Are Obama and his Team Repeating Mistakes of the 1930s?

Thanks to the liberal mindset and their love afair with the failed policies of Keynesian Economics, we find ourselves with Europe as the new flash point of global concern.

"With 44 million already unemployed in advanced countries, the social and political implications are fearsome. Worse, a new recession might snowball into an even deeper and longer downturn."

 

This review was very good.

Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus

[ame="http://www.youtube.com/watch?v=VoxDyC7y7PM"]Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus - YouTube[/ame]

 

if you want to see failed keynessian economics then just look at japan!

 

No. Japan's problem was zombie banks. They refused to mark to market.

 

They are if they pursue a Republican austerity program. The only thing that got us out of the depression was massive government spending under FDR.

 

That review was biased tripe of the type you should expect from a biased source like Cato whose only objective is to lower taxes for the richest.

The review relies primarily on a straw man argument -- That the premise of Keyensian theory is to get more "cash" into the economy. That is not the idea at all. The ideal is to get more demand in the economy.

It ignores the difference between having money in a bank account and the money being spent. Having money in a bank account doesn't mean its getting spent and creating demand in the economy, particularly if bank lending is down, like it is in a bad recession like this one. To imply there is no difference between money sitting in a bank or being spent in the economy is simply dishonest.

The video also falsifies facts. The video argues that Hoover was a big Keyensian spender and increased spending 47%.



source: http://www.usgovernmentspending.com/

Hoover was in office 1929-1932. See that 47% increase in spending the video claims?

Me neither.

It's bull(*)(*)(*)(*). If spending had increase almost 50% it would have been up from about $4 billion to about $6 billion. As everyone can see, it wasn't even close to $5 billion in 1932.

The video also claims Hoover raised taxes. Which is not a Keyensian idea at all, but taxes were increased from a 26% top rate when the economy tanked to 63% in 1932 -- three years after the GD raged while the economy tanked. In 1933, with those higher taxes, the economy turned around, and grew on an average of 8.5% (real) for the next 7 years.

As you can see, it wasn't until FDR's New Deal programs that spending took off and the economy stopped tanking and growing again.

The video also claims spending didn't work for FDR any better than Hoover.

I'll let others decide if the fact support that claim:

Year - % chng real GDP
1930 -8.6%
1931 -6.5%
1932 -13.1%
1933 -1.3% <-FDR takes office, spending increases
1934 10.9%
1935 8.9%
1936 13.1%
1937 5.1% <- Spending cut
1938 -3.4%
1939 8.1% <- Spending increase
1940 8.8%

Source data: BEA.gov

Based on the evidence of the GD, it looks like Keyensian spending worked great.

Completely contrary to the video.

It's a very good review. For those invested in a political agenda who don't care about or understand facts or economics.

 

This OP!

It's full tilt Tea Party revisionist history at its best!

Keynesian policies of course saved the nation from the failed market evangelist politcies of Hoover. But what do facts have to do with ********** memes!

Read Reich's Aftershock. He'll set you straight, Cessna, if such were possible.

 

Posted on another thread but very applicable here.

The progressives here must be regressive's, they simply don't understand the world has changed a tad since FDR was President.

 

What is your solution and who should be the ones who implement it?

 

I have my solutions, but I would like to hear yours first.

You do have solutions don't you?

By the way, I have posted my solutions before in this political forum.

 

Thanks for sharing, Professor Peabody.

 

So what changes have occurred that invalidate the Keyensian policies that worked in the GD and why?

 

true thats part of it, but from what I read Japan also spent the equivalent of over 1 trillion dollars in stimulus throughout the 90's

 

keynessian crap just dragged the depression on and on.....just like it also did in japan and also now in the US

 

Your analysis is very correct, bacardi.

This analysis was also very good.

 

I already posted the answer to your question.

 

Total US production of goods and services is $15 trillion.

Net imports from China is $275 billion.

Imports from China represent 1.8% of gross domestic production.

That 1.8% of additional spending that might go to China doesn't seem like a significant difference or reason to supports the conclusion that it invalidates effective Keyensian policies during the Great Depression to me.

 

a little flaw with your calculations:

1. the 275 billion is just the cost of the finished product....it does not put into consideratrion the parts manufacturers or the raw material companies that supply the stuff in order to produce the finished product....you can easily double the 275 billion if you do this.

2. then there are all the employees that would be paid a check every week and would then go out and spend it on haircuts or fixing their cars etc.

there are many spinoffs not mentioned in your overly simplistic net imports of 275 billion!

 

President Obama and his team are repeating the mistakes of last year, too. They are quite capable of repeating socialist mistakes from any time period.

 

It would be a good idea to try keynesian economic stimulus right now to try and get us out of the recession we're in. The 2009 stilulus, 40% of which was tax cuts and most of the rest going to keep firefighters, teachers and other needed workers in jobs, didn't even begin to cover the huge drop in GDP caused by the enormous 2008 market failure. In countries where the private sector didn't melt the economy down and need huge bailouts by government to prevent going bust, Keynesian policy was used to boost their economies and it worked as well as they could have wished for :

Asia’s Keynesians take pride in prudence

By David Pilling

[...]


Unlike in the west, there is little debate in Asia about how well the stimulus worked. It has been spectacular. Asian output is well above pre-crisis levels. HSBC is predicting growth for Asia ex-Japan of 8.6 per cent this year. Rather than contemplating more stimulus, authorities are trying to cool things down. Banks have been raising interest rates for months. China and others have introduced measures to take the heat out of the housing market. Fears about unemployment have given way to concerns about labour shortages and spiralling wage demands. Thus the question in most of Asia is not whether to remove stimulus, but how fast. Asia is in orthodox territory, balancing well-trodden trade-offs between growth and inflation.


http://www.ft.com/cms/s/0/7ec7882c-94f3-11df-af3b-00144feab49a.html

 

These so-called 'progressives' haven't had a new idea since the ink was drying on the Manifesto. Bob La Follete must be turning in his grave.

 

You are correct, Dispondent.

Barack Obama has set the socialist agenda and big-government solutions to our economic problems back 100 years.

 

Aren't most of those costs included in the cost of the finished product? When you buy a car you are also paying for the cost of raw materials and parts manufacturers included in the final price.

 

No, the evil government tosses an additional tax on top of that, all the while taxing the hell out of those materials from point A to Finished product. Bastards.

 

We're not talking about taxes but the portion of spending that goes to China compared to domestic production.