« empire misc. | | state schmate »
who delayed recovery??
at the thoma site
talk of new deal failure.....
did the new deal delay recovery???
but natch it was the big corporations that delayed recovery
in particular
their investment
crisis
of
1937-38but no one today gabbles over this flaw in the system
the way they gabble over
fdr's nra
with its sectoral price collusion
and his tax war on the royalists
idle profitsthat's like blaming
the fire's damage
not on the arson
but on
the fire departments slow response
at any ratethe finger is pointed at the new deal as
recovery retardentmy addition is nothing less then
magisterial...
------------------
haven't yet read all comments here nor the linksbut first off lets be clear
there were several overlapping new dealsthe hamilton critique of the nra
involves a key element
of stage one
new dealthe nra
was in form
just
a reheat of mussolini's interventin max corporatist hash
of the 20'sas to the uncle milty type monetarist
bugga boo
that's
about
the great money base contraction
a pre new deal
phase
promptly ended by the bank holiday
and the gold drop
if that sub crisis
should be
on anyones plate
try hoover's .....trade policy????
not mentioned here
but really protectionism
was not a new deal thing eitherdid the new deal progs beggar neighbors better then they let
neighbors beggar
us ????yup
problem no global gubmint to do for the planet
what keynes' formulas
offered each nation( forget the still not possible
what about
treating the whole
earth's economy
to an recovery act
like the nra ??? ...
worth a think through)--------------
on to stage two new dealit might be
we best see
this as
de facto gross keynesianismbecause itbwas half assed
should we call this
prolonging
the depression ???no
unless u are also
prepared to say the first world war medical corps increased
the death rate
from infection
because
they failed
to use penicillini suspect most of us would not call it prolongation
just because
the fiscal defict
wasn't big enough
to speed
the return to full employment
at an optimal rateits enough i think
given the ignorance
to say"hey
at least
it was in the right direction...
so what more do ya want from the fools...
they
not only
didn't do harm
they did good ..."starting when???
u see these policies of de facto
inadequate pri sec
effective demand
compensation
starting to blend into
the gyro gear loose
prog pipe dreams
after
the start
of the recession of 37-38this is a clear point
where cdedication to spend our way out
was reconfirmed
even if under heavy bombardment
from
wall street
and its
re actionary babbitoid friendsof course its old hat to say
things really
only catch fire
with
the arsenal of democracy
economy of 1940which was of course
the beginning of the third stage new deal
and in itself
a miracle of rapid industrial development
and exspansion
to awe
even today's china-------------------
btw
is hamilton playing trog himself here ????i quote him:
"What is supposed to help
the economy recover ...
a substantial pool
of unemployed workers
.... result
in a fall in wages and pricesthat .... restore equilibrium
in the labor market..."what ????
this is pure high octane
19th century
total price flexclassical price
adjustment fluidic flow maxa wonderland
not believed in
even when it was first preachedwhat is he trying to say ???
okay
market price rigidity
is the problemthat's keynesian
but its anti keynes
to suggest
the system
had spontaneous and rapid enough means
to reconfigure its prices
and get going againthat deflation was not
a protracted trench line
even if not
a bottomless
pitand to do nothing
would be better
then to halt the price drop
with gubmint actions
if he's saying"the NRA
only made
the problem that much greater
by adding
legal market clogs
that blocked
the natural
dynamics
of relative price
rectification
such as they were
and
thus by state action
further preventing
recoveryerecting
ceilings and floorsthat
amounts
to
piling
pilius apon
palius
or
however that phrase goesnot loosing but
adding
to those
death grip price rigidities
that are the ultimo problem ???
ie
as if deflation was not
--------------
btw
by baying at
these new deal
pooh pooh ers
brad delong
is just playing
good ole party hound
fdr is
the jack ass party icon
of icons
unparalleled
in his
titanic goodness and
greatness
proportionswe are simply
seeing here
brad's
ferocious barkso
ignore
the lack
of calm science in his bitesits not about science of history
besides
as usual
despite their apparent
size and gleeming surfaces
mistah delong's
wearing a very dull
very soft
very false
set
of
halloween canine's
anyway----------------
later comment
----------------for emphasis only:
the notion of price floors
and ceilings
buffer stocks
and green scaling thumbs
were all rigged up by new deal progs
to prevent cut throat compas you suggest
fear of the price spiral to hell
was
precisely what motivated themthey saw only
further turns of the deflation spiral unless intervention from above stepped in
to end these multiple market macro failuresbtw
here's my favorite depression fact
the farm sector responded
to declining market prices
with more out puttrying to run faster to stay even
driving prices lower stillpartly
not having a wage based work force
made this possible
but
their mortgages
were in nominal terms"steady "
not re adjusting
so in real terms the burden of servicing these debts
was croaking
the beloved jeffersonian yeomanryby 32 add in the bank rural defaults
with their cavalier liquidations
of defaulted loans
both as cause and effect ....my point:
much of fdr's personal
crisis paradigm
was set thru this farm lensehis sense of the industrial sector's dynamics
were
not intrinsic to
his world viewthe wage based mass production system
as it was in fact
played little role in his mind beyond relief
and hope the future consumption waves would rise
once he stopped the falling price based
contractions
the collusive nature of
the corporate
hi fi /industrial oligopoly
with
its near complete
halt to real productive
investment
if anything
impressed him
as a better result then the rual idiocy
of more and more
making for less and less
like most progressives
fdr really
just "worked "
with a blown up version
of his farm and ma pa shop modela model without
possible effective
"firm" collusionwhere the collision
of the intentions of
the parts
since they remained
uncordinated where no one prefered to comply thru voluntary action
alone
ie without the force and outside funds on the state
behind the plan
what else could there be
but all the parts
nearly ruined
by the unavoidable
horrid results
of the whole ....
of course
in
stark contrast industrialists'
had just seen
the shut down
of vast hunks
of their
capacitysome closed by creditors
others
by owners
triming output
to match salessomehow
there was a systemic difference between the two sectors
rather then
try to troop on
turning out product
by a cut prices and wages strategy
industry dropped out put and held priceof course
the source of this
very different sectoral behaviour
had complex causes---still not well enough reflected
in orthodox micro modeling
even now ----but easily
shown
to any one
at the time
with open eyes(keynes nicely assumed his micro conclusions
based on this simple observation
of indusrty
and proceeded...."well
if prices are locked
at least on the down side then ...."just how different
the two basic sectors
crisis dynamics really were
was the hard gaping fact in everyones faceand yet
here's where the failure of the NRA comes in...
both were in wild dis function
in their different waysin a sense the NRA
and its hick brother
the AAA
were attempts
to complete
the work of co ordination
corporate oligopoly
in industry and finance
spontaneously
created
very quickly
(less then a year)
after the crisis onset in 1930by using
the state's
" legal"
force majeur
to halt
the
very different farm sector dynamics
ie halt
the on going
24/7 deflation spiral
with it side kicks
price drop
exacerbating
manic production
and ever growing
real burdens
of debt service....
--------------the odd part is to graspthis clearly
price reduction
ie deflation
was never fast enough to catch e effective demand's
fall
and stop
the downward processafter all
exports investment and consumption
plus
state and
local gubmint
were all contracting in nominal terms here
faster then prices felland
uncle alone
at the time a comparative demand midget
was not enough
to counter alll these drops in demand...
short of going to a war footing-------------------
my second favorite
depression era factan effective demand program that might have really worked
in 1933
would have been
equivalent
to a total
tax holiday
at all levels
of gubmintand total
fiscal funding (on federal credit )
of all programs
at all levels
imagine a macro pundit suggesting that ..
Posted by pinky at January 13, 2007 07:08 PM