Conservatives have no ideas what to do about recessions

POSTED BY: kpo
UPDATED: Monday, March 9, 2026 17:30
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M52NICKERSON

Tuesday, December 31, 2013 7:51 PM

Quote:
Originally posted by Geezer:
Nope. I get the point of Keynesian theory. Throw enough money at it and recession/depression goes away. The problem is that you can't convince folks to dig holes and bury jars of money. You need something like a war - the imminent threat of killing, destruction, bombing, gas chambers, etc. - to get people to willingly make such sacrifices and go so far into national debt. So I'm back to thinking that the Keynesian solution is to have a nice big war.

The only people you can't convince are the people who think that the government running up a debt will cause them to have to bury money. Even with that the US government has not had much problem running deficits.

The real problem is getting government spending to be reduced when the economy is good and revenues are high. That is the point government spending should shrink, but not taxes, to act as a calming force in the economy.

I do not fear God, I fear the ignorance of man.

BYTEMITE

Tuesday, December 31, 2013 7:54 PM

Depends on what exactly you're arguing. If you mean that the war wrecked the economies of Europe and Asia and left the US the only remaining stable developed nation economy for almost 40 years, then yes, WW2 ended the depression.

But that solution strikes me as a little on the evil side of the alignment pool.

NEWOLDBROWNCOAT

Tuesday, December 31, 2013 8:51 PM

Quote:
Originally posted by Geezer:
Quote:
Originally posted by NewOldBrownCoat:
Quote:
Originally posted by SIGNYM:

BTW GEEZER, there was a huge recovery under FDR from 1930-1936. By the spring of 1937, production, profits, and wages had regained their 1929 levels. But in 1936, the Federal Reserve had tightened the money supply, and the US Treasury had insisted in budget cuts and increased taxes to "balance the budget". As a result, the economy took a swift downturn in 1937. Your reading of the Great Depression, and the lessons to be learned from it, is superficial at best.

Thanx , Sig. That is the conventional theory of how the history went. I was gonna post that same point in refutation of Geezer, that's how I remembered learning it when I studied 20th Century history.

Unemployment right before the recession of 1937-38 was 14.3%. This is a success? Not sure how it refutes anything.

You're not listening, OldRap.

Both Sig and I are claiming that there was a signifigant recovery by 1936, out of the deepest deep and back toward better times; that in '36 policies got more conservative; and that that set off a double dip in '37, that lasted until the War. Negative stats from '37-38 kinda prove our point. And 14.% before '37 is better the millions datandin in breadlines and at soup kitcheds in '30-'32.

KPO

Tuesday, December 31, 2013 9:11 PM

Quote:
Nope. Read wiki.

I've read Wiki. The question is not whether HH carried out some liberal policies, it's whether he and FDR carried out unrestricted Keynesian liberal policies throughout the whole of the GD. They didn't.

Quote:
Smoot-Hawley was gone by 1934. The Depression remained.

1. I don't know what your point is. Are you disputing that protectionism exacerbated the GD?
2. Things started to improve around that time (until 1937, when FDR enacted austerity)
3. One would not expect global trade to recover instantly. Viable businesses and factories had closed down, it would take time to regrow them.

Quote:
Not if you look at the actual amount of debt as shown in my cite. Actual dollars of debt went up steadily from 1929 to 1941.

Ok. Technically the budget wasn't completely balanced, but the correct economics way to look at it is debt as a % of GDP. So although debt was growing slowly, so was the economy, and so the debt burden was not growing. That's what my graph shows. And it shows that the brakes were firmly on the government spending.

Quote:
You need something like a war - the imminent threat of killing, destruction, bombing, gas chambers, etc. - to get people to willingly make such sacrifices and go so far into national debt. So I'm back to thinking that the Keynesian solution is to have a nice big war.

Ok, I think you're halfway to understanding Keynesian theory. The key point that I think you might be missing is that Keynesian economists do not really advocate wasteful spending as a solution to recessions - but rather economically useful spending. Like infrastructure investments. Imagine for e.g. if all the money of WWII was spent instead on infrastructure, education, research and development projects. How much MORE of a boost to the US economy would it have been? In the long term, as well as the short term? That's what Keynes advocates as the solution to recessions. And when you have situations like the one in the US at the moment, with a weak economy and infrastructure that desperately needs improving, stimulus spending would be a win-win. It's a complete no-brainer. And yet, because we live in a time when US politics have been dragged far to the right, desperately needed stimulus spending is not even on the agenda. Economists and historians will look back on this period of US history and pull their hair out.

It's not personal. It's just war.

SIGNYM

Tuesday, December 31, 2013 10:50 PM

Quote:
I read your previous post. It's pretty funny that you complain about ideologues then go on an ideological "But Bush..." rant yet again.

Bush is a historic figure; he followed a policy for eight years which precipitated the WORST recession since 1929.DO you really think we can discuss the relative merits of various policies without discussing Bush. And Keynes, Hoover, FDR, Harding, and Obama? If you do, then you're the one being the ideologue.

Quote:
And you seem to be in the same boat as KPO, deciding that if it takes a world war to end a depression, then that's a good thing. Somehow, I'm not too comfortable with that. It must be a liberal thing.

Again, read with comprehension (if at all possible). I specifically said it didn't have to be war, it's just that was was the motivation which allowed the politicians of that day to leap over their reservations about EVEN MORE government spending.

Also, the war effort wasn't just money shoveled at the top (as it is today). It provided JOBS to millions of people... men to fill out those uniforms, women at home to wrap bandages and make airplanes and tanks, farmers t provide the food.

If you keep insisting in misrepresenting me in some sort of attempt to discredit what I say, without ever actually discussing my points, this conversation will go nowhere.

So, in today's economy, OUR effort to end the recession would involve lots and lots of government jobs... let's call it the "War on Global Climate Shift". Renovate every single water/energy- inefficient home, condo, or apartment. Engage in a massive resettlement of coastal people 50' higher than they are now. Build massive north-south wildlife corridors for plants and animal to migrate northward, and pre-plant them with heat-tolerant species. Develop 1-mile-wide firebreaks through all of our national forests by thinning trees and laying down biochar. Remove invasive species. Rebuild and rehabilitate our wetlands. Put in trolleys and land-ferries (trains which carry cars to their destination)

Bring our soldiers home, and make them part of THIS effort. Raise the minimum wage. Tariff goods from environmentally-unsound nations. Raise taxes to 90% at the top level, and raise corporate taxes and eliminate tax loopholes.

NEWOLDBROWNCOAT

Wednesday, January 1, 2014 2:03 AM

Quote:
Originally posted by SIGNYM:

So, in today's economy, OUR effort to end the recession would involve lots and lots of government jobs... let's call it the "War on Global Climate Shift". Renovate every single water/energy- inefficient home, condo, or apartment. Engage in a massive resettlement of coastal people 50' higher than they are now. Build massive north-south wildlife corridors for plants and animal to migrate northward, and pre-plant them with heat-tolerant species. Develop 1-mile-wide firebreaks through all of our national forests by thinning trees and laying down biochar. Remove invasive species. Rebuild and rehabilitate our wetlands. Put in trolleys and land-ferries (trains which carry cars to their destination)

Bring our soldiers home, and make them part of THIS effort. Raise the minimum wage. Tariff goods from environmentally-unsound nations. Raise taxes to 90% at the top level, and raise corporate taxes and eliminate tax loopholes.

Hey, I'd vote for somebody who ran on that platform. 'Course he'd only get 3 votes: mine, yours and his own; and he'd stand ZERO chance of getting elected,and zero chance of getting any of it passed, but I'd gladly march into Hell behind a banner proclaiming those goals.

GEEZER

Thursday, January 2, 2014 7:47 PM

Quote:
Originally posted by M52NICKERSON:
Quote:
Originally posted by Geezer:
Nope. I get the point of Keynesian theory. Throw enough money at it and recession/depression goes away. The problem is that you can't convince folks to dig holes and bury jars of money. You need something like a war - the imminent threat of killing, destruction, bombing, gas chambers, etc. - to get people to willingly make such sacrifices and go so far into national debt. So I'm back to thinking that the Keynesian solution is to have a nice big war.

The only people you can't convince are the people who think that the government running up a debt will cause them to have to bury money. Even with that the US government has not had much problem running deficits.

Talk to KPO. He thinks that the FDR administration, despite tripling the national debt, wasn't spending enough until WWII came along and bailed the Keynesians out.

Quote:
The real problem is getting government spending to be reduced when the economy is good and revenues are high. That is the point government spending should shrink, but not taxes, to act as a calming force in the economy.

Sort'a like what Coolidge was doing after WWI. He dropped the national debt from $26 billion to $16 billion by cutting government spending and cutting taxes.

I do not fear God, I fear the ignorance of man.

"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

GEEZER

Thursday, January 2, 2014 7:52 PM

Quote:
Originally posted by NewOldBrownCoat:
You're not listening, OldRap.

Both Sig and I are claiming that there was a signifigant recovery by 1936, out of the deepest deep and back toward better times; that in '36 policies got more conservative; and that that set off a double dip in '37, that lasted until the War. Negative stats from '37-38 kinda prove our point. And 14.% before '37 is better the millions datandin in breadlines and at soup kitcheds in '30-'32.

I'm listening to you and SignyM tell me that the liberal policies of Hoover and Roosevelt took six years to reduce unemployment to 14.3%, and that the 1936 recovery wasn't sustainable and failed. I am still not finding this persuasive proof that liberal ideas of how to end a depression/recession work all that great.

"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

SIGNYM

Thursday, January 2, 2014 7:53 PM

Well, I just have to toss this in, not only bc it's funny but bc its' educational

Keynes versus Hayek: Fear the Boom and Bust

Keynes versus Hayek Party II: The Throwdown

GEEZER

Thursday, January 2, 2014 8:14 PM

Quote:
Originally posted by kpo:
I've read Wiki. The question is not whether HH carried out some liberal policies, it's whether he and FDR carried out unrestricted Keynesian liberal policies throughout the whole of the GD. They didn't.

So it was Hoover and Roosevelt who had no idea what to do about recessions?

Quote:
Quote:
Smoot-Hawley was gone by 1934. The Depression remained.

1. I don't know what your point is. Are you disputing that protectionism exacerbated the GD?

I'm noting that protectionism was gone by 1934. The Depression continued until 1942. So Smoot-Hawley may have had an effect, but can hardly be blamed for the problems eight years later.

Quote:
2. Things started to improve around that time (until 1937, when FDR enacted austerity)

Because the Keynesians couldn't convince enough folks to bury jars of money?

Quote:
3. One would not expect global trade to recover instantly. Viable businesses and factories had closed down, it would take time to regrow them.

And this was all Smoot-Hawley's fault? Nothing else caused it?

Quote:
Quote:
Not if you look at the actual amount of debt as shown in my cite. Actual dollars of debt went up steadily from 1929 to 1941.

Ok. Technically the budget wasn't completely balanced, but the correct economics way to look at it is debt as a % of GDP. So although debt was growing slowly, so was the economy, and so the debt burden was not growing. That's what my graph shows. And it shows that the brakes were firmly on the government spending.

This graph shows Federal spending as a percent of GDP went from less than 4% in 1929 to almost 11% in 1936. Doesn't look like spending was being brakes much to me.

http://www.usgovernmentdebt.us/spending_chart_1920_1940USp_15s1li011mc
n_F0f_US_Federal_Spending

Quote:
Ok, I think you're halfway to understanding Keynesian theory. The key point that I think you might be missing is that Keynesian economists do not really advocate wasteful spending as a solution to recessions - but rather economically useful spending. Like infrastructure investments. Imagine for e.g. if all the money of WWII was spent instead on infrastructure, education, research and development projects. How much MORE of a boost to the US economy would it have been? In the long term, as well as the short term? That's what Keynes advocates as the solution to recessions. And when you have situations like the one in the US at the moment, with a weak economy and infrastructure that desperately needs improving, stimulus spending would be a win-win. It's a complete no-brainer. And yet, because we live in a time when US politics have been dragged far to the right, desperately needed stimulus spending is not even on the agenda. Economists and historians will look back on this period of US history and pull their hair out.

Folks don't reject this because politics has been dragged to the Right. They reject it because they have a perfectly understandable aversion to running up massive Federal debt - apparently debt much more massive than what we already have - in hopes of making the Keynesian prescription for recession relief work.

You and others talk about the unlikeliness of selling Libertarian philosophy to the masses. I suggest that your version of Keynesian economics would be just as hard a sell.

"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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