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
