Conservatives have no ideas what to do about recessions

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

Friday, January 17, 2014 9:24 AM

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Originally posted by kpo:

My contention was that it's clear from the data that US spending did not ramp up in response to the GD 'from the get go', or anything like it. This is the important point. You yourself admit this. What the machinery of 1930s US government was like, and whether Hoover was a Keynesian champion or not, does NOT matter, all that matters is that US GOVERNMENT SPENDING UNDER HOOVER WAS NOT KEYNESIAN.

No Hoovers spending was not, but he did take measures to boost the flow of money in the economy, which is the heart of Keynesian economics. That is why the recovery started in early 1933 and thing did not get worse. Of course the recovery was not at all great and it took much more stimulus (government spending) to finally have a true recovery.

I think arguing the minute points with Geezer you missed the fact that he is basically proving Keyne's point.

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

GEEZER

Friday, January 17, 2014 6:49 PM

Quote:
Originally posted by m52nickerson:
That is the the heart of Keynesian economics it to boost the economy when it start falter. That is what Hoover did and what FDR continued in different ways.

So the idea is to boost the economy by government spending during recessions and then throttle back when things get back on track.

The problem is, once governments start spending, they don't stop.

Federal spending has done nothing but increase since shortly after the de-militarization decrease following WWII.

http://www.usgovernmentspending.com/spending_chart_1930_2010USb_13s1li
011mcn_F0f

"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."

KPO

Friday, January 17, 2014 7:53 PM

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GDP also went up in the Coolidge era (through two recessions) when Federal spending and taxes were reduced.

Very minor recessions and very small (~1%) decreases in spending. Two very weak examples that go against the statistical evidence of spending cuts that I've shown. We've every reason to believe that the economy was set to recover on its own without the 'help' of those small spending cuts. It was a boom decade after all. Show me BIG spending cuts in a DEEP recession, and GDP responding STRONGLY. In other words show me no less than what I've shown for Keynesian spending. And we'll see who has the stronger case.

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Yep. Just ignore what you don't want to see. The Wiki article gives a long section on "Economics out of favour 1979–2007"

I'm aware that Keynes has fallen out of favour, and that many of his ideas have been revised, and challenged. He is not taken as gospel now, and if he was, he should never have been. And yet, what I said is still completely true:

http://www.igmchicago.org/igm-economic-experts-panel/poll-results?Surv
eyID=SV_cw5O9LNJL1oz4Xi

80% of economists surveyed said that the ARRA lowered the US unemployment rate in 2010 - to 4% who disagreed. And this is in America, bastion of libertarianism and anti-Keynesian thought. Anywhere else in the world and these numbers would be even greater than the 20-1 in Keynes' favour. So, as I said, government spending is stimulative = economic consensus.

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And Hoover's action, even though the machinery of government slowed things down, DOES matter. It started things in motion, and put agencies in place that Roosevelt used later.

Fine. Well done Hoover, for setting up the beginning of recovery in 1933.

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Then again, I could note that per your analysis, Hoover did not follow Keynes, but the Great Depression officially ended in March of 1933, while he was still in office.Sort'a shoots down the Great Depression as a exemplar of the Keynesian cure.

You judge the (implemented) US policy response to the Wall Street crash as a success if you want to. One thing we can safely say - it wasn't 'Keynesian'.

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ETA: And I have to ask, how much of Keynes is in this?

- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.

This paper was posted at the bottom of the Wall Street Daily article you posted earlier. The article's writer didn't read it. I suggest you do.

http://www.aeaweb.org/aea/2014conference/program/retrieve.php?pdfid=71
3

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The problem is, once governments start spending, they don't stop.

Your own example of the 1920s contradicts you.

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I think arguing the minute points with Geezer you missed the fact that he is basically proving Keyne's point.

That hadn't escaped me.

I might be gone from this thread for a while.

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

SIGNYM

Saturday, January 18, 2014 1:24 AM

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In other words show me no less than what I've shown for Keynesian spending. And we'll see who has the stronger case.

Geezer? Your move.

GEEZER

Saturday, January 18, 2014 8:21 PM

Quote:
Originally posted by kpo:
Quote:
GDP also went up in the Coolidge era (through two recessions) when Federal spending and taxes were reduced.

Very minor recessions and very small (~1%) decreases in spending. Two very weak examples that go against the statistical evidence of spending cuts that I've shown. We've every reason to believe that the economy was set to recover on its own without the 'help' of those small spending cuts. It was a boom decade after all. Show me BIG spending cuts in a DEEP recession, and GDP responding STRONGLY. In other words show me no less than what I've shown for Keynesian spending. And we'll see who has the stronger case.

Once again, the conservative idea is not to do anything different than business as usual in response to a recession.

To quote the article yet again,

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They favor lower taxes, less regulation, government spending cuts, more domestic energy production, school choice, free trade, and low inflation. They often cite these policies as ones that might alleviate recession and speed recovery.

So there will be no BIG spending cuts during a recession. Regular conservative economic policy, they believe, will take care of it.

One might also wonder if the reason the recessions during Coolidge's administration were so small (as you noted) was due to his conservative economic policy.

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80% of economists surveyed said that the ARRA lowered the US unemployment rate in 2010 - to 4% who disagreed. And this is in America, bastion of libertarianism and anti-Keynesian thought. Anywhere else in the world and these numbers would be even greater than the 20-1 in Keynes' favour. So, as I said, government spending is stimulative = economic consensus.

Don't see this as a stunning proof of Keynes. Anyone would have to agree that if you throw enough money out there, some of it will be spent to hire new folks.

More to the point of effectiveness, looking at the responses to Question B, less than half agree that the benefits of the stimulus will end up exceeding its costs.

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And Hoover's action, even though the machinery of government slowed things down, DOES matter. It started things in motion, and put agencies in place that Roosevelt used later.

Fine. Well done Hoover, for setting up the beginning of recovery in 1933

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Then again, I could note that per your analysis, Hoover did not follow Keynes, but the Great Depression officially ended in March of 1933, while he was still in office.Sort'a shoots down the Great Depression as a exemplar of the Keynesian cure.

You judge the (implemented) US policy response to the Wall Street crash as a success if you want to. One thing we can safely say - it wasn't 'Keynesian'..

Per NBER, the Great Depression ENDED in March 1933, the same month Hoover's term as President ended. So apparently Hoover's non-Keynesian actions ended the worst depression in U.S. history.

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Quote:
ETA: And I have to ask, how much of Keynes is in this?

- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.

This paper was posted at the bottom of the Wall Street Daily article you posted earlier. The article's writer didn't read it. I suggest you do.

http://www.aeaweb.org/aea/2014conference/program/retrieve.php?pdfid=71
3

That paper tracks the length and severity of financial crises. The name "Keynes" is not found in it. Not sure it links the actions above to Keynes.

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The problem is, once governments start spending, they don't stop.

Your own example of the 1920s contradicts you.

If you take that statement out of context, maybe.

However, when talking about the effects when Keynesian policies are applied, as

SIGNYM

Saturday, January 18, 2014 11:06 PM

There is more to the question whether or not conservatives have "an idea" what to do about recessions, and that is whether or not that idea actually works to end or shorten them.

Geezer, you have demanded "proof" that Keynesianism works to shorten or end depressions. Now, as I pointed out earlier, it is impossible (from science philosophy standpoint) to "prove" anything. Even the most durable and repeatable phenomena, like gravity, can't be "proven" because - since it hasn't been universally tested - there might always be exceptions "out there"- things we don't know about. Even then, with reams and reams of what seem to be incontrovertible evidence, delusionists like flat-earthers will rebut the evidence, and subjectivists will retreat back into their minds and claim that reality is whatever they "think" it is. And so, while you have been demanding something that is actually impossible to provide, you yourself have brought nothing to the table in support of your own ideas.

At some point, if we're going to have a productive discussion on such a complex topic, there have to be a few ground rules. We have to agree that there actually IS evidence to support or refute an idea... we can't just willy-nilly decide to get all bizarre about evidence if it doesn't meet our expectations; we have to agree on when is there "enough" evidence and when it is significant; and we have to agree that there has to be more than correlation tying the pieces together- one must propose an actual mechanism for HOW these things are tied together, in real terms.

Care to engage? We both might learn something, but I expect you to bring as much to the table as I do, and not just sit back in a corner and cavil, as you've been doing.

GEEZER

Sunday, January 19, 2014 12:18 AM

And one more time...

Quote:
Originally posted by SIGNYM:
There is more to the question whether or not conservatives have "an idea" what to do about recessions, and that is whether or not that idea actually works to end or shorten them.

Could be, but that wasn't my question.

My original question was this:

"So recessions last between 8 and 18 months pretty much regardless of whether liberals or conservatives are in office*. So maybe both solutions work. Or one might ask if the government actually has anything to do with ending recessions.

Now if you could show that recessions didn't go away during conservative administrations, and did go away during liberal administrations, that might support the point of the cited article. However, that doesn't seem to be the case."

*This was describing recessions since 1980 or so.

You and KPO got the discussion off on Keynes, and my "libertarian" plans for ending recession (whatever you conceive those to be.), etc.

My main point is that several types of actions (and inactions) have been tried over the years, and recessions end no matter the 'cure' tried. In this case, providing substantial evidence that any particular method, and particularly the two alternatives presented in the article, works is going to be difficult. This is especially true given the massive number of factors involved in even day-to-day economics.

This is the discussion I wanted to have. I shouldn't have gotten distracted when others wanted to drag it off into Keynes vs. whoever.

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And so, while you have been demanding something that is actually impossible to provide, you yourself have brought nothing to the table in support of your own ideas.

So what do you consider my ideas relating to ending recessions? As noted above, I wonder if any type of government activity actually has anything to do with ending recessions, or if it's even possible to substantiate it one way or another.

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At some point, if we're going to have a productive discussion on such a complex topic, there have to be some ground rules. We have to agree on when is there "enough" evidence and when it is significant; and we have to agree that there has to be more than correlation tying the pieces together- one must propose an actual mechanism for HOW these things are tied together, in real terms.

And here is the problem. if the Keynesians, and the Monetarists, and the Austrian School, and the Marxists, and all the other multiplicity of economic schools can't get together on these definitions (and from what I've read, they can't), I'm not too sure we can do so here.

This is not to mention the fact that the definition of a recession itself is open to question. the NBER says one thing, and the paper KPO cited above, "Recovery from Financial Crises: Evidence from 100 episodes" says another. Per the NBER, the Great Depression was over in the same month Roosevelt took office.

Then again, I'm not trying to prove any particular school works, I'm doubtful of any of them. The only reason I've been questioning Keynes so much is that you and KPO are pushing Keynesian policy so hard. I've tended to use the Coolidge administrations policies as counter-examples because I happen to have just finished a couple of Coolidge biographies.

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Care to engage? We both might learn something, but I expect you to bring as much to the table as I do, and not just sit back in a corner and cavil, as you've been doing.

It might be worthwhile if you'd agree to the caveats that you'd stop insulting me when I don't agree with you, and that I'd only have to address one person, rather than getting pretty much the same questions from four or five, as has been common so far.

So to reiterate:

My position is that, given the complexities of all the elements included in the economic state of th

SIGNYM

Sunday, January 19, 2014 12:31 AM

Quote:
So what do you consider my ideas relating to ending recessions? As noted above, I wonder if any type of government activity actually has anything to do with ending recessions, or if it's even possible to substantiate it one way or another.

If this is the case- that government policies don't end recessions/ depressions one way or another- then clearly they can't initiate them either. Because, if you can't improve something, you've got no levers to make it worse either. In effect, what you're saying is that government policy has NO effect on economic performance whatsoever.

Well, if that is the case, then it doesn't matter WHAT government does. Tax at 100%? Tax at 0%? Print money? Don't print money? Create jobs programs? Tariff imports? Hey, it's all good! Right?

But if we can show that government policies DO effect living standards for everyone, then let's have the government go whole-hog into "meddling with" the economy, because- in YOUR view- it's feckless anyway as far as economic activity, but it can make life better for everyone.

ETA: So, you will first have to establish the mechanisms by which government can only make things worse, but not make thing better.

Your turn.

GEEZER

Sunday, January 19, 2014 8:13 AM

Quote:
Originally posted by SIGNYM:
Quote:
So what do you consider my ideas relating to ending recessions? As noted above, I wonder if any type of government activity actually has anything to do with ending recessions, or if it's even possible to substantiate it one way or another.
If this is the case- that government policies don't end recessions/ depressions one way or another- then clearly they can't initiate them either. Because, if you can't improve something, you've got no levers to make it worse either. In effect, what you're saying is that government policy has NO effect on economic performance whatsoever.

Well, if that is the case, then it doesn't matter WHAT government does. Tax at 100%? Tax at 0%? Print money? Don't print money? Create jobs programs? Tariff imports? Hey, it's all good! Right?

But if we can show that government policies DO effect living standards for everyone, then let's have the government go whole-hog into "meddling with" the economy, because- in YOUR view- it's feckless anyway as far as economic activity, but it can make life better for everyone.

ETA: So, you will first have to establish the mechanisms by which government can only make things worse, but not make thing better.

Your turn.

Once again...

Quote:
My position is that, given the complexities of all the elements included in the economic state of the U.S., or the world, it's not possible to provide convincing evidence that any one particular economic theory ends recessions faster, with less negative economic fallout (government debt, loss of jobs, etc.), and with less risk of failure than any other.

Anyone proposing that any particular theory does meet these criteria should first provide a generally agreed to definition of that theory, and then show how the application of the theory, and no other factors, accomplished the end of several specific recessions, and did so meeting the criteria above (faster, less impact, less risk of failure).

Address this.

"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

Sunday, January 19, 2014 9:14 AM

Quote:
given the complexities of all the elements included in the economic state of the U.S., or the world, it's not possible to provide convincing evidence that any one particular economic theory ends recessions faster, with less negative economic fallout (government debt, loss of jobs, etc.), and with less risk of failure than any other.

Basically, you have doubts that any theory works. That includes yours, correct?
So, you've just proved the point of the thread, because you (a conservative) apparently really don't have any ideas what to do with recessions.

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