UCLA Study Finds FDR Prolonged the Great Depression - Mercedes-Benz Forum

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post #1 of 13 (permalink) Old 11-06-2008, 09:38 AM Thread Starter
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UCLA Study Finds FDR Prolonged the Great Depression

It makes me very edgy when ever anyone starts quoting FDR's policies as a good way to overcome economic down turns. Now there is empirical evidence to back that up.

FDR's policies prolonged Depression by 7 years, UCLA economists calculate / UCLA Newsroom

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post #2 of 13 (permalink) Old 11-06-2008, 10:43 AM
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Originally Posted by TNTRower View Post
It makes me very edgy when ever anyone starts quoting FDR's policies as a good way to overcome economic down turns. Now there is empirical evidence to back that up.

FDR's policies prolonged Depression by 7 years, UCLA economists calculate / UCLA Newsroom
Interesting theory but there is no way to carve out the effects of one policy among others beyond speculation and economic "models" with fancy maths.

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The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages
...
NIRA's role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

"Historians have assumed that the policies didn't have an impact because they were too short-lived, but the proof is in the pudding," Ohanian said. "We show that they really did artificially inflate wages and prices."

Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.
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post #3 of 13 (permalink) Old 11-06-2008, 11:46 AM
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They have been working on this for five or so years. I read about it back when it was first published. It is not getting a lot of traction from other economists mainly because the assumptions drawn to project the NIRA data are just that.

Not to say that FDR did everything correctly. He did not. But most believe that the BALANCE was very much toward the good.

The folks who compare NOW to the Great Depression do so oft times without some of the caveats. The biggest being that we are in a much more complex world now than 1929-1936. On one hand the programs FDR implemented were wide sweeping and draconian [and some needed to be]. On the other hand, much of what he did would be stopped by some of the very regulations HE imposed as the Depression started winding down.

Cole and Ohanian look at the Depression as a 15 year event that could have been shortened. While it MIGHT be possible that it could have been, that assumption is not based on the dynamics of the day. Much the same as if we applied the same "fix" to today's economy, would we have the same results, NO.

It is a good piece and a lesson for those who want to simply legislate out of Recession/Depression. But that won't work any better that a free market "let the market sort it out" approach.

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post #4 of 13 (permalink) Old 11-06-2008, 11:50 AM
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Republicans. Everytime they relax FDR's reforms, they steal us blind and we have a recession, a lesson we keep forgetting in America. So instead of long recessions, under Republicans, we just start having new ones over and over again.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

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post #5 of 13 (permalink) Old 11-06-2008, 12:54 PM Thread Starter
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Originally Posted by mcbear View Post
They have been working on this for five or so years. I read about it back when it was first published. It is not getting a lot of traction from other economists mainly because the assumptions drawn to project the NIRA data are just that.

Not to say that FDR did everything correctly. He did not. But most believe that the BALANCE was very much toward the good.

The folks who compare NOW to the Great Depression do so oft times without some of the caveats. The biggest being that we are in a much more complex world now than 1929-1936. On one hand the programs FDR implemented were wide sweeping and draconian [and some needed to be]. On the other hand, much of what he did would be stopped by some of the very regulations HE imposed as the Depression started winding down.

Cole and Ohanian look at the Depression as a 15 year event that could have been shortened. While it MIGHT be possible that it could have been, that assumption is not based on the dynamics of the day. Much the same as if we applied the same "fix" to today's economy, would we have the same results, NO.

It is a good piece and a lesson for those who want to simply legislate out of Recession/Depression. But that won't work any better that a free market "let the market sort it out" approach.
Well at least you and I agree on something here. Although I think FDR is given WAY too much credit for getting the US out of the Depression. It was actually the WWII that got us out. I don't wish to open a can of worms about FDR seeing it on the horizon or not and letting it happen or not.

It really can not be argued with any sense of reason that FDR's policies were responsible for getting the country out of the Depression. Unless you are to say that FDR's policy of massive spending on the war effort was the impetus.

Of course you have such learned opinion put forth like FTL's just above here. No wonder the hard left is so universally hated by the Dalai Lama.

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

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post #6 of 13 (permalink) Old 11-06-2008, 01:35 PM
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If WWII turned around the great depression, why isn't this current war effort in Iraq saving our economy?

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post #7 of 13 (permalink) Old 11-06-2008, 01:41 PM Thread Starter
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If WWII turned around the great depression, why isn't this current war effort in Iraq saving our economy?
As McBear pointed out this is not the same time and our Economy is vastly more complicated.

For one thing the International Monetary Fund did not exist, the debt "taboo" was very strong still (as in you did not go into debt if you could avoid it). There are a myriad of reasons.

Who's John Galt.

"Timeo Danaos et dona ferentes" - Virgil, The Aeneid, Book 2

If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel. --Benjamin Netayahu
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post #8 of 13 (permalink) Old 11-06-2008, 01:48 PM
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FDR? Good man who met a bad end. Eventually it will be revealed that he committed suicide by shooting himself in the brain with a .22 pistol.
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post #9 of 13 (permalink) Old 11-06-2008, 02:18 PM
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As McBear pointed out this is not the same time and our Economy is vastly more complicated.

For one thing the International Monetary Fund did not exist, the debt "taboo" was very strong still (as in you did not go into debt if you could avoid it). There are a myriad of reasons.
I'll be the first to admit I'm not a financial guy, but how are those differences responsible for a rescued economy in the past vs. a sunk one presently? It seems to me an economic drain such as war, where products are destroyed without financial return is a net loss regardless of the factors you mention.

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post #10 of 13 (permalink) Old 11-06-2008, 02:58 PM
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Well at least you and I agree on something here. Although I think FDR is given WAY too much credit for getting the US out of the Depression. It was actually the WWII that got us out. I don't wish to open a can of worms about FDR seeing it on the horizon or not and letting it happen or not.

It really can not be argued with any sense of reason that FDR's policies were responsible for getting the country out of the Depression. Unless you are to say that FDR's policy of massive spending on the war effort was the impetus.

Of course you have such learned opinion put forth like FTL's just above here. No wonder the hard left is so universally hated by the Dalai Lama.
Many of the policies that FDR had did indeed help move the country out of the Depression. Considering we had a workforce unemployment in the 25%+ in many areas of the country, jobs programs were responsible for many of the areas of growth in the rebuilding economy. Projects like the CCC and WPA were examples of simple, yet thorough workfare programs that put bread on the table for millions.

You have to understand that at that time there were no food stamps, no WIC, school lunch programs. When mom and dad were out of work, KIDS DIDN'T EAT. There was only so much sharing in the communities that some places could do.

So as works programs like Hoover Dam and TVA sprung up, they did several things. The provided JOBS first. They also used those programs to build infrastructure and rebuild the country.

While you can argue that the country got out of the depression with WW2, MOST of the rebuilding of the economy had already been in place a few years prior to 1939. When we started building for Lend/Lease, that spurred on the economy to actual "growth" levels instead of just "getting back to a real functioning economy" levels.

So, there are two elements to FDR. Yes he overreached. But some of that overreach, at the time was very necessary. Second, he managed the growth so that it was steady and not fits and starts. Third, he put in place some very good programs that instilled confidence in the economy and in the government, two institutions that had extremely low confidence prior to those programs. [THAT is where the parallels are with today].

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