Why can't capitalism stop its excesses, greed, and other damaging characteristics?

Don't be so pathetic! Refer to some economics. Its an economics forum!

 

The Great Depression was called the Great Depression because of very high unemployment and very low GDP.
Depression could have ended in 1930 with a return to capitalism, instead liberalism prolonged it 16 years and caused a world war that killed 60 million.

 

Hoover was a conservative Republican, not a liberal, and the Depression was over by 1939, as YOUR OWN SOURCE proved.

 

Hoover was very very liberal:
Hoover extended the size and scope of the federal government in six major areas: (1) federal spending, (2) agriculture, (3) wage policy, (4) immigration, (5) international trade, and (6) tax policy.

Consider federal government spending. (See Fiscal Policy.) Federal spending in the 1929 budget that Hoover inherited was $3.1 billion. He increased spending to $3.3 billion in 1930, $3.6 billion in 1931, and $4.7 billion and $4.6 billion in 1932 and 1933, respectively, a 48% increase over his four years. Because this was a period of deflation, the real increase in government spending was even larger: The real size of government spending in 1933 was almost double that of 1929.5 The budget deficits of 1931 and 1932 were 52.5% and 43.3% of total federal expenditures. No year between 1933 and 1941 under Roosevelt had a deficit that large.6 In short, Hoover was no defender of “austerity” and “budget cutting.”

Shortly after the stock market crash in October 1929, Hoover extended federal control over agriculture by expanding the reach of the Federal Farm Board (FFB), which had been created a few months earlier.7 The idea behind the FFB was to make government-funded loans to farm cooperatives and create “stabilization corporations” to keep farm prices up and deal with surpluses. In other words, it was a cartel plan. That fall, Hoover pushed the FFB into full action, lending to farmers all over the country and otherwise subsidizing farming in an attempt to keep prices up. The plan failed miserably, as subsidies encouraged farmers to grow more, exacerbating surpluses and eventually driving prices way down. As more farms faced dire circumstances, Hoover proposed the further anti-market step of paying farmers not to grow.

On wages, Hoover revived the business-government conferences of his time at the Department of Commerce by summoning major business leaders to the White House several times that fall. He asked them to pledge not to reduce wages in the face of rising unemployment. Hoover believed, as did a number of intellectuals at the time, that high wages caused prosperity, even though the true causation is from capital accumulation to increased labor productivity to higher wages. He argued that if major firms cut wages, workers would not have the purchasing power they needed to buy the goods being produced. As most depressions involve falling prices, cutting wages to match falling prices would have kept purchasing power constant. What Hoover wanted amounted to an increase in real wages, as constant nominal wages would be able to purchase more goods at falling prices. Presumably out of fear of the White House or, perhaps, because it would keep the unions quiet, industrial leaders agreed to this proposal. The result was rapidly escalating unemployment, as firms quickly realized that they could not continue to employ as many workers when their output prices were falling and labor costs were constant.8

Of all of the government failures of the Hoover presidency—excluding the actions of the Federal Reserve between 1929 and 1932, over which he had little to no influence—his attempt to maintain wages was the most damaging. Had he truly believed in laissez-faire, Hoover would not have intervened in the private sector that way. Hoover’s high-wage policy was a clear example of his lack of confidence in the corrective forces of the market and his willingness to use governmental power to fight the depression.

Later in his presidency, Hoover did more than just jawbone to keep wages up. He signed two pieces of labor legislation that dramatically increased the role of government in propping up wages and giving monopoly protection to unions. In 1931, he signed the Davis-Bacon Act, which mandated that all federally funded or assisted construction projects pay the “prevailing wage” (i.e., the above market-clearing union wage). The result of this move was to close out non-union labor, especially immigrants and non-whites, and drive up costs to taxpayers. A year later, he signed the Norris-LaGuardia Act, whose five major provisions each enshrined special provisions for unions in the law, such as prohibiting judges from using injunctions to stop strikes and making union-free contracts unenforceable in federal courts.9Hoover’s interventions into the labor market are further evidence of his rejection of laissez-faire.

Two other areas that Hoover intervened in aggressively wereimmigration and international trade. One of the lesser-known policy changes during his presidency was his near halt to immigration through an Executive Order in September 1930. His argument was that blocking immigration would preserve the jobs and wages of American citizens against competition from low-wage immigrants. Immigration fell to a mere 10 to 15% of the allowable quota of visas for the five-month period ending February 28, 1931. Once again, Hoover was unafraid to intervene in the economic decisions of the private sector by preventing the competitive forces of the global labor market from setting wages.10

Even those with only a casual knowledge of the Great Depression will be familiar with one of Hoover's major policy mistakes—his promotion and signing of the Smoot-Hawley tariff in 1930. This law increased tariffs significantly on a wide variety of imported goods, creating the highest tariff rates in U.S. history. While economist Douglas Irwin has found that Smoot-Hawley’s effects were not as large as often thought, they still helped cause a decline in international trade, a decline that contributed to the worsening worldwide depression.

Most of these policies continued and many expanded throughout 1931, with the economy worsening each month. By the end of the year, Hoover decided that more drastic action was necessary, and on December 8, he addressed Congress and offered proposals that historian David Kennedy refers to as “Hoover’s second program, ” and that has also been called “The Hoover New Deal.”11 His proposals included:

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The Reconstruction Finance Corporation to lend tax dollars to banks, firms and others institutions in need.

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A Home Loan Bank to provide government help to the construction sector.

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Congressional legalization of Hoover’s executive order that had blocked immigration.

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Direct loans to state governments for spending on relief for the unemployed.

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More aid to Federal Land Banks.

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Creating a Public Works Administration that would both better coordinate Federal public works and expand them.

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More vigorous enforcement of antitrust laws to end “destructive competition” in a variety of industries, as well as supporting work-sharing programs that would supposedly reduce unemployment.

On top of these spending proposals, most of which were approved in one form or another, Hoover proposed, and Congress approved, the largest peacetime tax increase in U.S. history. The Revenue Act of 1932 increased personal income taxes dramatically, but also brought back a variety of excise taxes that had been used during World War I. The higher income taxes involved an increase of the standard rate from a range of 1.5 to 5% to a range of 4 to 8%. On top of that increase, the Act placed a large surtax on higher-income earners, leading to a total tax rate of anywhere from 25 to 63%. The Act also raised the corporate income tax along with several taxes on other forms of income and wealth.

Whether or not Hoover's prescriptions were the right medicine—and the evidence suggests that they were not—his programs were a fairly aggressive use of government to address the problems of the depression.12 These programs were hardly what one would expect from a man devoted to “laissez-faire” and accused of doing nothing while the depression worsened.





... the Hoover interventions include: expanded public works( ever heard of Hoover dam), greater government control over agriculture, the Smoot-Hawley tariff, a virtual end to immigration, government loans for construction and other businesses ... Most important was Hoover’s pressuring businesses to not cut wages even as the prices of their output fell. The result was higher real wages, which were responsible for the unemployment rate topping out at 25 percent, causing the greatest human toll of the Great Depression. [1]
Hoover, much like FDR, was skeptical about free markets. [2]

 

war spending made GDP look good but depression war was just beginning

****Here's what Henry Morgenthau, FDR's Secretary of the Treasury (the man who desperately needed the New Deal to succeed as much as Roosevelt) said about the New Deal stimulus: "We have tried spending money.We are spending more than we ever have spent before and it does not work... We have never made good on our promises...I say after eight years of this administration we have just as much unemployment as when we started... And an enormous debt to boot!"

"The New Republic"( at the time a FDR greatest supporter") noted. In June 1939, the federal public works programs still supported almost 19 million people, nearly 15% of the population" [page 313]

In fact in 1939, unemployment was at 17%, and there were 11 million additional in stimulus make work welfare jobs. Today when the population is 2.5 times greater we have only 8 million unemployed. Conclusion: legislation to make Democrats illegal
is urgently needed

 

econlib grunt!

 

<yawn> Speaking of pathetic (and hypocritical), I've just looked at your last 10 posts in response to my posts. None has referred to any form of economic analysis or information whatsoever. Given that I have actually been posting references to economic statistics, which you have not, your behavior is despicable, and constitutes trolling and harassment.

 

That has nothing to do with FDR. The G.D. began in 1929 with the market crash. FDR entered office in 1933.
"When Roosevelt was inaugurated March 4, 1933, the U.S. was at the nadir of the worst depression in its history." (Wikipedia)
"Nadir" means the direction was upward from that point.

"Historians categorized Roosevelt's program as "relief, recovery and reform." Relief was urgently needed by tens of millions of unemployed. Recovery meant boosting the economy back to normal. Reform meant long-term fixes of what was wrong, especially with the financial and banking systems." (Wikipedia)

There. Now you know something about it.

 

Your dodge is expected, but not appreciated. Simply refer to economics

 

actually he was president. Hard to imagine you didn't know that!!

 

You've enabled these divs! FDR was not anything to celebrate. That notion is a false revisionism that ignored, obviously, the conservatism and failure to even apply basic Keynesianism

 

Your simplistic thinking is your downfall. If it were otherwise you would have something to say about the remainder of my post.

 

you mean libcommie historians. Here's how the administation categorized it:


***Here's what Henry Morgenthau, FDR's Secretary of the Treasury (the man who desperately needed the New Deal to succeed as much as Roosevelt) said about the New Deal stimulus: "We have tried spending money.We are spending more than we ever have spent before and it does not work... We have never made good on our promises...I say after eight years of this administration we have just as much unemployment as when we started... And an enormous debt to boot!"

 

He got the top income tax bracket to 94% in 1944. I don't consider that plus a 40-hour work week, minimum wage, a standard work week, overtime pay, prohibition of child labor, Food Stamps, Social Security, the CCC, the PWA, the WPA, the Federal Surplus Commodities Corp., the National Labor Relations Act (unions), and the Bankhead-Jones Farm Tenant Act to resemble your description of "conservatism and failure to even apply basic Keynesianism".

 

100% obviously not true Keynes wrote open letter to FDR saying FDR should spend on infrastructure which FDR did in a huge way!!!

 

Yeah, said in a 1937 speech, but finish it...

He was calling for higher taxes. To reduce the deficit he argued for increased taxes, particularly on the wealthy, and the top bracket was already at something around 65%.

 

MASLOW'S HIERARCHY OF NEEDS

You're disappointed and I am aghast.

The Right-wing can be classified as "primates who think the only worthy criteria of success is measured in dollars". It is a belief engendered first by Hitler to rejuvenate a defeated Germany in the 1930s.

But it was prevalent pre-WW1 and resumed prevalence in post-WW2. It was and still is today a fundamental part of human-nature in the US. Largely for historical reasons, the most important of which is the fact that societal thinking that elevated fairness and equitability as primary attributes of a "just and equitable society" succeeded in Europe but not the US in the post-WW2 years.

(America, having defeated the Nazis, decided to take on Communism. Which, rather than being defeated, simply died of the fact that it was a corrupt and unfair totalitarian ideology.)

But, Socioeconomic Fairness/Equitability is an attitude that has become more generalized in recent years, notably by the rejuvenation of both European and Far-east economies. Afterall, what easier measure to apply to show its obverse: One's penchant to spend lavishly and hold mountains-of-moula in "investments" - both rewards for adept business transacting.

At the levels given, the flagrant arse-kissing of the rich by their subservients in any Financial Capital on earth simply "goes with the territory".

And nothing can be done for as long as a middle-class dreams of getting rich and inculcates its children in that direction. The poor (otoh) know well poverty; they live their lives on the bottom two rungs of Maslow's Hierarchy of Needs:


For as long as a people honor/salivate at the thought of accumulating massive amounts of money, we shall always as a country have a poor distribution of the riches that we all work to generate - but rarely share equitably ...

 

Even conservatives are forced to react to economic crisis! I'll quote Krugman, something I rarely do mind you...

"'The boom, not the slump, is the right time for austerity at the Treasury'. So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon,
sending the United States economy—which had been steadily recovering up to that point—into a severe recession".

 

A bit old-that that story.

Keynes went on to convince Roosevelt that Stimulus Spending was the way out. Well, it wasn't really - the US was in deep, deep sneakers and deserved to be there. It was paying for the lack of Fed-oversight of markets pre-1929 that led to not only people jumping out of windows but the Great Recession of the 1930s.

In fact, the Stimulus Spending that finally spiked the Great Recession was, uh, World War 2.

A bit expensive in terms of lives lost to correct a mistake (frenzied investing on Wall Street), doncha think?

Has anything changed? The Great Recession was what? Yes! Frenzied thinking once again on Main Street and then Wall Street.

The call to make a quick megabuck and people ran like crazy to do it. Which got them where?

Into the Deep Great-Recession.

If people can't learn from history, they deserve to repeat it ...

 

No he didn't. It was World War that forced America to understand Keynesianism (e.g. "When Roosevelt was finally converted of the need for a deliberate fiscal stimulus in 1938, it was on the basis of empirical results derived by researchers in his own government who had no direct acquaintance with Keynes's recently published ideas")

 

Well let me say it this way: Liberals are not opposed to capitalism, yet they are not known as "conservative". I'd say FDR was a liberal or some other permutation of pro-capitalist, but I don't consider him to have been a conservative.

 

His understanding of the economy was certainly conservative. He didn't learn either, with change forced on the US.

You could argue that Keynesianism is conservative I suppose, with reference to simply protecting capitalism from the threat of macro instability. I'm not sure what that mind. Neo-Keynesianism is certainly conservative, but it isn't actually based on the General Theory. IS/LM and the Phillips Curve sprung up purely as a means to try and find consistency with neoclassical microeconomics.

 

JM Keynes had suggested early-on "multiplier stimulus-spending" in 1933, having been invited to the White House by Roosevelt who had been told about Keynes groundbreaking-book on economics*.

Yes, as I've said in this forum, the government spending subsequently was palliative and it was the massive spending of WW2 that stopped-dead the Great Depression.

My point:
-AFTER Obama had brought down the Unemployment Rate (handed to him by Dubya) from 10% to around 6% (by means of the ARRA-bill), in 2010 he asked Congress for more government spending.
-But American voters were so pissed-off that his "magic" did not work overnight, they voted the HofR over to the Replicants in 2009. Who promptly refused any further stimulus-spending - barking that the debt was "too high".
-The result was no further job-generation by the economy from 2010 to 2014. For that fact, see the Bureau of Labor "Employment-to-Population Ratio" here:

So, who's to blame for the protracted unemployment 2010/2014? Obama or the Replicants ... ?

* From here:

 

Spending-money to revive a dormant economy is NOT CONSERVATIVE THINKING.

The Replicants refused to do so when Obama requested added funding in 2010 to further reduce unemployment ...

 

None of it was a reaction to Keynes. Indeed, he was dismissive of Keynes: "a mathematician rather than a political economist". And the solution was only achieved when Keynesianism was forced on the US through world war.

I appreciate the need to celebrate FDR. Its used to try and get through to right wingers over the folly of austerity. However, that celebration is based around myth. There was nothing Keynesian about the US in the 30s.