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Old 10-01-2008   #91
mr. compassionate's Avatar
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Following is a review of a book by Amity Schlaes a Wall Street Journal contributor as well as historian/economist. Both right and left would do themselves a favor by reading it "The Forgotten Man". Focuses on causes and responses which caused and prolonged the Great Depression. Following is a review.

What were the actual effects of New Deal policies?, June 27, 2007
By Jim Powell (Westport, Connecticut) - See all my reviews

For offering a critical view of FDR's policies in her terrific new book THE FORGOTTEN MAN, Amity Shlaes has been taken to task by those who say that his charisma helped lift American spirits and get us through the Great Depression. FDR certainly had charisma, but what were the effects of his New Deal policies?

Dozens of economists, including two Nobel Prize winners, have evaluated the consequences of New Deal policies. Empirical research at many universities raises suggests that the New Deal actually prolonged the Great Depression. Consider some key questions like these:

1. Why did FDR triple federal taxes during the Great Depression? Federal tax revenues more than tripled, from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and "excess profits" taxes all went up. FDR introduced an undistributed profits tax. Consumers had less money to spend, and employers had less money for growth and jobs.

2. How much net benefit did the New Deal provide ordinary people who paid most of the costs of the New Deal? For instance, the biggest New Deal welfare programs were funded before 1936, when federal excise taxes on beer, wine, cigarettes, soft drinks, chewing gum, radios and other things purchased by millions of ordinary people, generated more revenue than the federal personal income tax and the federal corporate income tax combined. According to the standard reference work HISTORICAL STATISTICS OF THE UNITED STATES FROM COLONIAL TIMES TO THE PRESENT, in 1936 the federal government collected $674.4 million from the personal income tax, $753 million from the corporate income tax and $1.5 billion from excise taxes. Despite big income tax hikes, the federal excise tax continued to be the single largest source of federal revenue until after the United States entered World War II. So FDR's New Deal was mainly financed on the backs of the middle class and poor people who bought things subject to the federal excise tax. To hear one of FDR's "Fireside Chats," Americans had to pay a federal excise tax on a radio and a federal excise tax on the electricity needed to run it.

3. Why did FDR discourage investors from taking the risks of funding growth and jobs? As Robert Higgs (Independent Institute) pointed out, frequent tax hikes (1933, 1934, 1935, 1936) created uncertainty that discouraged investment, and FDR further discouraged investors by denouncing them as "economic royalists," "economic dictators" and "privileged princes," among other epithets. No surprise that private investment was at historically low levels during the New Deal era.

4. Why did FDR channel government spending away from the poorest people? Research by Gavin Wright (Stanford University), Robert Tollison (Clemson University), John J. Wallis (University of Maryland), Jim F. Couch (University of North Alabama), William F. Shughart II (University of Mississippi) and others documented how political influences skewed New Deal spending away from the poorest people. The South, America's poorest region, received significantly less than would have been the case if New Deal spending were allocated according to the amount of poverty. More New Deal spending went to political "swing" states in the West and East, where incomes were more than 60% higher.

5. Why did FDR make it more expensive for employers to hire people? By enforcing above-market wages, introducing excise taxes on payrolls and promoting compulsory unionism, the New Deal increased the costs of employing people about 25% from 1933 to 1940 -- a major reason, as Richard K. Vedder (Ohio University) and Lowell E. Gallaway (Ohio University) showed, why unemployment averaged 17 percent during the New Deal era. Demanding that employers pay above-market wages created incentives for employers to introduce more machines, go with part-timers or independent contractors or otherwise avoid expanding full-time payrolls.

6. Why did FDR destroy all that food when millions were hungry? FDR promoted higher food prices by creating scarcity -- paying farmers to plow under some 10 million acres of crops and slaughter and discard some 6 million farm animals. The New Deal food destruction program mainly benefited big farmers, since they had more food to destroy than small farmers. This policy and subsequent New Deal programs to pay farmers for not producing victimized the 100 million Americans who were consumers. As William E. Leuchtenburg (University of North Carolina) reported, "Only the war rescued the New Deal farm program from disaster."

7. Why did FDR make everything more expensive during the Depression? Americans needed bargains, but FDR signed the National Industrial Recovery Act to establish some 700 industrial cartel codes that forced consumers to pay above-market prices for goods and services. Moreover, FDR banned discounting by signing the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937). During the New Deal, Americans were actually prosecuted for cutting prices!

8. Why did FDR break up the strongest banks? George Benston (Emory University), Eugene White (Rutgers University), Lester V. Chandler (Princeton University) and others showed how FDR's banking laws had different consequences than what had been intended. FDR broke up the strongest banks, which had diversified with both commercial banking and investment banking. FDR's federal deposit insurance didn't stop bank failures. Rather, New Deal federal deposit insurance undermined the incentives of bankers to manage their businesses prudently, and it transferred the cost of bank failures to taxpayers who, among other things, had to pay the $500 billion tab for the S&L debacle during the 1980s. About 90% of depression era bank failures occurred because of unit banking laws that prevented small banks from diversifying through branches. Canada, free from branching restrictions, didn't have a single bank failure during the Great Depression.

9. What was the point of New Deal securities laws that made it harder for employers to raise capital and didn't help investors to do better? Employers desperately needed to raise capital.

10. How did the Tennessee Valley Authority become a drag on the economy? FDR taxed 98% of the American people who didn't live in the Tennessee Valley, then used this revenue for the TVA power-generating monopoly, exempt from federal and state taxes and regulations. Like other big public works projects, the TVA mainly provided jobs for well-paid engineers, heavy equipment operators and others with technical skills. The TVA was slow to produce electricity - the first TVA dam wasn't finished till three years after the TVA law was passed, most TVA dams were finished after the Great Depression was over, and many TVA dams provided power for war-related government projects, not poor farmers. As for flood control, the TVA seems to have flooded more acreage (behind the dams) than it protected from flooding (below the dams). According to economist John Moore, the TVA flooded an area about the size of Rhode Island. Thousands of people, including black tenant farmers, were forced out of their homes.

11. Why did FDR disrupt companies employing millions? In 1938, FDR authorized an unprecedented barrage of antitrust lawsuits against about 150 employers and industries. There were lawsuits against the milk, oil, tobacco, shoe machinery, tires, fertilizer, railroad, pharmaceuticals, school supplies, billboards, fire insurance, liquor, typewriter and movie industries, among others. But the antitrust crusade was a flop. The government won few cases.

More than 6 decades have passed since FDR died, and it's past time to consider the New Deal in light of the consequences of his policies.
There's a substantial economics literature about the consequences of New Deal policies, steadfastly ignored by political historians who continue to build their narratives with personalities, speeches, correspondence and other traditional sources, and ignore evidence from outside their field, even when writing about a major economic event like the Great Depression.

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Old 10-02-2008   #92
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PORK, the "other" white meat...

Get your copies of "Grapes of Wrath" before they sell out so you can learn the rules of the Brave New World.

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Old 10-02-2008   #93
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Originally Posted by DurangoSteve View Post
Get your copies of "Grapes of Wrath" before they sell out so you can learn the rules of the Brave New World.
On that topic, a booke called "The worst hard times" is about people who stayed in place during the dust bowl. Amazing read. We are very fortunate to be able to sit at work and ponder these things with people we don't even know.
I am a river, babe - I've got plenty of time, I don't know where I'm going, I'm just following the lines..... - "We are water" by Shaye
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Old 10-05-2008   #94
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The need for a bailout is being blamed on: greed, Dems, Repubs, deadbeats, lack of regulation, too much goverment interference, etc etc.

If this was actually caused by increased forclosures let's look at the cause of foreclosures. An uninsured health crisis is estimated to be a factor in up to 50% of all foreclosures. And how many people lost their homes when their jobs were "outsourced" to a cheaper econmy?

Maybe fixing our "unhealth system" and creating a sustain able economy that can not be outsourced should be part of the pacvkage of solutions.
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Old 10-08-2008   #95
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This is fucking bullshit.

Rock Out With Your Bailout - October 7, 2008
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Old 10-08-2008   #96
I'm wrong 50% of the time
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The resort is really nice. To bad that it's across PCH from the beach. And it's not Monarch Beach, It's Laguna Niguel. So the Tab is a bit much for a nice party.
Claimer: Someone that makes a claim that they have been there and done that, can do anything you can do better than you. I hate "claimers"
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Old 10-10-2008   #97
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the bailout gave money directly to the liberal group "acorn" thanks to senator obama. yeah give that money away.
$100 million of the $700 billion to be exact
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Old 10-10-2008   #98
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thats 1/7000 th Mike.
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Old 10-10-2008   #99
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Mike - do your homework.

A provision (section 105(d)) in the bailout bill that would have sent some of the profits from the sale of distressed assets the government buys into an affordable housing trust fund was removed by congressional negotiators from the bailout legislation.

ACORN, a Democratic ally, was not specifically directed any funds in the previous proposal, but money that went to state and local governments could then have been divvied out to the organization, which the GOP said was a deal breaker.

Bottom line: there never was an "ACORN provision," but section 105(d) could have allowed funds to ultimately be sent to that organization. That provision was stricken from the bill that passed. Non-issue. Sorry.
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Old 10-10-2008   #100
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why would a group like acorn recieve any government money and what will giving them money do to get us out of our economic situation?

i know, so obama can receive more fake votes.

100 million. 100 million of our hard earned tax money.

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