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November 3, 2008
Roosevelt Extended the Great Depression?
wo researchers at UCLA have published a study and determined that President Roosevelt's actions actually extended The Great Depression by seven years.
After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.
"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he 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."
Why do I get the feeling that Obama's election will mean a longer economic downturn (not to mention increased activity by all the global bad guys).
Posted by witnit at November 3, 2008 10:48 AM
Comments
To answer your question: because you are probably right. There was a recession in 1920 that's not often talked about. The U.S. had to pay off World War I debts and assist the rebuilding of Great Britain's post war economy. It was also the first downturn since the Federal Reserve was created. The government did absolutely nothing about it and within 1 year, the economy rebounded and became stronger than it was before the recession. This was the beginning of the roaring 20s prosperity.
BTW, Hoover is often derided as being a 'do-nothing' Depression era president and that's not true. In fact, much of Roosevelt's programs and policies were similar to Hoover's with some enhancements. The difference between them was that Roosevelt had a warmer, more personable manner with the people. He made people feel better by assuring them things were going to get better, even though the evidence didn't support that. World War II pulled us out of the Depression. They didn't restore the U.S. economy back to what it was before the Depression, they transformed it into the Cold War economy.
My concern about Obama's Presidency is that our national economy will be subsumed into a bigger, more global version of the same house of cards that created the present crisis.
Posted by: Broadlighter at November 7, 2008 11:02 AM
