise of marriage. State law made me liable for 50% of all debt she racked up ( even if it was solely in her name and I was unaware of it) that neatly crushed me. Now that I've recovered, I made my recovery based on the concept of paying cash as I go. I have 1 credit card with a sufficient limit should work require me to travel, and only use it for that. Like you I save an "allowance" towards something until I can pay outright for it. For instance my "big" screen TV started going south last fall, by Christmas time I'd saved enough to get a new flat-screen I was happy with. The not having to worry about making payments if my job would be affected by the current crisis were all just icing on the cake for me. {edit}Something odd just happened and 2 posts occurred , deleted one(/edit)