Worst Economic President in US history

[Gustaf]

So, I guess you might save face here by claiming inability to read rather than inability to comprehend economics. When I was talking about the Bush tax-cuts, who took place during the early years of his presidency, you thought I was talking about hypothetical tax-cuts taking place now during the Obama presidency. How that is even possible I have no idea.

Anyway, you do seem to grasp, albeit in a rather shallow sense, why stimulating the economy can be a bad idea. Perhaps you will one day realize that this is true of all kinds of stimulances, not just the ones you are ideologically opposed to.

[opebo]

LBJ of course.

Haha, the height of american economic well being, since destroyed by your party.  Good choice.

So, I guess you might save face here by claiming inability to read rather than inability to comprehend economics. When I was talking about the Bush tax-cuts, who took place during the early years of his presidency, you thought I was talking about hypothetical tax-cuts taking place now during the Obama presidency. How that is even possible I have no idea.

No, there was no overheating, and my view of the Bush tax cuts is that they had little if anything to do with any recession.  We're talking past each other, my friend.

What happened was a collapse of demand due to a lack of redistribution, not an 'overheating' causing inflation.  The economy during the Bush years was in fact very poor, and could in no way represent an 'overheating' - for example there was hardly any inflation, and not much growth.

It is my view that 'stimulus' in the sense of government policy which directs economic activity, is absolutely necessary.  Aside from the fact that there is no reason - from the point of view of personal interest - for the vast majority of people to support the political hierarchy known as capitalism, it is also the case that this system fails over and over again due to its inherent instability.

[Gustaf]

Ok, then explain why annualized nominal GDP growth per quarter from 2003-2006 never fell below 4% and had temporary highs at 8-10%?

Here is a statistic for nominal GDP growth rate in the US (%):

2000   5,9
2001   3,2
2002   3,4
2003   4,7
2004   6,6
2005   6,3
2006   6,1
2007   4,8
2008   3,3

(Source: http://www.bea.gov/national/index.htm#gdp)

Note especially the years 2004-2006 when the stimulations really kicked in and created the bubble. So, how does this reflect a collapse of demand? Or let me guess - while I based my statements on actual facts you based them on your opinions on how the world should be to fit your pet theories.

[opebo]

The collapse in demand occurred in 2007/2008, Gustaf.  By the way, why do you use nominal rather than 'real' gdp?

[Marokai Backbeat]

The tax hikes and government aid to business did not really come until 1932, much closer to the bottom than the top. It is well worth nothing that the 90% top income tax bracket remained in place from 1932 until 1964, so it certainly did not prevent recovery from the Depression, nor did it cause the Depression. There are also scholarly reassessments of how much Smoot-Hawley actually contributed to the Depression.

It came towards the end of his presidency, but I'm not just referring to the top rate (although I personally have no doubts that does in inhibit productivity). Aside from raising the top rate from 25% to 63% he also reduced personal exemptions, increased corporate taxation, AND added a check tax. There is considerable evidence that the money contractions of the early 30s were exacerbated by the latter policy alone.

Not only does this fail to address the issue of my post, but every tax you speak of further reinforces my point. The more Hoover raised taxes in 1932 under the Revenue Act of 1932 (under which all of your taxes, and more, fall under) passed that June, the more evidence there is that tax hikes did not prevent the recovery in the stock market which began that July or the recovery in the economy which began the following March. FDR again raised taxes in 1934, 1935 and 1936. Compared to June 1932, taxes in 1936 were astronomically high and would remain so for decades. During this time the Dow rallied over 300%.

The the study you linked on the money supply is rather beside the point. After being on the downtrend for years, the money supply was on a clear uptrend from 1932 to 1934, as was the national economy. So even if some marginal connection between the check tax and a reduced multiplier can be found, it was not remotely central to the causes of the Depression, and it did not prevent a strong recovery.

Reagan hiked taxes throughout the mid-1980s, a time of great expansion. Of the Clinton tax hike of 1993, Dick Armey said "Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating." Newt Gingrich opined that "The tax increase will... lead to a recession... and will actually increase the deficit."

And we are entering a depression right now with no tax hike in sight (nor indeed any major tax hikes of any kind, except on cigarettes, since 1993)- and Obama has committed to cutting taxes, just as was Hoover's instinct in 1929. If there is a comparison, it is in that. The idea that tax hikes are always bad economic policy just flies in the face of the accumulated facts.

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A.k.a. he engaged in voluntarism.

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Hoover's voluntarism and his few infrastructure projects were swamped. To his credit, the size of the federal government was so small at that time and he didn't have enough time to expand it properly. The New Deal had more of an effect, but it was preceded by a dollar devaluation and shuttering the banks, remember.

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Which did not come until mid-1932, again.

Edit: Also, nearly all of the loans made by the RFC were repaid, although this is probably partially a result of the program's timing. But it is worth nothing that the RFC's most active years were 1933 and 1934, just as things were turning around.

Debating conservatives on the Great Depression is exasperating. They feel so strongly about a historical matter in which the empirical evidence, as far as any historical economic story goes, is about as one-sided as it can possibly be against them. But they have so many sources and theories to try and explain it the other way. It's almost amusing. You never hear liberals trying to argue that Volcker's policies prolonged inflation. We know when we're beat.

*cough*

[Gustaf]

The collapse in demand occurred in 2007/2008, Gustaf.  By the way, why do you use nominal rather than 'real' gdp?

Because nominal GDP reflects the creation of a bubble more accurately, taking inflation into account.

So, you admit then that the collapse of demand did not occur during the early Bush years when the tax-cuts we discuss were actually made, but after that when the bubble created in the early Bush years imploded?

Sounds very much like you do not actually contest anything I've said, but merely foam at the mouth when you hear tax-cuts.

[opebo]

The collapse in demand occurred in 2007/2008, Gustaf.  By the way, why do you use nominal rather than 'real' gdp?

Because nominal GDP reflects the creation of a bubble more accurately, taking inflation into account.

So, you admit then that the collapse of demand did not occur during the early Bush years when the tax-cuts we discuss were actually made, but after that when the bubble created in the early Bush years imploded?

Sounds very much like you do not actually contest anything I've said, but merely foam at the mouth when you hear tax-cuts.

No, I only made the claim, and continue to do so, that the tax cuts had little or no effect on demand.  The bubble was created not in consumption but in asset prices, due to the excessive use of only the interest rate lever of economic policy.  The collapse of this same bubble was caused by a lack of corresponding increase in incomes for the working class (the lower 90%).   In other words a great deal of credit was pushed in an attempt to prop up demand in the face of increasing inequality and falling real incomes for workers, but was insupportable due to this self-same lack of income (lack of redistribution).

The Bush tax cuts had only the most peripheral effect on any of this, if any effect at all.  Only in the sense of a 'negative' effect - as in if that several trillion had, instead of being wasted on the rich, been given to the poor where it would have propped up demand.

[Gustaf]

The collapse in demand occurred in 2007/2008, Gustaf.  By the way, why do you use nominal rather than 'real' gdp?

Because nominal GDP reflects the creation of a bubble more accurately, taking inflation into account.

So, you admit then that the collapse of demand did not occur during the early Bush years when the tax-cuts we discuss were actually made, but after that when the bubble created in the early Bush years imploded?

Sounds very much like you do not actually contest anything I've said, but merely foam at the mouth when you hear tax-cuts.

No, I only made the claim, and continue to do so, that the tax cuts had little or no effect on demand.  The bubble was created not in consumption but in asset prices, due to the excessive use of only the interest rate lever of economic policy.  The collapse of this same bubble was caused by a lack of corresponding increase in incomes for the working class (the lower 90%).   In other words a great deal of credit was pushed in an attempt to prop up demand in the face of increasing inequality and falling real incomes for workers, but was insupportable due to this self-same lack of income (lack of redistribution).

The Bush tax cuts had only the most peripheral effect on any of this, if any effect at all.  Only in the sense of a 'negative' effect - as in if that several trillion had, instead of being wasted on the rich, been given to the poor where it would have propped up demand.

But you are making no sense at all! The collapse in demand that you talk off occured after the bubble burst - you identified the time frame yourself as 2007 to 2008. I posted numbers indicating that there was no collapse in demand before the crisis and you admitted to this.

Are you so stuck in your dogmatic thinking that you are unable to admit to being wrong? You have admitted to pretty much every factual statement I've made. Why is it so hard for you to admit to that?

The problem here seems to be that you decided to like certain terms and for that reason don't want those terms to be applied to policies you dislike for ideological reasons. That is a fairly naive and childish approach, imo.

For instance, it seems as if you like to be in favour of stimulating demand. But you don't like tax-cuts. So you don't want to think that they stimulate demand. You have admitted yourself though that demand for stocks and houses certainly went up.

I might write more later, but it's beginning to feel ridiculous.

[opebo]

But you are making no sense at all! The collapse in demand that you talk off occured after the bubble burst - you identified the time frame yourself as 2007 to 2008. I posted numbers indicating that there was no collapse in demand before the crisis and you admitted to this.

Yes, the collapse in demand occurred in 07-08.  So?  You and I just attribute this to different causes.

Are you so stuck in your dogmatic thinking that you are unable to admit to being wrong? You have admitted to pretty much every factual statement I've made. Why is it so hard for you to admit to that?

Why is it so hard for you to understand that the disagreement here is in our analysis, not about 'facts'.

For instance, it seems as if you like to be in favour of stimulating demand. But you don't like tax-cuts. So you don't want to think that they stimulate demand. You have admitted yourself though that demand for stocks and houses certainly went up.

I am in favor of supporting demand or creating demand, but tax cuts for the privileged to not increase demand. 

'Demand' in economics is normally used to describe consumers ability to acquire goods and services that they desire.  While it is not inaccurate to call the desire and ability of the owning class to buy shares of the means of production ('stocks') a sort of 'demand', it is confusing, as most economists do seem to separate the two phenomena.   Compare, for example, the Carter years - there was a very strong and healthy demand for consumer products, such as for example cars, while there was little 'demand' for stocks.  This is a much better situation than the Bush years, which provided a bidding up of asset prices but very inadequate demand for final products and services.  These are typical examples of the divergence in practice between good Keyensian economics and bad supply side economics, and the main difference is that worker wages were much higher relatively speaking, for various reasons, during the Carter years. 

In fairness, the poor specific macroeconomic policies implemented since Reagan are not the only reason for the collapse.  "Free-trade" has also been a destructive influence on demand, and a deflationary influence overall.  Of course this is another aspect of foolish right wing economics.  (this is not so say that closing the domestic market to slave-made goods is the only way to prevent this damage - there may be other ways to replace working class incomes as well; but the point is, nothing was done).

As for the demand for housing, this was fueled by the excessively low interest rates mandated by supply-side economics - without the proper support of final consumer demand created by redistribution, government is left with only the one policy lever.  This works for a while, but is finally unsuccessful as it creates insupportable debt.  Workers cannot pay back loans if they are not allowed to keep enough of their production to cover the payments.

[Eraserhead]

None of the above, you incredible jokester.

[Gustaf]

Funny that this opposition to exploting slave-labour comes from someone who goes to Thailand to buy cheap hookers, explicitly because things are too expensive in the US. I guess you don't want to endure yourself what you want to force upon others.

It is also funny how you love inflation, yet always complain about how expensive everything has become in America. But logic does indeed not seem to be your strong suite.

Now, since I've actually taken macroeconomics I know that the output-gap, the measure of general economic performance, is affected by several different things. One is private consumption, one is public consumption and one is private investment. There are other aspects as well, but those are the most important ones.

I already described to you how investment=savings and how this does in fact stimulate demand. You then answered that this is not true when we're in the middle of a depression. That is correct but obviously not what I was referring to. During the boom years of the Bush presidency the problem was precisely that people did borrow too much and spent like mad. That created the bubble.

You also seem to think that only "owners" own stocks and houses. A lot of people bought houses during the boom years, but maybe you missed that aspect.

Anyway, houses is something people buy. There is demand for houses. If demand for houses goes up, demand has been stimulated. The desire to buy a house is certainly not increasing supply, even you must see that surely?

[opebo]

Funny that this opposition to exploting slave-labour comes from someone who goes to Thailand to buy cheap hookers, explicitly because things are too expensive in the US. I guess you don't want to endure yourself what you want to force upon others.

When the game is as it is, one plays it as it is, Gustaf.  Individual action is meaningless.  What I suggest is that political actions of the working class are foolish, and that they should strive to vote for a system that is less blatantly abusive to them.  Given that they are to consumed by hubris to do this, then of course I will attempt to make the best of the bad situation.

It is also funny how you love inflation, yet always complain about how expensive everything has become in America. But logic does indeed not seem to be your strong suite.

Speaking of logic, you are not using it, Gustaf.  If one complains about something being too expensive, it is always relative to income. 

Now, since I've actually taken macroeconomics I know that the output-gap, the measure of general economic performance, is affected by several different things. One is private consumption, one is public consumption and one is private investment. There are other aspects as well, but those are the most important ones.

Thank you, insipid.  Everyone here has 'taken economics'.  I did so in the 1980s.  But feel free to be proud of your achievement, if you like.

I already described to you how investment=savings and how this does in fact stimulate demand. You then answered that this is not true when we're in the middle of a depression. That is correct but obviously not what I was referring to. During the boom years of the Bush presidency the problem was precisely that people did borrow too much and spent like mad. That created the bubble.

Yes, they borrowed too much - because interests rates were too low.  Why?  Because of inadequate fiscal redistribution.  I have stated this many times.  Can't you read my posts?

You also seem to think that only "owners" own stocks and houses. A lot of people bought houses during the boom years, but maybe you missed that aspect.

Well, by definition only owners own, but you are correct that working class people do 'buy' houses, sometimes.  But the excessive bidding-up of house-prices relative to incomes was the result of a) excessively low interests rates caused by a lack of redistribution (fiscal stimulus), and b) inadequate wages, also caused by a lack of redistribution.  Bubbles are to be expected when right-wing economics are applies.

Anyway, houses is something people buy. There is demand for houses. If demand for houses goes up, demand has been stimulated. The desire to buy a house is certainly not increasing supply, even you must see that surely?

The dispute between us, Gustaf, is the source of this stimulation - if it were in fact the result of a government expenditure, a cash redistribution, or union/government mandated wage increases, then obviously it would be completely sustainable.  But it was merely credit growth necessitated by poor right-wing economic management.  Lacking the essential component of demand-support - redistribution - they tried to make due with simply lowering interest rates and making more and more credit available to a working class that they were simultaneously impoverishing with declining real wages.  Obviously this led to a 'bust', as it always does - such as the 20s/30s. 

Where we differ is that you fail to see that this credit bubble and bust is a clear discrediting of right-wing supply side economics, and a clear proof of the superiority of redistributionist Keynesianism.

[Gustaf]

1. So, your compassion for the poor does not even extent to refraining from joyfully stepping on them. Can I assume that you support others' abuses of the poor as much as you support your own?

2. Eh. You seem to think that increasing wages won't lead to an increase in prices. That is a somewhat strange opinion to hold.

3. "Everyone here has taken economis" I worry about your grasp of reality sometimes, I really do. Besides, if you have studied the subject it certainly doesn't show.

4. So, let me get this straight: you think stimulating demand for houses is supply-side economics. I suggest you re-take that economics course to see if you can understand it this time, because it doesn't really seem to have worked for you back in the 80s.

(small hint: stimulating DEMAND is usually associated with DEMAND-side economics whereas SUPPLY-side economics is more commonly thought to be somewhat linked to stimulating SUPPLY)

[opebo]

2. Eh. You seem to think that increasing wages won't lead to an increase in prices. That is a somewhat strange opinion to hold.

Not really. You seem to think that increasing profits can be accomplished without an inflationary effect.   Look at it this way, Gustaf - our economy is enormously slack over the last 30 years.  We have not passed on much if any of productivity increases to workers.  We could afford to redistribute a tremendous amount before the balance would tip from deflation to inflation.

3. "Everyone here has taken economis" I worry about your grasp of reality sometimes, I really do. Besides, if you have studied the subject it certainly doesn't show.

Christ man, everyone takes a few economics courses in college.. its standard.

4. So, let me get this straight: you think stimulating demand for houses is supply-side economics. I suggest you re-take that economics course to see if you can understand it this time, because it doesn't really seem to have worked for you back in the 80s.

Yes, as it is stimulated through interest rate reductions, which are the one policy lever allowed government under supply-side economics.

Such credit-based stimulation is, while perhaps not part of the rantings of supply-siders, an inevitable result of their poor policy.  The type of attentions to the supply-side which these crackpots espouse, coupled with their refusal of proper fiscal redistribution, leads to a disastrous dearth of demand.  For a while the only institution standing (the central bank) attempts to paper over or mask this mess, but in the end it leads to a bust.  It has always been thus.  Keynes offered us the perfect way out, but they oppose him purely on grounds of 'principle' (aka spite).

[Gustaf]

2. Eh. You seem to think that increasing wages won't lead to an increase in prices. That is a somewhat strange opinion to hold.

Not really. You seem to think that increasing profits can be accomplished without an inflationary effect.   Look at it this way, Gustaf - our economy is enormously slack over the last 30 years.  We have not passed on much if any of productivity increases to workers.  We could afford to redistribute a tremendous amount before the balance would tip from deflation to inflation.

3. "Everyone here has taken economis" I worry about your grasp of reality sometimes, I really do. Besides, if you have studied the subject it certainly doesn't show.

Christ man, everyone takes a few economics courses in college.. its standard.

4. So, let me get this straight: you think stimulating demand for houses is supply-side economics. I suggest you re-take that economics course to see if you can understand it this time, because it doesn't really seem to have worked for you back in the 80s.

Yes, as it is stimulated through interest rate reductions, which are the one policy lever allowed government under supply-side economics.

Such credit-based stimulation is, while perhaps not part of the rantings of supply-siders, an inevitable result of their poor policy.  The type of attentions to the supply-side which these crackpots espouse, coupled with their refusal of proper fiscal redistribution, leads to a disastrous dearth of demand.  For a while the only institution standing (the central bank) attempts to paper over or mask this mess, but in the end it leads to a bust.  It has always been thus.  Keynes offered us the perfect way out, but they oppose him purely on grounds of 'principle' (aka spite).

1. Do you deny that the US has had inflation, not deflation for the last, I don't know, century or so?

2. The wage-share of GDP has remained more or less constans for the last 50 years or so. http://en.wikipedia.org/wiki/File:AdjustedWageShareUSAFRGJapan.PNG

It is true that it went down during the Bush presidency, but that is to be expected given that it is a counter-cyclical measure. It went down in Japan and Germany as well, as can be seen in the link.

Besides, the real hourly wage has been going up for the last nine months:

             |                             |
             |       Average hourly        |       Average weekly
             |          earnings           |          earnings
    Year     |_____________________________|_____________________________
     and     |              |              |              |
    month    |    Current   |   Constant   |    Current   |   Constant
             |    dollars   |    (1982)    |    dollars   |    (1982)
             |              |   dollars(2) |              |   dollars(2)
_____________|______________|______________|______________|______________
             |              |              |              |
2008:        |              |              |              |
    June     |      3.6     |     -1.7     |      2.6     |     -2.5
    July     |      3.5     |     -2.4     |      2.9     |     -2.9
    Aug.     |      3.8     |     -1.9     |      3.5     |     -2.2
    Sept.    |      3.6     |     -1.7     |      3.0     |     -2.3
    Oct.     |      3.9     |      -.1     |      2.9     |      -.9
    Nov.     |      3.9     |      3.3     |      2.6     |      2.0
    Dec.     |      3.9     |      4.6     |      2.4     |      3.1
2009:        |              |              |              |
    Jan.     |      3.7     |      4.5     |      2.5     |      3.2
    Feb.     |      3.5     |      4.0     |      2.0     |      2.5
    Mar.     |      3.4     |      4.3     |      1.2     |      2.2
    Apr.     |      3.1     |      4.3     |      1.0     |      2.2
    May(p)   |      3.0     |      4.6     |      1.2     |      2.8
    June(p)  |      2.7     |      4.5     |       .9     |      2.6
_____________|______________|______________|______________|______________

http://www.bls.gov/news.release/archives/realer_07152009.htm

And, of course, in a longer perspective you alway claim that the Carter days were the glory days. I guess it depends on data interpretation. Real weekly wages did indeed peak during Carter's presidency. At the start of it. In fact, the two largest annual decreases in the data in real weekly wages occurred during the two last years of the Carter presidency, 1979 and 1980. So if your argument is that Carter killed wages I guess that may have some support.

http://www.workinglife.org/wiki/Wages+and+Benefits%3A+Real+Wages+%281964-2004%29

Now, this does not however, account for changes in hours worked. Looking at real hourly wages we can study this graph.
http://www.stateofworkingamerica.org/tabfig/03/SWA06_Fig3D.jpg

As you can see the median income-earner has the same real wage now as in 1973. And as you can see the last decade has seen real income increase for everyone.

Furthermore, this does not take into account the fact that costs of living has been increasing disproportionately for high-income earners: http://www.econ.berkeley.edu/~moretti/inequality.pdf

But I guess being factually wrong won't change your opinion, right?

And, before you try anything, let me remind you that the owners are only those who don't work. As you've stated yourself repeatedly, high-income earners like doctors or CEOs are just as opressed tools of their masters as anyone else.

[opebo]

1. Do you deny that the US has had inflation, not deflation for the last, I don't know, century or so?

It is very hard to say with any degree of confidence, Gustaf, as all such figures are quite politicized.  But given the relative benignity of a few percent inflation compared to the disaster that even a little deflation represents, I'd rather err in favor of the former..

2. The wage-share of GDP has remained more or less constans for the last 50 years or so. http://en.wikipedia.org/wiki/File:AdjustedWageShareUSAFRGJapan.PNG

Those figures are meaningless.   Labeling an income 'wages' is done arbitrarily by the payer, so we cannot know what is the actual position behind it.  For example my parents pay themselves 'wages' out of their companies, in addition to 'taking profits', but they do no 'work', but rather are owners.  Also you figures say nothing whatever about the increasing inequality within the 'wage income' designation.  Finally, the share of the economy represented by wages should be going up as productivity increases.

And, of course, in a longer perspective you alway claim that the Carter days were the glory days. I guess it depends on data interpretation. Real weekly wages did indeed peak during Carter's presidency. At the start of it. In fact, the two largest annual decreases in the data in real weekly wages occurred during the two last years of the Carter presidency, 1979 and 1980. So if your argument is that Carter killed wages I guess that may have some support.

In any case, the main point is that the Keynesian past - overall - was better than the supply-side present, for workers.  Ups and downs over particular quarters are probably not going to be as reliable a way to evaluate this as whole years or even decades.

As you can see the median income-earner has the same real wage now as in 1973.

Yes!  This is precisely the point - the real wage should have gone up enormously since 1973 due to increases in productivity.  That it did not is testimony to the political power of the owners, who usurped the entire gain.

And, before you try anything, let me remind you that the owners are only those who don't work. As you've stated yourself repeatedly, high-income earners like doctors or CEOs are just as opressed tools of their masters as anyone else.

And yet they also have a capital-based advantage over their class inferiors, Gustaf.

[Marokai Backbeat]

The tax hikes and government aid to business did not really come until 1932, much closer to the bottom than the top. It is well worth nothing that the 90% top income tax bracket remained in place from 1932 until 1964, so it certainly did not prevent recovery from the Depression, nor did it cause the Depression. There are also scholarly reassessments of how much Smoot-Hawley actually contributed to the Depression.

It came towards the end of his presidency, but I'm not just referring to the top rate (although I personally have no doubts that does in inhibit productivity). Aside from raising the top rate from 25% to 63% he also reduced personal exemptions, increased corporate taxation, AND added a check tax. There is considerable evidence that the money contractions of the early 30s were exacerbated by the latter policy alone.

Not only does this fail to address the issue of my post, but every tax you speak of further reinforces my point. The more Hoover raised taxes in 1932 under the Revenue Act of 1932 (under which all of your taxes, and more, fall under) passed that June, the more evidence there is that tax hikes did not prevent the recovery in the stock market which began that July or the recovery in the economy which began the following March. FDR again raised taxes in 1934, 1935 and 1936. Compared to June 1932, taxes in 1936 were astronomically high and would remain so for decades. During this time the Dow rallied over 300%.

The the study you linked on the money supply is rather beside the point. After being on the downtrend for years, the money supply was on a clear uptrend from 1932 to 1934, as was the national economy. So even if some marginal connection between the check tax and a reduced multiplier can be found, it was not remotely central to the causes of the Depression, and it did not prevent a strong recovery.

Reagan hiked taxes throughout the mid-1980s, a time of great expansion. Of the Clinton tax hike of 1993, Dick Armey said "Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating." Newt Gingrich opined that "The tax increase will... lead to a recession... and will actually increase the deficit."

And we are entering a depression right now with no tax hike in sight (nor indeed any major tax hikes of any kind, except on cigarettes, since 1993)- and Obama has committed to cutting taxes, just as was Hoover's instinct in 1929. If there is a comparison, it is in that. The idea that tax hikes are always bad economic policy just flies in the face of the accumulated facts.

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A.k.a. he engaged in voluntarism.

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Hoover's voluntarism and his few infrastructure projects were swamped. To his credit, the size of the federal government was so small at that time and he didn't have enough time to expand it properly. The New Deal had more of an effect, but it was preceded by a dollar devaluation and shuttering the banks, remember.

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Which did not come until mid-1932, again.

Edit: Also, nearly all of the loans made by the RFC were repaid, although this is probably partially a result of the program's timing. But it is worth nothing that the RFC's most active years were 1933 and 1934, just as things were turning around.

Debating conservatives on the Great Depression is exasperating. They feel so strongly about a historical matter in which the empirical evidence, as far as any historical economic story goes, is about as one-sided as it can possibly be against them. But they have so many sources and theories to try and explain it the other way. It's almost amusing. You never hear liberals trying to argue that Volcker's policies prolonged inflation. We know when we're beat.

*cough*

I love the smell of intellectual cowardice in the afternoon.

[Gustaf]

The tax hikes and government aid to business did not really come until 1932, much closer to the bottom than the top. It is well worth nothing that the 90% top income tax bracket remained in place from 1932 until 1964, so it certainly did not prevent recovery from the Depression, nor did it cause the Depression. There are also scholarly reassessments of how much Smoot-Hawley actually contributed to the Depression.

It came towards the end of his presidency, but I'm not just referring to the top rate (although I personally have no doubts that does in inhibit productivity). Aside from raising the top rate from 25% to 63% he also reduced personal exemptions, increased corporate taxation, AND added a check tax. There is considerable evidence that the money contractions of the early 30s were exacerbated by the latter policy alone.

Not only does this fail to address the issue of my post, but every tax you speak of further reinforces my point. The more Hoover raised taxes in 1932 under the Revenue Act of 1932 (under which all of your taxes, and more, fall under) passed that June, the more evidence there is that tax hikes did not prevent the recovery in the stock market which began that July or the recovery in the economy which began the following March. FDR again raised taxes in 1934, 1935 and 1936. Compared to June 1932, taxes in 1936 were astronomically high and would remain so for decades. During this time the Dow rallied over 300%.

The the study you linked on the money supply is rather beside the point. After being on the downtrend for years, the money supply was on a clear uptrend from 1932 to 1934, as was the national economy. So even if some marginal connection between the check tax and a reduced multiplier can be found, it was not remotely central to the causes of the Depression, and it did not prevent a strong recovery.

Reagan hiked taxes throughout the mid-1980s, a time of great expansion. Of the Clinton tax hike of 1993, Dick Armey said "Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating." Newt Gingrich opined that "The tax increase will... lead to a recession... and will actually increase the deficit."

And we are entering a depression right now with no tax hike in sight (nor indeed any major tax hikes of any kind, except on cigarettes, since 1993)- and Obama has committed to cutting taxes, just as was Hoover's instinct in 1929. If there is a comparison, it is in that. The idea that tax hikes are always bad economic policy just flies in the face of the accumulated facts.

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A.k.a. he engaged in voluntarism.

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Hoover's voluntarism and his few infrastructure projects were swamped. To his credit, the size of the federal government was so small at that time and he didn't have enough time to expand it properly. The New Deal had more of an effect, but it was preceded by a dollar devaluation and shuttering the banks, remember.

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Which did not come until mid-1932, again.

Edit: Also, nearly all of the loans made by the RFC were repaid, although this is probably partially a result of the program's timing. But it is worth nothing that the RFC's most active years were 1933 and 1934, just as things were turning around.

Debating conservatives on the Great Depression is exasperating. They feel so strongly about a historical matter in which the empirical evidence, as far as any historical economic story goes, is about as one-sided as it can possibly be against them. But they have so many sources and theories to try and explain it the other way. It's almost amusing. You never hear liberals trying to argue that Volcker's policies prolonged inflation. We know when we're beat.

*cough*

I love the smell of intellectual cowardice in the afternoon.

I honestly have no idea what all this is about?

[Gustaf]

1. Do you deny that the US has had inflation, not deflation for the last, I don't know, century or so?

It is very hard to say with any degree of confidence, Gustaf, as all such figures are quite politicized.  But given the relative benignity of a few percent inflation compared to the disaster that even a little deflation represents, I'd rather err in favor of the former..

2. The wage-share of GDP has remained more or less constans for the last 50 years or so. http://en.wikipedia.org/wiki/File:AdjustedWageShareUSAFRGJapan.PNG

Those figures are meaningless.   Labeling an income 'wages' is done arbitrarily by the payer, so we cannot know what is the actual position behind it.  For example my parents pay themselves 'wages' out of their companies, in addition to 'taking profits', but they do no 'work', but rather are owners.  Also you figures say nothing whatever about the increasing inequality within the 'wage income' designation.  Finally, the share of the economy represented by wages should be going up as productivity increases.

And, of course, in a longer perspective you alway claim that the Carter days were the glory days. I guess it depends on data interpretation. Real weekly wages did indeed peak during Carter's presidency. At the start of it. In fact, the two largest annual decreases in the data in real weekly wages occurred during the two last years of the Carter presidency, 1979 and 1980. So if your argument is that Carter killed wages I guess that may have some support.

In any case, the main point is that the Keynesian past - overall - was better than the supply-side present, for workers.  Ups and downs over particular quarters are probably not going to be as reliable a way to evaluate this as whole years or even decades.

As you can see the median income-earner has the same real wage now as in 1973.

Yes!  This is precisely the point - the real wage should have gone up enormously since 1973 due to increases in productivity.  That it did not is testimony to the political power of the owners, who usurped the entire gain.

And, before you try anything, let me remind you that the owners are only those who don't work. As you've stated yourself repeatedly, high-income earners like doctors or CEOs are just as opressed tools of their masters as anyone else.

And yet they also have a capital-based advantage over their class inferiors, Gustaf.

I'm going to end this now with a couple of notes:

1. I consider the come-back "well, facts and figures shouldn't be trusted" to be rather weak.

2. How is showing you data over 3 decades in any repudiated by saying that one should study data over "whole years or even decades." You again seem confused about reality to a worrying degree. 

3. Whether the real wage "should" have gone up or not is a subjective political idea of yours that I have no interest in. This is your typical strategy. First you make a factual claim and when that is disproven you claim that it "should" be as you wish. Or something. Your inability to separate reality from your personal, subjective moral opinions is honestly a bit strange. Especially considering that you claim to be such a hard-headed cynic.

4. You still seem to fail to realize that the unchanging share of GDP made up by wages means that owners did not capture all the gain. You also conveniently ignored the point on equality that I made.

5. Since you are a rather sad little man, with probably the most miserable existence of anyone on here, unloved even by your own parents, I'm going to let you go now. My heart just isn't in it anymore. If it is really so important to you to pretend that you know economics, fine, carry on. I doubt these delusions of grandeur are healthy, but I'm not your shrink.

[opebo]

3. Whether the real wage "should" have gone up or not is a subjective political idea of yours that I have no interest in.

Dude, whatever the real wage did was a political choice, not something that 'just happened'. 

4. You still seem to fail to realize that the unchanging share of GDP made up by wages means that owners did not capture all the gain. You also conveniently ignored the point on equality that I made.

Why should workers accept the same measly share of GDP?  Isn't progress a reasonable goal?

5. Since you are a rather sad little man, with probably the most miserable existence of anyone on here, unloved even by your own parents, I'm going to let you go now. My heart just isn't in it anymore. If it is really so important to you to pretend that you know economics, fine, carry on. I doubt these delusions of grandeur are healthy, but I'm not your shrink.

Gustaf, what motivates your desire to make these personal attacks?  It seems you must be an awfully bored, sad little swede.  Just because you hold all those typical spoon-fed right-wing economic delusions doesn't motivate me to attack you.   You might in fact be a very nice, pale, flaxen haired youth with good intentions, even though you seem otherwise.

[Gustaf]

3. Whether the real wage "should" have gone up or not is a subjective political idea of yours that I have no interest in.

Dude, whatever the real wage did was a political choice, not something that 'just happened'. 

4. You still seem to fail to realize that the unchanging share of GDP made up by wages means that owners did not capture all the gain. You also conveniently ignored the point on equality that I made.

Why should workers accept the same measly share of GDP?  Isn't progress a reasonable goal?

5. Since you are a rather sad little man, with probably the most miserable existence of anyone on here, unloved even by your own parents, I'm going to let you go now. My heart just isn't in it anymore. If it is really so important to you to pretend that you know economics, fine, carry on. I doubt these delusions of grandeur are healthy, but I'm not your shrink.

Gustaf, what motivates your desire to make these personal attacks?  It seems you must be an awfully bored, sad little swede.  Just because you hold all those typical spoon-fed right-wing economic delusions doesn't motivate me to attack you.   You might in fact be a very nice, pale, flaxen haired youth with good intentions, even though you seem otherwise.

And you are a true economic genius. All the cheap hookers you've bought in Thailand puts you so highly above all the provincial Americans that you alone can see the truth.

After all, why should workers settle for a constant share of GDP. They have a right to increase their share of GDP for all eternity.

[Amenhotep Bakari-Sellers]

It should be Hoover, H. Bush, W. Bush

Hoover is the one that everyone votes for.