I owe my friend Jared Yamamoto for this large amount of reading material on FDR.  Jared argues that FDR saved the country, and I argue that he made the problem worse (in agreement with several leftist UCLA economists, read more.)

Here’s the conversation:

Jared Yamamoto

Herbert Hoover’s the biggest whiner EVER.

Adam Uglum Hoover is the biggest hypocrite in history.

Adam Uglum His rhetoric and his polices are almost completely opposite.

Jared Yamamoto Clearly bitter over FDR’s victory

Adam Uglum His presidential victory? Or FDRs victory in preserving the great depression? 😛 And yes, clearly bitter about it considering he was campaigning against the guy the rest of his days.

Jared Yamamoto WHAT?!? FDR saved America! Can you imagine inheriting a country with a 33% unemployment rate, nearly all banks closed, and people starving in the streets. His various social programs saved capitalism by expanding the money supply and when he left, the country was twice as wealthy. The only thing wrong was that those social programs were meant to be temporary.

Adam Uglum    It was never 33%.

1929: 3.2
1930: 8.7
1931: 15.9
1932: 23.6
1933: 24.9
1934: 21.7
1935: 20.1
1936: 16.9
1937: 14.3
1938: 19.0
1939: 17.2
1940: 14.6

If FDR was the nation’s economic savior, then what explains the general lack of recovery, including the “Rosevelt recession” of 1938 with an unemployment rate of 19 percent?

The claim that FDR “saved us” from the Great Depression is simple ignorance or outright deception. Roosevelt inherited the economic problems largely created by Hoover and made them much worse.

FDR took Hoover’s policies and expanded on them greatly, namely by freezing the banks, preventing them from re-opening and thus further worsened the panicking consumers

Having ruined the banking system and destroyed the gold standard with the Gold Seizure Act (He totally forbid private ownership of gold), he turned next to agriculture. With help from the Farm Bureau and the other Ag programs at the state level, Roosevelt passed the the Agricultural Adjustment Act of 1933. It provided for acreage and production controls, restrictive marketing agreements, and regulatory licensing of processors and dealers “to eliminate unfair practices and charges.” It authorized new lending, taxed processors of agricultural commodities, and rewarded farmers who cut back production.

Don’t forget Hoover’s Smooth-Hawley tariff that FDR expanded upon: in the three years (1930-1933), U.S. exports plunged 64% and farm exports by 60%.

This is from “FDRs Folly” A book you should read: “The interventionist schemes of the Roosevelt administration were an unmitigated economic disaster. Suffice it to say that by 1937, after more than four years of Roosevelt’s policies (and after eight years of the combined Hoover-Roosevelt New Deal) — after the National Industrial Recovery Act, the abandonment of the gold standard, the tripling of taxes, more labor legislation and many similar acts of governmental interference — unemployement rose to more than ten million, and business activity fell to virtually the same low reached in 1932. (382)”

Jared Yamamoto ‎1942: 4.7

Jared Yamamoto ‎1944: 1.2%, 1946 3.9%, 1948: 3.8%

Jared Yamamoto Remember FDR was in office from 1933-45. During his tenure the unemployment dropped significantly. (you only show through 1940) Whether we like it or not he got us out of the Great Depression. The free market failed under pitiful investments and his social programs promoted confidence in the public knowing they had a safety net and arguably preserved “what we call” capitalism.

Adam Uglum Don’t forget WWII was under way, and France/Germany had much of their infrastructure destroyed in the conflict. WWII got us out of the Great Depression. HUGE demand from

Again, how do you explain 10+ years of Hoover/FDR New Deal hardly doing anything for unemployment?

Even Berkley professors say FDR prolonged the depression:http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

I hate to repeat myself, but how do we explain 10+ years of high unemployment before pre-WWII? I excluded WWII years because I figured we were on the same page that WWII caused a boom in the U.S. economy.

Jared Yamamoto It definitely did, but again the social programs created confidence to spend in the public sector. Spending generates revenue for the economy. Revenue created jobs and lowered the unemployment rate. People knowing they were safe to invest, along with WWII saved America my friend.

Adam Uglum Consumer spending FELL dramatically over that time period:

Per capita GDP was lower in 1939 than in 1929 ($847 vs. $857), as were personal consumption expenditures ($67.6 billion vs. $78.9 billion), according to Census Bureau data. Net private investment was minus $3.1 billion from 1930–40.

Jared Yamamoto Where you and I agree is that those social programs were not designed to continue as long as they have.

Adam Uglum Yes, but where you’re wrong is that consumer spending is not what saved the economy. Global demand for U.S. food and military goods is what got us out of the depression.

I have to refute your claim that median income growth was amazing during the 1930-1940 period, unemployment was high, employment was low (it is critical you understand that these numbers represent two totally different things). Medican income growth WAS significant, but it’s intellectually dishonest because it’s a very narrow look at wages, i.e.:

The workforce shrank, wages grew. Were people better off with an economy with fewer jobs but higher wages?

Jared Yamamoto ‎*played a role, but renewed confidence in the American economy was a huge factor as in 1942 the unemployment rate was 1.2% Roosevelt was an excellent motivator. We didn’t enter the war until December of 1941. The unemployment rate was calculated in January of 1942.

Adam Uglum What empirical data proves “renewed confidence”

People having jobs = confidence, and war spending and the production of war goods = employment and therefore, confidence. What did FDR have to do with the 40-45 War boom?  Jared, just because we didn’t enter the war till WWII doesn’t mean we weren’t selling tanks, airplanes, ammunition, in epic proportions to every allied nation.

Jared Yamamoto I’m well aware that we were selling weapons before we entered, but not on the magnitude that we were when we entered. We contributed, but again it played a part. The renewed confidence in American Economics, stock market, etc. began in the mid to late 30s. Talk to someone who lived during that time my friend. It’s the best advice I can give. Renewed confidence in America in general preserved what we have today. Knowing that you have govt. programs to support you promotes spending.

Adam Uglum

What empirical data supports that consumer ‘confidence’ rose in the mid 1930’s? As I cited earlier, consumption FELL over that 10 year period: personal consumption expenditures ($67.6 billion vs. $78.9 billion), according to Census Bureau data.

I’m just curious where the rhetoric for “renewed confidence” came from. Even the stock market was terrible 1930-1940:

January 2, 1929 307.01
January 2, 1930 244.20
January 2, 1931 169.84
December 31, 1931 77.90
May 25, 1932 49.10
July 8, 1932 41.22
December 30, 1932 60.26
December 30, 1933 40.24
January 2, 1934 100.36
January 2, 1935 104.51
January 2, 1936 144.13
December 31, 1936 179.90
December 31, 1937 120.85
December 30, 1938 154.36
January 2, 1940 151.43
January 2, 1941 130.57

Jared Yamamoto

Again with any recession that we’ve seen. It takes time to build consumer confidence. Had those programs not been implemented consumer spending would not of risen. In order to persuade the masses they must have confidence. The social programs along with the second bill of rights, and four freedoms created a renewed confidence. We knew we could spend. I don’t know how else to say it. Where FDR was wrong was not putting a definite stop to these programs.

Adam Uglum Where is your evidence consumer confidence rose? Or am I just supposed to believe you? The numbers say otherwise.  Are you reading anything that I’m typing?

Source: http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

“In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.”

Will update with new conversation as it arrives.  He hasn’t responded in a few hours.

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