The Hoover-Roosevelt Redux
As I watch George Bush swing helplessly in the wind, abandoned by both his party and common sense, unable to control a Democratic congress and see Barack Obama and the Clinton Team already over the starting line, not even waiting for the bell, I am so reminded of the Great Depression, and the myths I was taught in school. But here's
the truth:
"Hoover and Roosevelt administrations -- in disregarding market signals at every turn -- were jointly responsible for turning a panic into the worst depression of modern times. As late as 1938, after almost a decade of governmental "pump priming," almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth."
Roosevelt gave us 8 more years of bad economic policies, some of which we still live with; let's hope Obama doesn't go the same destructive route.
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5 comments:
Actually, things had begun to improve about four years into FDR's presidency, but then in 1937 he was persuaded to cut government spending and balance the budget, plunging the country back into depression until the massive government works program of WWII began, resulting in a 30 year economic boom.
Milton Friedman correctly observed that massive government spending over the long term will result in stagflation and should be avoided, but as a method to jump start the economy and rebuild crumbling infrastructure needed to pave the way for the next economic boom, it is easily the most effective option, paying dividends for decades to come.
Murray sez:
I'd like to think our government has learned from history how to mannage our tax dollars that provides positive results. However, from what I have witnessed the past several years, neither party seems to have a clue! They print it, collect it and then PORK it while the important issues grow deeper in debt. At my age, the possibility of seeing real change in this philosophy is practically nil so I, like thousands of others, will be just trying to hang tough. It makes me sick that we did everything right, followed the rules and then we're forced to pay for those who didn't. I guess that's Democracy huh??
The public works program was in the 30s not the 40s. WWII pulled us out of the Depression--all the workers went into the service. I wouldn't call 8 years of what he did a "jump start." His taxation plans were particularly hard on the poor, then he gave some of it back to them in public works projects. Government interference does not grow an economy. And we're going that direction now.
Although WWII may not have been called a public works program, it was the largest government spending program in history, with outlays around 125% of GDP. It was this spending, and not the war itself, that pulled us out of the depression.
Right. I certainly wouldn't call WWII a WPA program, but it did turn the economy around. Even my grandfather got a job when all the young men left town.
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