Let us revisit in 2012... Fai de bèn a Bertrand, te lou rendra en cagant
15th US census, pdf page images and *.gov source links.
In The Politically Incorrect Guide To The Great Depression And The New Deal, economist Robert P. Murphy, Ph. D., gives us a very useful comparison of what happened in another recession that occurred in the 1920s when so-called laissez-faire economics was practiced and the more famous economic collapse when it wasn't. "The annual unemployment rate peaked at 11.7 percent in 1921 [the other Great Recession year], but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923," Murphy writes. "That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom."... "From an estimated annual rate of 3.3 percent during 1923-29, the unemployment rate rose to a peak of about 25 percent in 1933," two U. S. Bureau of Labor economists reported in 2001. "The economy reached its trough in 1933; but although unemployment had reached its peak, economic recovery was slow, hesitant, and far from complete." "As shown below, the unemployment rate was still nearly 15 percent in 1940 [16th US census]. Read more...
"The annual unemployment rate peaked at 11.7 percent in 1921 [the other Great Recession year], but it had fallen to 6.7 percent by the following year, and was down to an incredible 2.4 percent by 1923," Murphy writes. "That is how a market with flexible wages and prices quickly corrects itself after a Fed-induced inflationary boom."...
"From an estimated annual rate of 3.3 percent during 1923-29, the unemployment rate rose to a peak of about 25 percent in 1933," two U. S. Bureau of Labor economists reported in 2001. "The economy reached its trough in 1933; but although unemployment had reached its peak, economic recovery was slow, hesitant, and far from complete."
"As shown below, the unemployment rate was still nearly 15 percent in 1940 [16th US census].
Read more...
The Second World War.
Massive infusion of cash into the economy, lots of things destroyed. Labor force of the industrial countries cut by about 45 million out maybe about 400 million at the start of the war. So roughly 12%.
So we have: 1) lots of broken things, 2) fewer people to fix them.
Not so creative destruction but it did the trick.
I'd like to think that we'll find another way out, but I have the sinking feeling that this is at least a possibility.
The second more limited one being that growth in China collapse, and it descends into another period of internal disorder like 1911-1949.
If companies can no longer get product from China, that's the same as taking a huge portion of the global labor force off the market. With the downward pressure on wags relieved, you can have growth in demand as wages start to pick up globally. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
However, I still cannot foresee how, in the immediate future or my lifetime, Keyesian prescriptions for Chinese domestic market or Friedman prescriptions for Chinese capital market will relieve OECD deflationary wage trends. Montary inflation over all simply discounts every investment metric I can think of.
Not that that standard says alot. Diversity is the key to economic and political evolution.
Part of the reason that China isn't developing the same way that Taiwan or Korea did is that those countries had much, much smaller populations.
Remove those workers from the global labor force because there's internal disorder in the country (which is likely if growth slows, which is probable in the next few years) and suddenly you have a lot less workers to do the same amount of work. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
China's total population is an outlier relative to that of any other OECD member. Also, total factor producitvity (TFP) immediately discounts estimated transaction costs of collective and disaggregate labor market bargaining power given automated technology transfers and "leakages." Moreover, Taiwan's and S.Korea's industrial growth (or GDP) have enjoyed ("profited" from) decades of US FDI and favored-nation trade status for decades more than China's WTO-sanctioned participation in integral OECD economic policy/capital formation.
I don't think this line of reasoning will take you where you want to go, presumably labor market reconciliation. Diversity is the key to economic and political evolution.
Sorry - that's right-wing spin. Sure, it created a booming war economy, but FDR's policies ended the depression. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
My original point still stands -- what we're currently witnessing is NOT a collapse equivalent to the depression; and the political environment Obama stepped into is different from the one FDR stepped into. Everything else remains to be seen as they also say. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
On the latter, I think it is wrong to interpret the recent rise in government bond yields as a sign that the sustainability of public finances is at risk. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Of course, 15 years of banks accummulating treasury bonds with very limited private investment due to strong war economy regulations of private industry also left the banks with a huge ability to lend and the private sector with a huge ability to borrow, leading to massive credit to fuel the boom. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Exactly. FDR took office in 1933. Do not underestimate what three years of suffering can do to people's attitudes. As I said - he had a very different political environment from the one Obama inherited. And Obama is taking steps to avert COMPLETE collapse, such as what happened after 1930. Seems to me to be working, but as you say, only time will tell. Perhaps we still do have a 25% unemployment rate, several million homeless, and whole towns having armed standoffs with authorities to keep their property in our future, but I doubt it. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
Even now, the political climate is much different from what it was 3 years ago, even 1 year ago. And how many percentage points has unemployment changed? I just don't think there's any way anyone who's read about conditions during the depression can possibly argue in good faith that conditions in 2009 are comparable to conditions in 1933. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
But if Obama indeed gets behind this new policy with all his ability I think he can make a real difference. Perhaps the most important thing he could do would be to conduct a series of tutorials from the oval office that serve to educate the population as to how the economic system really operates. how the theories currently being used obscures that operation and to whom the benefit accrues. The other thing is to make the argument for public financing of federal elections. Even the business people are making that plea now. Even if such a policy has to be pushed through in budget reconciliation it could save the country from perpetual corporate rule. Else, the concern is that business contributions for Democrats, let alone progressives will dry up. And the vast majority of that corporate money will not be supporting Obama or the Democrats. But the hour is late. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
I believe you are in California, so you perhaps have noticed that there are whole towns which sit empty. And, you probably know this as well, the number of homeless has grown, and sits at around 3.5 million in the US (and growing) while thanks to Clinton's Welfare "Reform," about 6 million folks get no aid from the Federal government other than foostamps.
The Obama administration's solutions to these frankly morally rotten problems was advertised as the stimulus plan, which his Council of Econ Advisors chair now admits was only an insurance policy to "avoid a catastrophe," not a policy necessarily to get people back to work, so this is why, at least on the left, the stimulus plan has been criticized as too little, a tactical mistake. I mean, when you're historic first black President of the US and you lose Bob Herbert after only a year, it's saying something. And not that you're doing a good job.
See, unfortunately, these millions of Americans living from hand to mouth and in highly precarious housing situations have no one looking out for them. Many thought this would change, and are unhappy to see that they haven't, and I can't say I blame them, though I certainly did not expect changes, which is why I live where I live. Fai de bèn a Bertrand, te lou rendra en cagant
Too early to say. Technically speaking, it's still only 1930. Exactly. FDR took office in 1933.
Exactly. FDR took office in 1933.
That wasn't the point of the comment. The point was that the environment Obama inherited wasn't the same one FDR inherited. Maybe we can eventually make language a complete impediment to understanding. -Hobbes
Given that Obama's economic team are, while guided by false lights, not total fools and must have seen the same charts, it is hard to see optimism about a recovery as other than disingenuous happy talk and spin--which is blowing back on them and Obama. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
omg - that was my POINT! Maybe we can eventually make language a complete impediment to understanding. -Hobbes
