From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: The blame game
Organization: Texas Instruments Inc
Distribution: usa
Date: Tue, 15 Sep 1992 12:31:42 GMT

In <1992Sep15.010551.8372@pony.Ingres.COM> garrett@Ingres.COM (QUOTE OF THE YEAR) writes:

>In article <1992Sep8.214556.29784@awdprime.austin.ibm.com>, curt@ekhadafi.austin.ibm.com (Cu writes...
>>>In article <1992Sep2.205150.3382@pony.Ingres.COM>, QUOTE OF THE YEAR writes:
>>>> Like FDR did when he successfully reduced unemployment.
>> 
>>FDR's policies, channeling private money into government paper doll
>>factories, did no good for the economy.

>This is wrong. Unemployment went down from well over 20% when FDR took over
>to around 9% in 1940 (before WWII had an effect).

Well, if the government prints money and then hires everybody,
unemployment will be zero.  Of course, they didn't 'print money',
which was part of the problem, but how many of the people in the 11%
gain in employment were employed by things like WPA, etc.?

>  The depression lasted many
>>years longer due to his policies than it otherwise would have.
>> 
>This is no more than an opinion and therefore means no more than anyone
>elses view without facts.

Well, examine some of his policies.  Minimum wage laws increase
frictional unemployment and help keep prices and wages (which are
sticky on the down side anyway) from adjusting downward.  This will
lengthen any economic correction which requires prices and wages to
adjust downward.  Reducing the money supply by some 25% will cause
contractionary pressures on the private economy, because credit and
capital simply will not be available.  Couple that with a fiscally
expansionist policy of government jobs programs and credit becomes
even tighter for the private economy due to 'crowding out' in the
credit and capital markets.  The trade unionist laws enacted prevent
industry from adjusting prices and wages downward, too, and also
prevent people who would be willing to work but are not in the union
from getting jobs.  It is quite a long list, and the contention that
many of the things FDR did lengthened the Great Depression would seem
to be well supported by the facts.

>>Recessions are ended by reduced government intervention.

>This is a very broad generalization. What do you mean by "intervention"?

It doesn't really matter what he means.  This one is wrong, and falls
into the "it ain't necessarily so" category.

>>Reduced taxes, (with equally reduced spending.)

>Fact?

Indeed it is a fact.  Or at least part of a fact.  Reduced taxes will
indeed help act as a spur on the civilian economy.  However, reduced
spending will act as a brake.  It very much depends on the shapes of
the curves involved whether the net effect acts as a spur or a brake.
However, in any case, increased government spending and taxation will
generally lead to some economic distortions, insofar as pareto optimum
eocnomic allocation of resources goes.

>>Reduced regulation.

>What kind of regulation? antitrust regulation? Worker safty laws?
>Environmental protection laws? Child labor laws? Minimum wage laws?
>Which regulations do you want to throw out? And try to be specific.

Minimum wage laws tend to be a drag on the economy and increase
frictional unemployment.  Extreme worker safety laws do likewise.  In
this case, it is a case of some being good and more being bad.
Various trade union regulations (union as the sole bargaining agent
for workers, etc.) should be thrown out on general principles (and
yes, they act as a drag on the economy by keeping wages artificially
high, and hence increasing structural unemployment).

>>	FDR did none of these.  And the depression went on for YEARS 
>>	because of him.
>>
>Once again, an opinion. BTW, you do remember that the world was suffering
>from a world-wide DEPRESSION. Not just recession, depression. 

There is no difference between a recession, a depression, and a panic.
They are merely different words for the same phenomenon.  When 'bank
panics' became a 'bad term', they tried to clean it up by calling them
'economic depressions'.  Well, that term got put out of favour with
the advent of the Great Depression, so economists took to calling them
'recessions'.  All the same critter.

>The economy
>improved every year except 37' under his administration. EVERY YEAR except
>about 6 months out of 1937. When did we have a president that could do 
>that. If he did such a bad job, as you say, then why was he re-elected 
>4 times by wide margins?

There are a lot of reasons why FDR kept getting reelected, most of
which have nothing to do with his economic performance.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
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Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.