UCLA Economists: Government Intervention Prolonged Great Depression

[Dolphins9954]

UCLA Economists: Government Intervention Prolonged Great Depression

2004 study found FDR's 'misguided policies' delayed recovery.

Those who ignore history are doomed to repeat it.

In 2004, economists at the University of California, Los Angeles (UCLA), studied the policies of President Franklin Roosevelt’s New Deal and determined his policies prolonged the Depression by seven years.

Harold L. Cole and Lee E. Ohanian blamed anti-free market measures for the slow recovery in an article published in the August 2004 issue of the Journal of Political Economy.

Cole and Ohanian asserted that Roosevelt thought excessive business competition led to low prices and wages, adding to the severity of the Depression.

“[Roosevelt] 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," Cole said in a press release dated Aug. 10, 2004.

The professors paid particular attention to the National Industrial Recovery Act (NIRA) and the effect it had on competition. Passed in June 1933, the NIRA required companies to write industry-wide fair competition codes that fixed prices and wages, established production quotas, and imposed restrictions on companies if they wanted to enter into alliances, according to OurDocuments.gov.

The Supreme Court declared the NIRA unconstitutional two years after it was passed, but Cole and Ohanian said that the act caused enough damage during those two years leading to even more regulation.

Roosevelt pushed on after the NIRA was declared unconstitutional with the 1935 National Relations Act (NRA), which sought to regulate private sector labor and management practices, according to the National Labor Relations Board.

http://businessandmedia.org/articles...027150030.aspx


If it wasn't for WW2 the Great Depression would have lasted longer. Looks like we are repeating the same mistakes all over again.

[Ferretsquig]

So who is out there trying to fix prices and wages? They're actually trying to do the opposite of Roosevelt.....get prices to rise and wages to remain stagnant. Everyone is well aware of the many mistakes FDR made and noone is trying to repeat them.

[Dolphins9954]

Originally Posted by Ferretsquig

So who is out there trying to fix prices and wages? They're actually trying to do the opposite of Roosevelt.....get prices to rise and wages to remain stagnant. Everyone is well aware of the many mistakes FDR made and noone is trying to repeat them.

Fixing prices and wages was just one of the many things FDR did. Remember The New Deal? Or the bailouts?

[LouPhinFan]

If FDR's efforts were found unconstitutional, then how can Obama's admin repeart his mistakes? I don't understand.

[WaywardZest]

Damn those liberal universities!

[Dolphins9954]

Originally Posted by LouPhinFan

If FDR's efforts were found unconstitutional, then how can Obama's admin repeart his mistakes? I don't understand.

You know the constitution doesn't matter anymore.

[Ferretsquig]

Originally Posted by Dolphins9954

Fixing prices and wages was just one of the many things FDR did. Remember The New Deal? Or the bailouts?

If you're going to post something then at least spend the time to read beyond the title. The study done evaluated a small part of the new deal where the government encourages the collusion of businesses with no real understanding of economic consequences. This was one area of government intervention which has been proven to a certain degree to be detrimental to the health of the economy. Noone is trying to repeat this mistake at this time.

If you want to make the argument that bailouts also have a negative impact, then do so....but don't post a study which has nothing to do with it and try to equate the two.

[Dolphins9954]

Originally Posted by Ferretsquig

If you're going to post something then at least spend the time to read beyond the title. The study done evaluated a small part of the new deal where the government encourages the collusion of businesses with no real understanding of economic consequences. This was one area of government intervention which has been proven to a certain degree to be detrimental to the health of the economy. Noone is trying to repeat this mistake at this time.

If you want to make the argument that bailouts also have a negative impact, then do so....but don't post a study which has nothing to do with it and try to equate the two.

And yet they conclude....

"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."

It was government intervention that made it worse. What's going on now may not fit to the letter. But it's the same reaction when it comes to bailouts and government intervention. It could even be worst with all the debt and inflation. The report concludes that government intervention was not the answer. And that the government's actions actually prolonged the Depression. We are once again faced with a similar crisis. And we are reacting the same why. More big government. More Bailouts. More Debt. You already hear the talk about another "New Deal". We are not allowing the market to adjust or recover. The government is blowing air into a busted bubble. Trillions are being printed or spent. The government's actions are what lead to this mess. Now their actions are continuing the mess and ensuring that it will last a while. It's like having your house on fire and calling the arsonist to help you put it out. It doesn't make sense.

[Ferretsquig]

Because some government intervention in the past has failed, all government intervention in the future will fail. This logic really makes sense to you?

I really take no issue with the argument you're making. Just so long as you aren't trying to use a study like this to reinforce it. The issues presented here have nothing to do with either the problems we're currently facing or the proposed solutions.

[Dolphins9954]

Originally Posted by Ferretsquig

Because some government intervention in the past has failed, all government intervention in the future will fail. This logic really makes sense to you?

I really take no issue with the argument you're making. Just so long as you aren't trying to use a study like this to reinforce it. The issues presented here have nothing to do with either the problems we're currently facing or the proposed solutions.

I think you argue for the sake of arguing. This report concluded that government intervention prolonged the depression. And in their own words.

"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."

We are seeing the same thing today. Obama and the Dems are already saying that we need even more government intervention. All I'm doing is showing a report that such actions could have a negative effect and could actually prolong the crisis. Why is that so hard for you to understand? What is it that drives you to constantly attack the poster? If you don't like what I have to say. Put me on ignore. Or try adding to the conversation. What a novel idea that is.

[Ferretsquig]

Originally Posted by Dolphins9954

We are seeing the same thing today. Obama and the Dems are already saying that we need even more government intervention. All I'm doing is showing a report that such actions could have a negative effect and could actually prolong the crisis.

Read the study. If you still think the actions which are being critiqued in this paper are in any way comparable to what is taking place today then read it again.....

What is it that drives you to constantly attack the poster? If you don't like what I have to say. Put me on ignore. Or try adding to the conversation. What a novel idea that is.

I would never attempt to be perceived as attacking a poster......only the fatuity of the argument.

[Dolphins9954]

Originally Posted by Ferretsquig

Read the study. If you still think the actions which are being critiqued in this paper are in any way comparable to what is taking place today then read it again.....



I would never attempt to be perceived as attacking a poster......only the fatuity of the argument.

One more time. Hopfully this time you will get it. I'm comparing the interventions of government. The report criticizes the policies of FDR and government interventions during the Great Depression. Notice that policies is plural meaning more than one. They concluded that FDR's policies and government interventions prolonged the Depression. And in their own words said that if the government did not intervene then the recovery would have been faster. It's very logical and reasonable to compare the government interventions of then and today. Why you think that's off limits is beyond me. We are now faced with the biggest government interventions since the Great Depression. It would only make sense to look back at our history. And see what happened and what we did wrong. So we don't repeat the same mistakes. If you can't understand that then i don't know what more to tell you. If at any point you want to add to this thread. I'm all ears. If not I have nothing more to say to you.

[Ferretsquig]

I get it....you read the last couple paragraphs of the study. All I ask is you read the content. For some reason I don't think that it is too much to ask that the poster reads what he/she posts before doing so. If you understood what those policies (plural) were then I do not believe you would be attempting to make any comparison.

[PhinPhan1227]

Originally Posted by Ferretsquig

So who is out there trying to fix prices and wages? They're actually trying to do the opposite of Roosevelt.....get prices to rise and wages to remain stagnant. Everyone is well aware of the many mistakes FDR made and noone is trying to repeat them.

Actually, I view the Employee Free Choice Act as wage fixing. I also view it as illegal and a STARK violation of the right to privacy. So yes, I see one of FDR's mistakes being repeated right there.