The Democrats have it wrong

Ah that meme.

Yes, yes, we know the revisionist history.

Do you have ANY facts, ANY statistics, that shows that anti-redlining legislation resulted in so many defaults that the whole banking industry was on the verge of collapse.

That's just silly. Indeed, the defaults were the result of CDSs spreading the toxin around, blocking credit to businesses, causes layoff, which then caused unemployment and significant mortgage defaults.

In short you have it totally backward. CDSs were deregulated (or rather made exempt from regulation, by good old boy Phil Graham, banking industry shill), and thus they infected the whole system for well researched well known reasons. When even a small percentage defaulted, the whole system siezed up.

But nice little rightwing narrative you're parroting.

 

its hard to find out exactly how many defaults were caused directly by the CRA and how many defaults were caused in the aftermath of the initial crisis. However, this website below answers a great deal of questions and concerns about the "right-wing narrative." (Hint: it's not!)

http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6

It sums it up by stating that the crisis was fueled by the lower lending standards that had spread throughout the entire mortgage market. The banks that were the best at making CRA loans were allowed to grow by opening branches and making aquisitions. The bad thing about this is that Banks making CRA loans initially expected that defaults would be higher due to lax lending standards. When they discovered the low-income borrowers had an unexpected propensity to pay their mortgages. After years of data poured in showing that borrowers were paying mortgages despite high LTVs, low down payments and unconventional income measures, bankers began to believe that many of the traditional measure of credit worthiness were overly conservative.

The government practice of expanding banks that were predisposed to lax lending standards (while conservative banks didnt expand) can largely to be blamed here.

 

It never happened during any of the 19th or 20th century recessions that demand for workers went up in recessions/depressions. Whare are you getting this information from that has no basis in reality?

Except for the raising of the top rate, the rest is right so far. Because of Hoover's belief in volunteerism, instead of regulation of banks and markets, he never could overcome the problems he faced.

Small doses when big doses were needed. Hoover probably extended the Depression because of his ineptness. Conservatives and Austrians would generally do as he did back then.

and thank goodness FDR expanded them, or the Depression might have created a revolution and the U.S. might have been broken up.

 

If its so simple then why does China buy our debt, then use the debt service payments to buy raw materials? At some point you have to stop the wealth transfer from the US to China do you not? I understand the economic theory of deficit spending to bring an economy out of recession, the problem we have is that the deficit spending does not stop when the economy rebounds. We do not pay off our debts when we have the money, we spend more.

I would say that America is in a dicey situation. We have trillions in spending and nothing to show for it, the spending on the military has not made us money, the spending on infrastructure with the stimulus has not spurred economic activity, and TARP bailed out those who had already stolen the money. I would be for deficit spending if we produced something the world wanted, but at this time we do not. Maybe we need to open arm sales to all nations and repatriate our money!

 

I just love the "bankers stole the money" meme. You sign a contract to go into debt on a house that you know you absolutely cannot afford, and then when the bank demands prompt payment it's theft?

Then, when millions of Americans decide paying back a legal loan is actually the bank stealing from them, they walk away and abandon their homes and the banks lose trillions and threaten a world wide depression. So rather than let the depression happen we bail them out, and that's theft?

Maybe the Government shouldn't have implied through fannie and freddie that the Government would back all subprime loans in the nation?

It was liberal economists such as Paul Krugman who advocated for the Government to inflate a housing bubble to begin with and starting with Clinton the cult of "Homeownership is a Civil Right" began to spread within the halls of Congress.

 

I don't know where the idea comes from that there was massive GDP growth in the 1950's. According to the following chart it was relatively flat.



It really didn't start expanding dramatically until the tax laws were being revised starting in the 1970's.

Of course we're not in an expanding economy today so any tax increases would adversely effect the economic recovery today. That doesn't imply that tax increases shouldn't be considered but first and foremost excessive government spending must be eliminated. We cannot and could not afford the doubling of the national debt under the Bush adminstration nor can we afford the trillion dollar annual deficits today. First dramatically reduce expendatures the, and only then, should tax increases be considered.

BTW I heard on the news this morning that President Obama believes that $4 trillion in spending over the next ten years can be cut. So why are the Democrats and Republicans only discussing two trillion in cuts over ten years?

 

Lets see...in the examples i gave you many of them featured businesses going out of business. That means people got laid off from work. Unemployment rose. Supply and Demand laws would have increased demand because employers are more willing to hire people when they don't have to pay as much in salary. How else would the 19th century recessions have ended within 1-2 years?

I wish Hoover was actually a do-nothing president like textbooks portrayed him. He did more than any peacetime president had ever done, and Rexford Tugwell (FDR official) even admitted that the New Deal was "extrapolated from programs that Hoover started."

Hoover's plan for 1932:

1) Establish a Reconstruction Finance Corporation, which would use Treasury funds to lend to banks, industries, agricultural credit agencies, and local governments;

2) Broaden the eligibility requirement for discounting at the Fed;

3)Create a Home Loan Bank discount system to revive construction and employment measures which had been warmly endorsed by a National Housing Conference recently convened by Hoover for that purpose;

4) Expand government aid to Federal Land Banks;

5) Set up a Public Works Administration to coordinate and expand Federal public works;

5) Legalize Hoover's order restricting immigration;

6) Do something to weaken "destructive competition" (i.e., competition) in natural resource use;

7) Grant direct loans of $300 million to States for relief;

Reform the bankruptcy laws (i.e., weaken protection for the creditor).

That fails to follow the idea of "voluntarism." Clearly Hoover was an activist president that interfered in the economy to an unprecedented amount.

Meanwhile, the recession (and the following depression) was not caused by a drop in consumer spending like many people think. Industries hardest hit were not consumer industries, they were the industries that created durable and capital goods. By giving people assistance to increase consumer spending, it would have done little to nothing for the heavy industries that had been most affected by the depression and where bulk of unemployment was concentrated.

And also, as you agreed to my reasonings (except for the taxes, which did reduce capability for the rich who invested in industries), then you must see that Hoover turned the recession into a depression. If he had not passed the tariff, US exports may have helped revive our economy. If he had not made a tax on checks (to fund social programs and unemployment programs), the run on banks would have been much smaller in size and caused less damage nationwide.

Conservatives and Austrian school economists would NEVER enact government social programs, hike taxes by 40+%, impose high tariffs, and interfere in the economy to such a degree. Propping up failed businesses like Hoover's RFC goes against the very principles of Austrian economics. Many businesses Hoover hoped to save with the RFC either went out of businesses, or were burdened by debt throughout the 1930s.

If Hoover had let the recession run its course (like the 19th century), it would have been over at most within 1-3 years. Instead, he started a period of government spending that would last for 12 years.

If Hoover was "inept" at economic policy, we must suppose FDR is an "economical genius," who used lucky numbers to determine commodity prices.

The Austrian school of economics. Thats where my economic reasoning comes from. Its one of the 3 main schools of economics. Theres no "misinformation" stemming from it like you suggest.

The $1 was an example amount to show the effects of government spending or giving to people. Private companies are capable of building bridges. In the 19th century, before government spending and highways, many private companies would create turnpikes, which were privately owned and charged tolls. Same with the bridges that these turnpikes often used to cross rivers. You can't imagine the $1 building these things but thats because in our lifetimes they simply havent. Government has taken the job away from these companies.

Dredging the Mississippi is not a commercial issue. That is one of the jobs that should be done by the government (Whether by army corp of engineers or by hiring a private company), because theres no incentive for a private company to do it by themselves. However, issues like these aren't numerous in America.

Railroads were privately owned and constructed. Look at the Great Northern Railroad by James J Hill. Built without government land grants and aid, it out-competed the Northern Pacific (government funded), and connected Hill's steamers shipping goods to asia with American farmers. Complete private sector ownership brought the means to sell goods to farmers.

You continue to believe the fallacy that this "stimulus" money is free. It comes from TAXES. I agree that if you give companies money, they will hire people, but this doesnt work out so well if you take money from one company and give it to another (thats basically whats happening). Someone elsewhere is has less money to spend because of stimulus money. Unfair distribution of money also occurs in situations like the TARP bailout.

Many people employed by the CCC weren't fully counted by the census as employed because they were underemployed or received substandard wages.

Many businessmen weren't going back to hiring people because they didnt know which law FDR would pass next or what new wage controls or programs would be launched. When you're investing with your own money, you tend to be a LOT more careful making decisions, and if you dont know what the government is going to do next, you wouldnt be sure of reinvesting in the economy for jobs.

In addition, the government actually PREVENTED farmers from going to work and producing the food starving people needed. Tell me how the problem would have been worse with no action here.

When the AAA was strucken down by the Courts, FDR actually said:

"Are we going to take the hands of the ffederal government completely off any effort to adjust the growing of national crops, and go right straight back to the old principle that every farmer is a lord of his own farm and can do anything he wants, raise anything, any old time, in any quantity, and sell any time he wants?"

#59
http://academic.brooklyn.cuny.edu/history/johnson/fdrschecter.htm

The WPA paid amounts to different states (possibly due to political climate)

"Gavin Wright, an economic historian, did a state-by-state analysis of New Deal spending. He noted that safe democratic states, especially those in the south, received fewer WPA dollars than the rich battleground states of the north. Since southern states had more poverty than the north, this meant WPA jobs often went to states that needed them the least. Tell me thats not politically motivated."

Pay in Southern states ranged from 31 cents per hour while spending in battleground states in New Jersey were closer to $2.25 per hour. The page continues and describes how FDR had complete control over funding and used as a form of patronage for the states.

Page 87

http://books.google.com/books?id=Hw...v=onepage&q=WPA spending Gavin wright&f=false

 

First most recessions end in one or two years. They do so now even with MW laws.

Second, there is no empirical evidence I am aware of that businesses hire more employees merely because wages have been suppressed. If they have no need for the new employees (because demand is down), then even if the wages are suppressed, the company is worse off after hiring them. Businesses tend to hire new workers when they need them, not because it's a "deal" to hire them at low wages.

So do you have any peer reviewed studies that in a recession hiring goes up if wage demands go down? I really doubt it

 

They could afford it. That's why the lender loaned the money. It was only after the CDSs crisis did credit seize up, resulting in a recession, resulting in large lay offs, resulting in people who couldn't pay their mortgages.

In short, Tea Partylike, you have it backwards.

 

Being an attorney, I always like to actually read the laws that the Rightwing Noise Machine blames for problems. I've read the CRA. It doesn't lower standards for lending. It prevents redlining and requires banks to meet the credit needs of local communities -- rather than refusing to loan to particular areas because banks don't like the ethnic makeup of the community.

There is not one word in the CRA, not a word, that forces banks to lower lending standards.

In short this is just a rightwing meme.

If banks did lower standards, it was because flush with cash under Bush, they wanted more and more profit and made riskier and riskier loans. But the CRA had absolutely nothing to do with that. It was LACK of regulation of the standard, not overregulation, that caused that problem.

 

I stated that this application of supply demand laws is how recessions end. This is evident, as employment picks up at the end of a recession. This is simply an explanation of how recovery starts. see the below article.

http://www.ncsu.edu/project/calscommblogs/economic/archives/2008/12/how_recession_e.html

 

Untrue. Tax increases on the top income earners would not harm the economy.

the only way you're going to do that is if the economy grows, and that's going to take some fiscal stimulus. Without a means to stimulate the economy, the debts continue to grow, unless you raise taxes to very high marginal rates and close loopholes and deductions.

Outside of (at most) 45% military budget cuts and extricating the U.S. from Iraq and afghanistan, the only places left to cut are in corporate welfare programs and farm subsidies.

 

Heh... That's certainly a novel, but wrong approach to supply and demand. Demand for goods would create the demand for workers, not the other weay around, as you're trying to say.

Hoover moved too little, too late and far too small. And you're pointing to programs that came about because none of the classical or Austrian approaches were working.

Demand for other consumer goods drove the demand up for durable goods. Once those businesses had cash in hand from sales, they could expand in workforce and in durable/capital goods to increase production.

It's unseen what those taxes did. You've provided no evidence to this (or any) assertion(s).

FDR, using Keynes' General Theory did something that the austerity, Hooverites and austriansbelievers couldn't do: End the Great Depression.

I'm very familiar with the Austrian School. They've done much to muddy the waters to obscure economic facts over the past 80 years.

How's that hyperinflation by 2010 prediction doing?

And just when are the invisible bond vigilantes going to show up?

Poor Peter Schiff and his poor predictions. And the best Hayek out there is Salma.

Private companies can't build a highway system, though. One giant corporation like GE doesn't have the ability to raise enough money to build more than a short number of miles of roadway until the ran out of money. Getting other companies to voluntarily invest in a road that doesn't directly affect the company is going to see them pass on the investment. And then with the lost time of toll collection and varied quality of road, and the need to go out of the way to get from one private highway to another, or not having a road go to where you need to go, the whole mishmash falls apart. We're not riding in Conestoga wagons anymore.

Just like an interstate roadway would not be able to be built using private companies: there's no incentive for them to build it and then let competitors use it and there wouldn't be enough capital to make it national in scope. You're not applying your Laissez Faire the same way as roads.

Railroads relied heavily on government subsidies in land and money. Abe Lincoln put government money into creating a trans-American railroad. One railroad does not erase the history of the other 80% of the rest.

You are making up a fallacy that I think stimulus money is "free". It has to be paid back via revenues. And revenues grow when economies grow. And the wealthy are paying ridiculously low tax rates right now. And a combination of small hikes on middle class and larger hikes on the wealthy, with a new bracket or two, can lower the deficits.

The census was done in 1930. By 1940, employment was rising as shipyards, railroads and manufacturers geared up for supplying equipment for the Allies, then for our own war effort later.

Plus, until the stimulus of the New deal and WWII came into full effect, there wasn't a need to expand capacity until there was demand for goods.

More people were fed through the New deal than without it. It's that simple. No job=no food. New deal = more jobs.

First of all, the wages were already higher in the North. Second, the South would still be in darkness without the TVA, or at least something other than the TVA would be costing much more and hampered the growth in the South over the past 70 years. Plus, it was largely Northern and Western companies and income taxpayers providing the taxes to pay for the New Deal in the South and elsewhere.

 

Sub-prime was where the housing bubble burst. CRA did not cover subprime loans made by non-bank mortgage companies.

 

Please note the two major recessions during the 1950's that reduced overall GDP growth.

This is arguable but we do know a couple of things related to tax increase. The wealthy invest heavily in the economy providing capital for enterprise. Reducing their disposable income reduces private investment in the economy and that is harmful to the economy.

Additionally we know based upon the evaluation of the Bush era tax cuts that the elimination of them for the wealthy would only provide about $700 billion in additional revenue over ten years which isn't enough to even put a dent in the projected deficits. Only if those tax cuts for both the middle class and wealthy are repealed do we see a significant reduction of $3.7 trillion over ten years. The extension of the Bush era tax cuts for anyone was a mistake by both Democrats and Republicans.

Consumer spending is the only way to stimulate the economy but the personal financial situation for Americans today is much different than in the past. In the 1950's individual debt was around 55% of annual income but it was at about 134% of annual income in 2008. The shock of the recession has finally reached the people although economists had been warning for years that Americans were too deep in debt. Until the average American's debt is significantly reduced we won't see consumer spending that will pull the economy out of the recession. Thankfully people are paying down their debt today so the recovery is on the horizon. Creating more debt for the American People through deficit spending works against the recovery because it is debt, both public and private, that is responsible for the recession to begin with.

Corporate welfare is "catch-all" phrase that is generally misused. What this general refers to are tax deductions for corporations that allow them to produce goods and services at a lower cost for the consumers. In most cases eliminating them merely increases the costs of the goods and services making them less affordable to the consumer which reduces sales. Reducing sales is not the way out of the recesssion. I certainly oppose subsidies that provide cash payments to any corporation such as many of the agriculture subsidies and that is a good place to cut expendatures.

Cutting defense spending by extricating the US from Iraq and Afghanistan as well as US military bases in foreign countries where American taxpayers are paying for the national defense of other nations can certainly reduce the military budget by about 50% (not just 45%) and it needs to be done. Military spending is one of the elephants in the living room.

Cutting military spending would significantly reduce the deficits and by cutting 50% it would result in about $350-400 billion per year and that is significant but neither the Democrats or Republicans are proposing these reductions. Eliminating subsidies would reduce spending by perhaps $10-20 billion which is insignificant on it's own but does add up with other reductions.

But this just addresses the general budget and does not address the Social Security/Medicare deficits where FICA/Payroll taxes are the source of revenue. General taxation cannot be used to bailout Social Security/Medicare because they have a dedicated revenue source. Yes, we could lift the cap on Social Security FICA taxes similiar to the no cap on the Medicare portion but that doesn't provide nearly enough additional revenue for these programs. Financially these programs are a failure and it is time for both the politicans and people to realize that. They are generating somewhere between $500-600 billion is deficit spending today and that cannot be addressed by general revenue tax increases. It is the second elephant in the living room that needs to be seriously addressed.

As I have noted first the cuts in expendatures must be made then, and only then, should Congress consider possible tax increases. Don't ask the American people to fund expendature that can be reduced or eliminated. That merely feeds the beast of government spending without addressing the problem that our government spends more than the People can afford.

 

Companies that are run on profit have an incentive NOT to sit around waiting for demand to pick up while they lose money. If labor costs go down, they will certainly hire and produce more output because otherwise they would be losing money.

I only wish Hoover used classical approaches. As soon as the recession started, he raised taxes by 40% (big no-no), raised tariffs to sky high levels (big no-no), taxed checks (big no-no). Here is a quote on Hoover's policies if you aren't convinced:

"Policies

I suppose the $1.8 billlion spent by the RFC (not adjusted for inflation) is too little? Unemployment benefits financed by tax hikes weren't enough? Government protection of domestic industries with tarriffs weren't enough either?

Hoover entered office with a plan to reform the nation's regulatory system, believing that a federal bureaucracy should have limited regulation over a country's economic system.[30] A self-described progressive and reformer, Hoover saw the presidency as a vehicle for improving the conditions of all Americans by encouraging public-private cooperation—what he termed "volunterism". Hoover saw volunterism as preferable to governmental coercion or intervention which he saw as opposed to the American ideals of individualism and self-reliance.[31] Long before he had entered politics, he had denounced laissez-faire thinking.[32]"

30^ Joyce, C. Alan. "World Almanac 2009", World Almanac Books, 2009, p. 524.
31^ http://millercenter.org/president/hoover/essays/biography/1
32^ Hoover, Herbert. "American Individualism", 1922.

Voluntarism isn't laissez faire. Its not a do-nothing policy. It was getting the public secctor and the private sector to work together (sort of like Regan's private corporate cost reduction committee in the 1980s). It says flat out that Hoover was a "self-proclaimed progressive" and was firmly against laissez faire. Being so, he did not implement any classical economics and instead used public policy to try to solve the recession.

"Theorists of the "Austrian School" who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote America's Great Depression (1963). In their view and like the monetarists, the Federal Reserve, which was created in 1913, shoulders much of the blame; but in opposition to the monetarists, they argue that the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a significant economic contraction was inevitable. According to the Austrians, the artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market's adjustment and made the road to complete recovery more difficult"

Basically, it states that the expansion of money supply led to an unsustainable boom in the capital goods industry. The recession was simply a reflection of the economical contraction in those industries. THAT is why consumer goods industries were barely affected in the 1929 recession.

I forgot to mention he also hiked the estate tax and the corporate tax (raising costs of doing business). The taxes helped reduce tax efficiency as well as slow recovery. When higher taxes are enforced, less people pay them. As a customer, I've went to many small businesses that ocasionally don't charge taxes (evasion) because of the extra cost to consumer (possible deterrent to purchases). A tire store I went to told me to forget about the tax because doing so would relieve the consumer of an extra 10% taxes. That reduced the overall costs by $50. This is just one example of countless many tax evasion stories, simply because the government taxes TOO MUCH. Its been proven that higher rates bring in less effective tax rates and not only did the higher rates fail to bring in more revenue, but it also had an effect on struggling businesses (especially in the manufacturing sector).

Hoover was a staunch opponent of the Austrian school of economics. Keynes' general theory failed to solve the great depression. Up till WWII, unemployment was still at sky-high levels, private sector growth was still stunted. It was only after Ike cut taxes, rolled back some new deal programs, returned normal market conditions that businesses began growing.

FDR forgot one important part of Keynesian economics. Federal debt must not exceed 25% of GDP. FDR had no restraints as he lavished funds on pet political projects and reached almost 50% of the GDP in debt. Keynesian economics also failed to account for the recurring recession in 1937 as well as the state of the economy in 1939-1941 (right before WWII). It wasn't even close to pre-depression levels and was no-better off than the initial years of the New Deal.

More like 140 years to you. Its Keynes and the politicans that bastardized his theory that has muddled the facts. Before then, there was largely a general consensus on economic principles. Ever since then, we've had a "schism" in the field of macroeconomics.

"Poor Peter Schiff" was one of the few sensible economists that foresaw our financial/mortgage crisis of 2007. One year later, he predicted the automotive crisis of 2008 and banking crisis.

Schiff was likely referring to the government's policy of printing money when it "needs it" (stimulus bill-Obama) causing it. Look at the Weimar Republic's economic policy towards currency printing and look where it got them.

Schiff suggests that as the Federal Reserve continues to fail in the policy of manipulating interest rates and cheapening money, there might be less incentive for foreign investors to keep US cash holdings when the Fed is devaluing their holdings by printing money. Its common sense. Why invest in something that likely could lose its value over time?

 

You hear all these talk these days about record profits for oil companies. I don't see why they wouldnt invest in a company that would oversee construction of roads (this would fuel gasoline demand as more cars hit the roads). Charge tolls for maintenance and as long as tolls are reasonable, the road pays for itself. Why else are states such as CA and CO leasing out highways to private companies (who are installing tolls to pay for this private maintenance)?

Companies aren't stupid. They easily would recognize these problems as you do. They would know that connecting neighboring highways in high-traffic areas would increase traffic on their road and thus increase revenue. Lost time in tolls can be averted with something like the current E-PASS system we have on our tolls in many federal highways.

If the government didnt build highways, oil companies would build highways because they stimulate demand for cars and gas (more mileage traveled).They arent letting competitors use it. They are charging everyone the same amount of money to use the road. This not only reduces federal expenditures, but also reduces emissions.

Unfortunately, federal funding encouraged waste. Railroad companies built tracks that went in long curves to increase overall distance covered (to receive more funds) even though this would increase overall travel time. They built RRs over poor terrain because that would entitle them to more funding. They even used shoddy worksmanship because this would let them finish faster and cover more track (receive more federal money).

Private railroads built the best and most efficient tracks because they knew they had to succeed on their own. If their railroad was not quality (too long travel time or too low in quality), traffic would decrease, lowering revenues. Meanwhile, federally funded RRs didnt really care whether their railroads were good or not because they still got federal money.

The wealthy pay the HIGHEST RATES and HIGHEST TOTAL TAXES of everyone in america. They pay 35% of all of their income. Thats not "ridiculously low." 10% for lower-class americans is ridiculously low by comparison.

Higher tax rates reduce effective taxing ability. Thus, raising tax rates dont always guarantee higher revenues. If we simply cut government spending and reformed the corporate tax (lowered by 10% and removed loopholes so every company pays the same rate), we would get the job done.

The census bureau records annual unemployment and employment levels. I'm not talking about the 10 year census.

The US didnt officially provide any material support until 1941. The Lend-Lease Act was the first major legislation providing material support for the allies and wasn't passed until March of 1941).

Thanks for admitting the uncertain market conditions of the New Deal.

You fail to understand that businesses drive economies. If more people are hired, there are more paying customers. By "expanding capacity," businesses would be increasing the amount of paying customers (increasing demand for goods).

With New Deal's AAA, food prices remained constant or increased.
Without new deal's AAA, food prices would have decreased due to excess supply.

With New Deal's AAA, many could not afford food and were starving in the streets.
Without AAA, food would have been easier to obtain.

With AAA, the amount of food US was producing was barely enough to meet the minimum subsistence diet.
Without AAA destroying crops and animals, we would have produced ample produce to feed the nation.

[/QUOTE]

The South received less per capita (75%).

Do you deny that the WPA was used as an instrument of partisan corruption in government? WPA workers in battleground states like NJ had to pay a mandatory 3% tithe to the democratic party. This was why the Hatch act was finally passed in 1939, to prevent this type of corruption.


" According to Lyle Dorsett, who has studied the Hague machine in detail, "Concrete evidence shows that from the outset of the New Deal, Democratic Mayor Frank Hague was in complete control of all patronage in the state." And Roosevelt poured patronage into New Jersey in the form of massive public works (Hague owned a construction company), which included almost 100,000 WPA jobs annually during the 1930s and the highest rate of pay in the nation for these skilled jobs. One minor drawback to the high pay was that WPA workers in New Jersey had to "tithe" 3 percent of their salaries to the Democrat Party at election time. One WPA director in New Jersey--a corrupt but candid man--answered his office phone, "Democratic headquarters!"

WPA director Harry Hopkins received mail regularly from people all over the nation who were denied federal jobs, or fired from them, because of their (p. 8 political views. Many of these letters are available in files for each state and housed in the National Archives. The title of these files is "WPA--Political Coercion." The hefty New Jersey file is very illuminating. One WPA worker complained about a mass-mailed postcard he received that stated, "You are either on the WPA or employed in some government department and by virtue thereof you owe a duty to the [Democrat] Party to do your part in making the canvass. Failure to do your active share will be reported to our county chairman, and you may find your position in jeopardy."

Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008."

"Much of the criticism of the distribution of projects and funding allotment is a result of the view that the decisions were politically motivated. The South, as the poorest region of the United States, received 75 percent less in federal relief and public works funds per capita than the West. Critics would point to the fact that Roosevelt’s Democrats could be sure of voting support from the South, whereas the West was less of a sure thing; investing in the West was a way of swaying voters.[29]

The WPA hired men with the weakest work habits who could not get regular jobs.[30][31][32] Critics ridiculed them, and the agency as a whole, as laze—calling the initials "We Poke Along", "We Piddle Around", "We Putter Along", "Working (*)(*)(*)(*) Ants", or the "Whistle, (*)(*)(*)(*) and Argue gang". These were sarcastic references to WPA projects that sometimes slowed down deliberately because foremen had an incentive to keep going, rather than finish a project.[33]"

Sources:
29Lee, "The New Deal Reconsidered", 70.
30^ that WPA is bad for people since it gives them poor work habits. They believe that even if a man is not an inefficient worker to begin with, he gets that way from being on WPA, Ginzberg, p. 447
31^ Employers became prejudiced against hiring men who had been employed by the WPA for any considerable length of time, arguing that they had formed poor work habits, Wood, p. 61
32^ To some extent the complaint that WPA workers do poor work is not without foundation. ... Poor work habits and incorrect techniques are not remedied. Occasionally a supervisor or a foreman demands good work, Report of investigation of public relief in the District of Columbia (U.S. Senate), 1938, books.google.com
33^ David A. Taylor, Soul of a people: the WPA Writer's Project uncovers Depression America (2009) p 12

 

OK, so you've made a great case of why we need regulation of banking/financial sectors because of the crises that you pointed out before Glass-Steagall and Regulatory agencies were enacted into being by law. You absolutely didn't address my statement, but made an argument that shows why the regulation could have kept the Great Depression from happening.

The trade-off was higher productivity from union workers and few cases of labor strife, especially during the years of WWII, which made companies profitable.

That's simply false. Life expectancy was built into SS, if not from the beginning, then at least starting from post-WWII administration of the program.

http://krugman.blogs.nytimes.com/2011/01/15/early-social-security-projections/

PDF:
http://www.ssa.gov/history/reports/trust/1945/1945a.pdf

So now you're saying that in normal circumstances, heavy taxation to hire workers is a policy that works.

Look, deficit spending doesn't matter, especially in a recession/depression. You can do the fiscal stimulus spending with deficits and not raise the taxes until the economy is growing again, as Keynesian policy calls for.

and yet, we were able to do it and get out from under the effects of the Great Depression and raise employment and opportunites at all levels using the stimulus spending and New Deal regulatory reforms. Until the Reaganistas, that is.

But, people were employed, making products that were profitable for their employers and tax revenues were higher as a result of higher tax rates and more people joining the ranks of those who made enough money to be taxed via income taxes.

Paper money is completely spendable. And bonds are an investment with a return at a future date. And wages did not fall after thre war (defeating your assertion that companies hire more when wages fall).

Austrian ideals aren't proven and often ignore statistics. Mises and Hayek wrote that their ideas weren't provable, which is why they eschewed empirical statistics.

It hasn't worked in Latin america. And as we saw in 2008, 401(k) accounts took some huge hits, and that's why SS is a successful part of retirement.

If we do any reform to Medicare, it should be to make the U.S. a fully single payer health care system, to lower costs and cut out the waste of private insurance. The other option is to enforce very strict regulations of insurance companies in health care.

The statistics are ambiguous on that. If one is going to work towards thwarting illegal immigration, the focus has to be in stopping the incentive to come here by cutting off the money supply.

Austrians provide no solid information. They can't even explain things like unemployment.

Untrue. Keynes' work was based in solid economic principles going back to Adam Smith, the underconsumptionist theories in classical economics, multiplier effect theories (which have been proven under different circumstances when spending policies result in larger economic growth), the paradox of thrift, his refutation of Say's law, his proof that wages and prices are "sticky" (the use of contracts makes this so, in both selling/buying goods and in wages) and more come from the works of other economists from the 16th Century through the 20th century. And his works have been expanded on and changed to reflect new knowledge by Paul Samuelson, Abba Lerner, Milton Friedman (though Miltie was opposed to fiscal stimulus and regulation, Keynes' work interest rates and money supply was a lot of the basis for some monetarist theories) and others. I agree more with New Keynesian economics than other economic schools of thought.

 

Please note the higher overall GDP growth of the 1950s to post-Reaganista growth.

Statistically unproven. And as we saw with higher effective tax rates in previous history, the assertion you make has little evidence to back it up.

If we can invest in the U.s. in infrastructure and job creation, the growth of incomes at all levels and lowered reliance on help for those harmed by the GOP's housing bubble/financial implosion induced recession, would push revenue numbers higher and spending lower.

You make a great argument for stimulus spending to get personal debt down as well as a great argument for returning to more regulation that would make loans based in more solid repayment. The problem is that debt is not being repaid, but homes are being walked away from in the circumstances of underwater mortgages. That hurts creditors, homeowners and housing prices, keeping the economy sluggish. Many of these homes would not be foreclosed on if there were jobs for these people and effective programs to help homeowners out and not just give money to some increduibly stupid bankers.

And I see that you are confusing government deficit spending with personal debt at the end of your paragraph. The two are completely unlike each other, of course.

Create more jobs and those corporations will still sell their goods. And moreso. It's merely a matter of cutting out loopholes and putting all industries on equal footing. You know... the invisible hand that liberals fight for while conservatives give lipservice to it?

Even if that money was still in the budget and used for education and infrastructure spending, putting people to work in the short term while providing opportunities for businesses to set up shop here, or diverted into single payer for all, more American and foreign investment for making goods and creating jobs would come here

Oil and gas subsidies alone are around $37 billion/year. Bringing back the corporate AMT and eliminating loopholes so that corporations pay no tax is also a revenue generating vehicle. You paid more than GE did last year. Talk of reducing corporate rates is bull(*)(*)(*)(*), no matter how you slice it.

These programs are far more successful than anything the private sector could provide. And they are not generating the
kinds of deficits you're speaking of. Social Security has run surpluses and can do so better with the cap being taken off. Medicare needs minor changes in funding. Job creation in the U.S. would take care of both programs' funding in part, too. Overall, it's a holistic approach that only the House Progressive Caucus has managed to take on, while Republicans and conservative Democrats and the President have avoided.

OK, so we're talking military and corporate welfare, still. And then raising taxes, especially on the wealthy, to pay down deficits, and see job growth that will lower debt to GDP ratios. Again, the only ones even looking at balancing budgets are the House Democratic Progressive Caucus.

 

Not if they don't see a market for demand, which is why they won't hire until there is one.

I'll admit that taxes on most incomes at that time was not a smart thing to do. It should have been focused on top income earners, because less of their income is used for demand as a percentage of that income.

Regardless, classical approaches would have seen the Great Depression last much longer. Laissez Faire has never worked, as evidenced by history.

You bring up a good point that Hoover, Reagan and George W. bush's approaches are the worst. That still doesn't take away the fact that Keynesian policies via the New Deal had ended the Great Depression and saw the largest and longest relative growth in the world's history as a result.

Tightening the money supply helped to bring about the worst of the Great Depression.

again, unregulated banking/finance, the use of buying stocks on credit, and tightening the money supply were all things that created and exacerbated the GD.

again, I'll admit that when tax hikes hurt demand, it's not good. But that's why raising taxes on top income earners has never hurt the economy, because much of their disposable income is not used to buy as much in consumer goods as you see in poor and middle class households.

If Hoover opposed the Austrians, than it is one of the few good things he did. Keynes' General Theory merely put in place a roadmap to end the Great Depression. It was nations using the roadmap that ended it.

Exceeding 25% of GDP with debt has already been historically proven to have no ill effects. and the recession in 1937 was due to ending fiscal stimulus too early. again, WWII proved beyond any reasonable doubt that deficit spending can end depressions. It may take several years, but wallowing in stagnation like the Austrian (austerians?) would have us do is no answer.

Keynes' work put it on it's head because classical approaches couldn;t explain much of reality. That's why the Austrians have largely been ignored for much of their existence.

Paul Krugman predicted the effects of the current liquidity trap in his writings about Japan. Peter Schiff's vague and general predictions are still saying "Hyper-inflation in 2010!!!!111"

Yeah. They look nothing like each other. If Peter schiff wants to compare how much oranges and sardines are alike, he can do it all day, but the real economic work will go on and he'll still be wrong.

Because the U.S., if they use fiscal and monetary measures correctly, as the New Keynesians have been promoting, will come out of the recession stronger. But in the meantime, the GOP is blocking any and all reforms and relief from their recession that they caused.

 

Nah. they'll shift their attention for oil sales to countries that will do it on the public dime, like everywhere else in the world.

CA and CO are doing that because they have large budget deficits to overcome and they don;t have the tools the Federal government has to run long term deficits.

Companies can be and often are stupid... They don't have the financial means or the will to create a national highway system. Let's say all of the oil companies agree that they need a highway system... Conoco-Phillips sees that they can make profits on the roads that Exxon-Mobil builds, without putting a dime into it. Valero sees that, and focuses it's sales in the small, limited limited market that Conoco and Exxon are fighting over, and now all three companies are not growing because Exxon doesn't want to invest in a highway system that other companies are profiting from while they are hemorrhaging money...

Reducing emmissions by reducing consumption of petroleum?

You'd never make it in business with that outlook.

Once the tracks were built, this meant that they were now spending more on fuel and maintenance... Who said companies were run by smart men? and shoddy workmanship is a hallmark of using non-union employees back then. it still is in the construction business.

And now they are all out of business and asked the Federal government to take them all over... the Feds could have done it cheaper and with lower ongoing costs if they had done it.

http://ctj.org/ctjreports/2011/06/us_one_of_the_least_taxed_developed_countries.php
http://ctj.org/ctjreports/2011/04/americas_tax_system_is_not_as_progressive_as_you_think.php

http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html
http://www.ctj.org/pdf/irstop400may2011.pdf

And for companies that rely on the U.S. government for it's wealth:
http://ctj.org/ctjreports/2011/06/t...n_171_billion_in_profits_reap_624_billion.php

Higher tax rates do no such thing. Cutting government spending would get what job done? And cutting government spending and cutting the corporate rate does not make any sense when viewed in relation to the link above about companies that rely on the U.S. for profits.

I did no such thing.

You fail tpo understand that supply needs demand, and that business cycles can reduce demand by reducing employment. Fiscal policies can restart demand by increasing employment. Lowered wages aren't what creates demand for labor. Being able to sell goods is what creates demand for labor.

There was less starvation once the New Deal was in place. There's really nothing debateable about that. More people were employed than would have been without the New Deal, and more people ate than they would have without it.

By all accounts, the New Deal had extremely little waste or fraud, because there was intensive oversight by the government. People were held accountable if they didn't watch every penny.


http://www.dailykos.com/story/2009/02/09/695061/-Once-Upon-a-Time-in-Republican-Land

 

My point was that IF the government did NOT create national highways someone still would have stepped in to provide regional highways. In many countries around the world completely private built and operated highways cater to traffic daily. When the Chinese government created the special economic zone in Shenzhen, Hong Kong businessman Gordon Wu used his own money to build a 6 lane superhighway (as it would have helped his commercial business interests). Here is a website with some private infrastructure projects. In the International examples, the governments didn't grant direct funding, as the projects were financed by local bonds or private loans.
http://jmsc.hku.hk/jmsc6030/bridgestory/finances/infrastructure.html

"With government budget deficits increasing, the private sector is likely to play a larger role in the future." （in Hong Kong)


I thought they didnt have any incentive???

They're doing that because the federal government can't afford to give them enough highway money.

If you make people directly pay for something such as a toll, they will likely use it less. Drivers that drive frequently will be less likely to do that, because while paying a little more for gas can be tolerated, paying $1.50 to use a highway for a certain amount of miles can start to become a pain in the as*. It wont be significant but tolls might have the same effect as $4 gas prices in the US a couple years ago. (public awareness on alternative traveling methods like busing, carpooling, biking, etc.) Just a possible benefit that could potentially arise. Its not the main reason to favor tolls (allows for sustainability of roads without government funding). But it IS one of the arguments states used to defend their leases of the toll roads.

What I was saying was that If the Govt didnt make the national system in the 50s, someone would have. Auto sales were booming and no one really cared about emissions. No doubt gas companies would have at least supported a private move towards regional toll highways.

Obviously NOW the situation is different. We have system of roads in place. We simply need to maintain them over a period of time. We dont need the private sector to simultaneously construct a private autobahn overnight. Emissions are very important to a lot of people, etc.

None of this would have happened without the government providing subsidies and incentivizing laying as much rail as possible, or giving long term low interest loans for building over mountains. Its GOVERNMENT that ENCOURAGED THIS　ＷＡＳＴＥ． If we didnt have subsidies, many companies would have built susｔａｉｎａｂｌｅ　railroads like the Great Northern RR.

If construction companies operated on a profit motive WITHOUT government handouts every so often they would have done more to reduce their future losses. EVERYONE lost in this situation (companies took several years to rewire the roads to create efficiency. farmers lost out on possible freight shipments, townspeople lost 10-25% of state land in many states.)

Thats because railroads are NO LONGER the mode of transportation for everythhing. Back then they didnt HAVE trucking, planes, etc. Everything was by train or it would have taken too much time. Back then it was profitable. It is absurd to think that private construction in railroads caused these companies to go out of business 80 years later because of new technological advances.

But if you want to see how the government is doing running railroads, take a look at the money-hemorrhaging Amtrak corporation (fully run and funded by the government). 41 of 44 lines lost money for each passenger and taxpayers end up paying the bill. How is that fair and logical? We continued to fund it with the stimulus ($8 billion). Its literally throwing money down the drain.

http://www.huffingtonpost.com/2009/10/27/amtrak-loss-comes-to-32-p_n_335020.html
http://seattletimes.nwsource.com/html/travel/2003882741_amtrak16.html
http://www.cato.org/pub_display.php?pub_id=6146

I dont understand what point you're trying to make with the first 2 links... They stated that many americans pay no tax, average of most americans rounds out to 3%. They also state that the wealthy pay most of the tax burden.

The point is, taxing at the same rate doesnt mean taxing less. If you earned $30,000 a year and was taxed 20%, you'd lose $6,000 in taxes. If you earned $300,000 a year and was taxed at 20%, you'd lose $60,000 in taxes. Taxing at the same rate still would tax the rich a lot more than average americans. However, increasing the rate just because some people have more money is completely unfair.

You're third link was very misleading propaganda done by an interest group. Their first chart implied that countries with SMALL economies and LARGE government spending are somehow more "developed" than the US. Its OECD table implies that taxing 50% of your citizens' earnings is something to brag about....

Then it goes on, and instead of showing the ACTUAL corporate tax rates (usually everyone ranges from 10%-35%), it uses percent of GDP. Its skewered because smaller economies with the SAME rate as the US will be higher up on the graph. Ireland actually has a LOWER rate than the US but due to their smaller economy, they're higher up on the chart. Its a very crude form of politicized deception.

Your fourth link proves that we need corporate tax reform. Eliminate subsidies and lower the corporate rate so the effective rate is the same for everyone. I have nothing against this (McCain is trying to push it in the senate).

The Laffer Curve is established economic theory and demonstrates what i just said. look it up sometime.

You failed to refute my evidence, thus you dropped this part of the debate by failing to respond.

Businesses can CREATE DEMAND by increasing employment too. You're right, an incentive not to sit around idling and losing money acts as a good reason too.

AAA increased food prices and instead of distributing the food to starving people, he destroyed it. That shows how much he cared about the people.

Its very debatable on the actual employment without the New Deal and bringing that in would further complicate our debate.

First of all, in a reference to "socialist" president that the article claims the right defames, ironically, one of the people in FDR's cabinet was later found to be a soviet spy (or at least served soviet interests in our government). The Venona Cables validated Lauchlin Currie as a soviet contact in our govenrment.

Then, your article didnt address corruption, and I can see it as a liberal blog or such.

Finally, the Hatch Act was passed to address the corruption within the WPA. Did you not read the quotations from the books i put here? Corruption was EVIDENT. Government workers were often COERCED to contribute to the democrats. go back and read it.

 

I made these examples to expose your fallacy that:

let's see...Progressive banking/financial Regulation was started back with the First National Bank of the United States (1791), but since that's back in the archaic days when there really wasnt federal regulation of money policy, lets fast forward to the Federal Reserve Act in 1913. Even after this act, recessions continued to occur due to financial issues. But lets "assume" I'm still "wrong." You claimed that Coolidge started "deregulation", and based by that reasoning it started sometime after 1923/24. Ok, so based on your quote above, there weren't any banking/financial crises before deregulation.

Too bad the Depression of 1920-21 proves you wrong. It was a large deflationary crises that can be blamed partially on the Federal Reserve's monetary policy of hiking interest rates 2.5% in just 6 months (largest increase of any period except for 1970s-80s inflationary crisis).

During the 10 year period between the creation of the Federal Reserve and "deregulation", we had a major 1.5 year depression. I think you were mistaken on your quote that launched our debate over 19th century recessions.

Yes, but companies hired less workers with these higher labor costs. The trade-off you're talking about is trading jobs away for supposed "productivity." If I was dealing with 25% unemployment, I wouldnt make that trade-off.

Few cases of labor strife can be attributed to the patriotism as well as the switch to women for many jobs in the workforce.

You're right. When the SS program started, life expectancy was around 65. But I'm also right when i say no one PEGGED the retirement age to life expectancy. The retirement age didnt CHANGE with average age over time.

SS is supposed to be Social INSURANCE. In case you lived past your life expectancy (didnt plan for this), you have extra money. However, now many elderly americans live past the archaic life expectancy age that was built into the system at the start and the negative effects on sustainablility is starting to show. If the SSA admin anticipated this, why didnt they adapt this system into actual social insurance (in case you live past your expected life?)? it would have made more sense.

I say that in normal circumstances,

Or you could let the recession run its course (all recessions except 2 or 3 in US history lasted 0.5-2 years). Government doesn't have to spend more money, and attain more debt.
Your idea works on paper, but it doesnt work when government runs on deficits EVERY YEAR and when a stimulus package clearly failed to end the recession (its been 3-4 years?).

It would be hard NOT to raise employment (given record high levels of jobless. Every recession sees job recovery after the initial blow. Its just when job creation is stagnant (like here we are today) that it is labeled recession/depression. New Deal really failed to bring about a complete recovery and actually can be blamed for a 2nd recession in 1937. When the head of the treasury admits that the New Deal failed, you know it did.

It doesnt matter if you have a job if you cant buy anything with the money you earn. You only have nominal wealth (in name only), not actual wealth (actual buying/spending). That was the case with rationing in our domestic goods industries.

It also doesnt matter if you have a job if up to 41% (lowest bracket) to 94% (highest) of your income was lost to the government. You still cant buy any of the few rationed goods with the reduced income you're earning.

The paper money issued during the war couldnt buy anything because THERE WASNT ANYTHING TO BUY...rationing...

BONDS ARE NOT LIQUID INCOME NOR DISPOSABLE INCOME. YOU HAVE NO PURCHASING POWER WITH THEM.

I spoke wrongly about the lower wages after the war, but you cannot deny that more people were willing to invest after the war WITHOUT many New Deal programs than before the war with these programs.

You misunderstand Mises. He describes economics as a whole as a priori science.

However, issues such as the minimum wage dont require an understanding of austrian economics to reject a higher one. Thats why its been more controversial and more economists have rejected it.

Its just one proposal for making the system sustainable. Its just a proposal. SS shouldnt be seen as a "retirement pension". It should be seen as social insurance, (refer to my arguement earlier).

Or we could fund it by taking the same approach Social Security takes. Take deductions out of earnings (payroll tax) and store it in a private account for the individual. By age 65 (or whatever age), there will be tens of thousands of dollars of medical money for average americans in their private account.
Single payer is still debatable and there are questions on the issue of rising costs (cost shifting).

Thats what criminalizing hiring illegal laborers would do. It reduces working opportunites in the US for illegals.


[/QUOTE]Austrians provide no solid information. They can't even explain things like unemployment. [/QUOTE]

These common economic principles dont all belong to the austrian school. Many of them are established theory (when you look at min wage issue) and common sense.

[/QUOTE] Untrue. Keynes' work was based in solid economic principles going back to Adam Smith, the underconsumptionist theories in classical economics, multiplier effect theories (which have been proven under different circumstances when spending policies result in larger economic growth)...[/QUOTE]

Now Keynes said three things in the General Theory. First: the labour market is not cleared by demand and supply and, as a consequence, very high unemployment can persist forever. Second: the beliefs of market participants independently influence the unemployment rate. Third: It is the responsibility of government to maintain full employment.

He was right on all three counts. But he was wrong about something else. Keynes thought that consumption depends on income. Two decades of research on the consumption function, following world war two, led to a different conclusion. Consumption, and this is two thirds of the economy, depends not on income but on wealth. This is no small matter: the theory of the multiplier and the implication that fiscal policy can get us out of the current crisis rests on exactly this point.

http://blogs.ft.com/economistsforum...t-and-wrong-and-why-it-matters/#ixzz1RfXkzlzz

Keynes also argued that people can be blamed for wanting to accumulate money and attain wealth instead of spend. The public "has a disposition to under-consume."

Clearly the Keynesian view on the negative effects of gaining wealth and "under-consuming" is refuted when the fact that consumption depends not on income but on wealth is taken into account.

 

While there isn't an exact financial definition of either recession or depression generally a recession is considered to be when the GDP does not grow for three consecutive quarters and a depression is when the GDP does not grow for two or more years. Following the 1929 Wall Street crash the GDP did not begin to expand again until March of 1933 when it once gain moved into positive growth. Of note FDR did not assume office until March of 1933 and was not responsible for ending the Great Depression. It is also questionable as to whether FDR's financial policies added in the recovery from the Great Depression which continued until after the end of WW II.

If we look at one factor then we're still suffering from the Great Depression because the money of the People (gold coins) were borrowed by the US government and promissory notes issued but the People have been unable to redeem those promissory notes in the lawful money (species gold coins) that was borrowed from them. All of the gold currently held by the US government belongs to the People of the United States and even though the emergency banking law passed in 1933 which allowed the government to confiscate that money was repealed in 1974 the government has refused to redeem legal tender currency in lawful money (gold and silver coins produced by the US Mint) in accordance with the law.

But this is still off topic to a great degree.

The fact remains that the Congress should not demand more in taxation until every possible reduction in expendatures has been implemented. I'm not even defining what those reductions need to be but currently, from what I read, the Democrats and Republicans can agree on somewhere between $1-2 trillion in reduced expendtatures over ten years and President Obama has more recently stated that $4 trillion in reduced expendatures can be accomplished in ten years. This does not balance the budget but these expendature cuts must be made before we address the balance that would, by necessity, require tax increases.

As an American Taxpayer I demand that Congress first make all of the expendature reductions possible before coming to me and demanding more of my money. I believe that is fair. The Congress should not be requiring me to fund expendatures that are unnecessary simply because they don't feel like eliminating them. If $4 trillion in expendatures can be cut, which the President says is possible, then cut those expendatures first.

 

Notice how Lock dropped the issue like a hot rock.

CRA was not responsible for the Bush Recession. That revision history is typical of the rightwing noise machine. Anything to avoid the obvious -- the crisis was the result of lack of regulation.