Saturday, January 10, 2009
Sneak Peak for My Upcoming Book on the Great Depression
If I were really creative I would do trailers showing me reading and typing, etc. Fortunately, I have no competence with video or graphic editing. So for those dying for the release of my forthcoming book on the Great Depression, you will have to be satisfied when I respond in the comments at Marginal Revolution like so:
Stan wrote:
The story I've heard about FDR and the Great Depression is a) he applied mild fiscal stimulus in the period 1933 - 1937 and reduced the unemployment rate from the mid 30's to 14% (lower if you include public employment), b) he reverted to classical economics in 1937 and brought on a severe recession, and c) spent vast sums on the military during WW II and ended the Depression. If this isn't true, would somebody explain why?
I'm not an economist, and I'm interested in the answer.
Stan, I knew FDR raised taxes in 1937 but I wasn't sure if he also cut spending; according to this site, he did. So yes, on the surface Krugman would have a pretty strong card to play there.
I'm actually working on a book on the Depression right now, and I'm going to deal with this very point. But for here, some really quick responses:
(1) If you play with the dates on this site, you can see that total federal spending absolutely collapsed during the 1920-1921 (some say -1922) depression. Unemployment shot up to more than 11 percent in 1921. I don't have the figures handy, but wholesale prices declined very sharply too, I think even more quickly than they fell from 1929-1930. So according to your hypothesis, this should have been an awful Depression, and yet we don't even hear about it in school. Unemployment was down to 6.7% by 1922, and down to 2.4% by 1923. And really, you should look at how much federal spending fell during this period from 1919 levels; it is shocking.
(2) To explain why the "depression within a Depression" of 1937-38 was so bad, and why unemployment was still over 14% in 1940, Vedder and Gallaway cite the high wages of the period. In particular, in 1937 the Supreme Court ruled that the Wagner Act (NLRB) was constitutional, and union membership shot up by 40% in a single year (the biggest jump in US history). Money-wages rose sharply, thus unemployment shot up. And, I would argue, the fact that you were still smack-dab in the New Deal prevented recovery.
(3) As far as WWII getting the US out of the Depression, the best refutation of that is Bob Higgs' work. He probably has some essays online, but I am using his collection of essays in the book _Depression, War, and Cold War._ Very briefly, his point is that the official statistics are meaningless in the war years. Sure, measured unemployment went way down, but duh, if you ship millions of able-bodied men overseas, that will happen. And sure, official GDP stats shot up, but when the government imposes price controls and rationing, and then has outlays exceeding 40% of GDP, that will happen too. But it's not obvious that this is a true economic recovery.
Comments:
Good to see the book research.
I have been wondering to myself why aren't wages shifting qownwards in this current unemployment. Many people would take lower wages to keep their job right now. I would.
But, the guys in the office say it is the taxes and benefits the employer wants to cut...they would happily reduce the wage and keep the worker but it is the other stuff that causes the large job cuts (en masse) at certain companies.
Right now, I believe corporations were ahead of the curve on layoffs (right now) and will wait for wages to come down and re-hire. I think some industries have cut too many people...so, they save in the short term and wait for wages to come down a little and start trickling workers back.
So, US Steel "cuts 3,000 jobs"...ok, I bet they hire back 50 in January and 200 in February, or soemthing like that.
I have been wondering to myself why aren't wages shifting qownwards in this current unemployment. Many people would take lower wages to keep their job right now. I would.
But, the guys in the office say it is the taxes and benefits the employer wants to cut...they would happily reduce the wage and keep the worker but it is the other stuff that causes the large job cuts (en masse) at certain companies.
Right now, I believe corporations were ahead of the curve on layoffs (right now) and will wait for wages to come down and re-hire. I think some industries have cut too many people...so, they save in the short term and wait for wages to come down a little and start trickling workers back.
So, US Steel "cuts 3,000 jobs"...ok, I bet they hire back 50 in January and 200 in February, or soemthing like that.
# posted by 
: January 11, 2009 at 10:29 AM
: January 11, 2009 at 10:29 AM
I'm a sucker for a good Depression book. What's the timeline?
# posted by : January 11, 2009 at 3:48 PM
: January 11, 2009 at 3:48 PM
I'd also add that most folks who claim WWII "got us out of the Great Depression" make the further mistake of claiming WWII caused the post-War boom.
It helped a bit because it created the Silicon Vally and Moore's law but that was almost accidental due to the Cold War and its needs. Without the Cold War, we probably would have seen the truth.
The real reason we had a post-War boom was because all of our pre-war industrial competitor's manufacturing capacity had largely been bombed out of existence or had not existed pre-war. It's easy to have a boom when you compete against no one. You are the only game in town.
It was exactly when these same pre-war industrial powers (Germany, Japan, Europe) got back on their feet in the late 1950s/early 1960s that the US post-war "boom" started to falter.
The "war boom" idea simply masked the fact that we still hada largely 1920s-based industrial infrastructure through the 1970s. The car industry that could not compete against imports was 1920s vintage in engineering and design. The steel industrial we lost to Japan and Korea was last updated with new technologies in the 1920s.
Vietnam was in part a foolish attempt to "recreate" a war boom which never succeeded. Instead it only took what was marginally uncompetitive and further damaged and endangered it resulting in the financial crises triggered by the Oil Embargo and the 1971 final elimination of the gold standard.
We are, again, is a similar, only far, far worse situation now. As Mark Twain said:
"History doesn't does repeat itself but it certainly rhymes"
I cringe when I hear folks from The Rand Corporation advocate "A war to get us out of our current economic situation, even it's nuclear".
Wars are generally not controllable - ask Germany about WWI and WWII. The extremes of war: nuclear and guerrilla warfare are both especially uncontrollable. The chances of things working out for economic purposes are slim to none.
It helped a bit because it created the Silicon Vally and Moore's law but that was almost accidental due to the Cold War and its needs. Without the Cold War, we probably would have seen the truth.
The real reason we had a post-War boom was because all of our pre-war industrial competitor's manufacturing capacity had largely been bombed out of existence or had not existed pre-war. It's easy to have a boom when you compete against no one. You are the only game in town.
It was exactly when these same pre-war industrial powers (Germany, Japan, Europe) got back on their feet in the late 1950s/early 1960s that the US post-war "boom" started to falter.
The "war boom" idea simply masked the fact that we still hada largely 1920s-based industrial infrastructure through the 1970s. The car industry that could not compete against imports was 1920s vintage in engineering and design. The steel industrial we lost to Japan and Korea was last updated with new technologies in the 1920s.
Vietnam was in part a foolish attempt to "recreate" a war boom which never succeeded. Instead it only took what was marginally uncompetitive and further damaged and endangered it resulting in the financial crises triggered by the Oil Embargo and the 1971 final elimination of the gold standard.
We are, again, is a similar, only far, far worse situation now. As Mark Twain said:
"History doesn't does repeat itself but it certainly rhymes"
I cringe when I hear folks from The Rand Corporation advocate "A war to get us out of our current economic situation, even it's nuclear".
Wars are generally not controllable - ask Germany about WWI and WWII. The extremes of war: nuclear and guerrilla warfare are both especially uncontrollable. The chances of things working out for economic purposes are slim to none.
The Blackadder Says:
How far along are you on the book (don't worry, I won't tell your publisher).
How far along are you on the book (don't worry, I won't tell your publisher).
# posted by : January 11, 2009 at 5:12 PM
: January 11, 2009 at 5:12 PM
The Blackadder Says:
How far along are you on the book (don't worry, I won't tell your publisher).
Oh, it's been done for weeks. I'm just converting it into iambic pentameter.
How far along are you on the book (don't worry, I won't tell your publisher).
Oh, it's been done for weeks. I'm just converting it into iambic pentameter.
Way to go, Milton.
Unfortunately, yours and Milton's masterpieces must end in the same somber tone (given the direction of things).
Unfortunately, yours and Milton's masterpieces must end in the same somber tone (given the direction of things).
So... I'm looking for statistics about tithing during the Great Depression... will your book be helpful there? Any suggestions where else I might look? Thanks!
Helen!
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Helen!
# posted by : May 28, 2009 at 11:57 AM
: May 28, 2009 at 11:57 AM Subscribe to Post Comments [Atom]
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