It is generally accepted by those not brainwashed by statist propaganda that Hoover's Keynesian policies of deficit spending and propping up wages made the depression worse. However, when Roosevelt extended these policies (implementing full-blown corporatism and spending even more money) there was an initial (if artificial) recovery. Question is, why didn't the Depression become even worse after 1933? Why did GNP begin to rise and unemployment fall whereas under Hoover it had done the opposite?
Was it because the money supply stopped contracting?
Did real wages actually go down?
Was there a natural economic rebound that happened to coincide with Roosevelt's election?
I'll take what I wrote in a different section:
Well when Roosevelt came to office he was able to stop the hemorrhage of gold and banking panics by closing the banks and putting us on a fiat standard. So he in essence was able to "floor" the problem.The Depression did "bottom" out by then, and now it was just a matter of recovery. As for businessman hearing upon this, and getting a new president who promises a "New Deal" (Whatever that may be, cutting government/unemployment/banks/gold etc etc), you try to think optimistically and rally behind it. Benjamin Anderson, writing in Economics and the Public Welfare, states that the Federal Reserve index of production rallied quickly in 1933 from 60 in March 1933 to 100 by July 1933, but then fell down to 72 by November 1933. When the end of the NRA came in May of 1935 he says that was when "real recovery" came because the NRA put alot of fear into business. Vedder and Gallaway also in Out of Work: Unemployment in the Twentieth Century state unemployment fell after 1933 because of the increase in productivity, prices and demand from businesses and a slight decrease in the adjusted real wage. However they state that soon wages increased rapidly and outstripped productivity in 1937 which brought the business downturn in 1937-1938, along with the "thin market" in the Stock market that Benjamin Anderson describes. Government programs technically ameliorated the problem, they did take people off the streets and make them labor on useless public works projects. But the fact remains during most of the New Deal a typically recovery never came because private investment decreased, and all of the workers were kept "employed" by a government bubble of debt. Keynesians sometimes point to the fact that government spending decreased prior to 1937 which caused the problem, and if this is true, then why didn't the country plunge back into a depression post 1945? In both cases the workers were doing pointless things, i.e making war materials and working on public works projects.
I just ordered Robert Murphy's The Politically Incorrect Guide to the Great Depression. Apparently it is not as irreverent as the normal PIG books, and people say this is the Austrian explanation for the entire Great Depression which was never really done before.
From what I understand...
- Roosevelt's New Deal created government jobs, thus unemployment goes down, but the free market is now being hog tied into submission by monopolized government jobs... thus free market is being suppressed.
- World War 2 is simple. Most people were drafted so unemployment goes down... thus free market is being suppressed.
It's about the free market and freedom - not forced labor and anti-competition. People inalienably have free-will.
"I used to see a mountain as a mountain.. Thereafter.. when I saw a mountain; lo! it was not a mountain.. yet now of final tranquillity: I see a mountain just as a mountain as I used to.." - Master Yuan; molon labe
wilderness:- Roosevelt's New Deal created government jobs, thus unemployment goes down, but the free market is now being hog tied into submission by monopolized government jobs... thus free market is being suppressed.
As Henry Hazlitt explains in Economics in One Lesson, government jobs do not create a net increase in employment. Since every dollar spent on government employment must be taxed, necessarily each government job created means that one job in the private sector never came into existence (the money taxed out of your pocket, which could have been spent on televisions, was instead used by the government). So, in that sense, there was no net increase in labor, but there is actually a net decrease. Hazlitt blames this on corporate taxes, because he suggests that businesses are less inclined to invest when a dollar of profit is taxed.
Economic Thought (Latest Post): Don't Be Fooled by GDP
Jonathan M. F. Catalán: wilderness:- Roosevelt's New Deal created government jobs, thus unemployment goes down, but the free market is now being hog tied into submission by monopolized government jobs... thus free market is being suppressed. As Henry Hazlitt explains in Economics in One Lesson, government jobs do not create a net increase in employment. Since every dollar spent on government employment must be taxed, necessarily each government job created means that one job in the private sector never came into existence (the money taxed out of your pocket, which could have been spent on televisions, was instead used by the government). So, in that sense, there was no net increase in labor, but there is actually a net decrease. Hazlitt blames this on corporate taxes, because he suggests that businesses are less inclined to invest when a dollar of profit is taxed.
Thanks for making this further clarification.
When I mentioned "unemployment goes down" in both New Deal and World War Two, I was talking about statist dishonest statistics, not what actually happen.
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