4 ms·

FDR tried lots of thing that had the opposite of the intended effect. Invoking the Trading with the Enemy Act of 1917, Roosevelt declared that "all banking tra

FDR tried lots of thing that had the opposite of the intended effect. Invoking the Trading with the Enemy Act of 1917, Roosevelt declared that "all banking transactions shall be suspended." Banks were permitted to reopen only after case-by-case inspection and approval by the government, a procedure that dragged on for months. This action heightened the public's sense of crisis and allowed him to ignore traditional restraints on the power of the central government. In their understanding of the Depression, Roosevelt and his economic advisers had cause and effect reversed. They did not recognize that prices had fallen because of the Depression. They believed that the Depression prevailed because prices had fallen. The obvious remedy, then, was to raise prices, which they decided to do by creating artificial shortages. Hence arose a collection of crackpot policies designed to cure the Depression by cutting back on production. The scheme was so patently self-defeating that it's hard to believe anyone seriously believed it would work. -- snip -- Yet after all this, the grand promise of an end to the suffering was never fulfilled. As the state sector drained the private sector, controlling it in alarming detail, the economy continued to wallow in depression. The combined impact of Herbert Hoover's and Roosevelt's interventions meant that the market was never allowed to correct itself. Far from having gotten us out of the Depression, FDR prolonged and deepened it, and brought unnecessary suffering to millions. What will be the ultimate result of the interventions you propose? How are we examining the long-term effects of government intervention in the economy and cutting back the government where it is harmful to prosperity? What about the acute depression of 1920[2]? Are we learning any lessons from that? [1] https://mises.org/library/how-fdr-made-depression-worse https://mises.org/library/how-fdr-made-depression-worse [2] https://mises.org/library/forgotten-depression-1920 https://mises.org/library/forgotten-depression-1920

rm_-rf_slash 11y ago
This is the most detailed rebuke I have seen yet. Thank you for adding this to the conversation. My weasley counterpoint is to say that FDR ultimately made more right moves than wrong, and he did not become, as he feared, "the last president". Economic manipulation aside, his public works initiatives like the Tennessee valley authority gave people good work when there was none, and strengthened our national infrastructure for the economy to use as it grew. The common conclusion is that the only real cure for the Great Depression was World War II, but from a Mars-eye view, wasn't that essentially an enormous public works program?
- protomyth 11y ago
  > The common conclusion is that the only real cure for the Great Depression was World War II Probably the common conclusion, but I think 1946-1948 congressional action had quite a bit to do with the the baby boom years. Its an interesting era to read up on.
- Amezarak 11y ago
  http://economics-charts.com/gdp/gdp-1929-2004.html#table http://economics-charts.com/gdp/gdp-1929-2004.html#table The New Deal had already kickstarted the economy by the time WWII rolled around - although obviously WWII served as an even larger public works and employment program. (The government did, however, have wage and price controls for many decades after the Great Depression.) As you can see in the chart, GDP had already doubled by 1941, returning to pre-Depression levels, with New Deal programs beginning in 1933. You can see that WWII again nearly doubled GDP from 1941 to 1945.
  - AnimalMuppet 11y ago
    OK, but Europe was at war starting in 1939, and was trying to buy all kinds of stuff from the US. That's still WWII kickstarting the US economy, even though the US wasn't in the war yet.
    - Amezarak 11y ago
      The very same table I linked showed that story doesn't make sense. Look at the exports column. Nothing to write home about until after 1945. Definitely not an impact remotely comparable to the huge increase in government spending.
Mikeb85 11y ago
Look at an economic chart pre and post New Deal. Not only did FDR's policies help the US recover from the depression, it set the framework for the strongest economic growth of the US' history (pre-1930s growth was much slower than it has been post 1945). Furthermore, your source is as partisan as they come. 'Austrian' economics exists pretty much only on the internet. Mainstream economics has progressed since 1930.
- AnimalMuppet 11y ago
  But post 1945, Europe had been bombed nearly to destruction, as had Japan. Even Russia had been devastated. The US was exporting to the whole world as everybody else tried to rebuild. You can't take 1945-1970 US economic growth as a measure of the quality of FDR's economic policies.
  - Amezarak 11y ago
    That's a common narrative, but it doesn't make sense when you look at the facts on the ground. And putting some thought into it, bombed-out economies are not good customers. http://graphics8.nytimes.com/images/2012/11/19/opinion/111912krugman3/111912krugman3-blog480.jpg http://graphics8.nytimes.com/images/2012/11/19/opinion/11191... As you can see, there was nothing more than a brief spike in the general upward trend in exports. The "Europe bought tons of stuff from us, fueling our economy" story is simply not true. Exports as a share of GDP briefly peaked at 8% and then rapidly returned to prewar levels by the early 1950s.
    - AnimalMuppet 11y ago
      OK, but what about imports? I'd bet that the US didn't import much until 1970 or so - at least, not in the form of finished goods (and apart from imports from Canada).
      - Amezarak 11y ago
        The graph shows both. They track pretty closely until the 1980s, with the exception being that brief couple year export spike which was not matched by imports.
anonbanker 11y ago
Why does everyone overlook that Roosevelt invoked the "Trading with the Enemy Act of 1917" in order to declare taxpayers (the people) to be enemies of the state that they must conduct trade with? Why does everyone overlook the ramifications of this action?
Retric 11y ago
This reads like revisionist history. people had called the great depression of 1873 - 1896 the "Great Depression" yet here it was happening again just worse in 30 years. And in those 30 'good' years you had the first world war. Banks where and still are considered a major cause of economic downturns and even today we stress test banks on a regular basis. Further, environmental devastation played a huge role in the Great Depression. https://en.wikipedia.org/wiki/Dust_Bowl https://en.wikipedia.org/wiki/Dust_Bowl

rm_-rf_slash 11y ago

This is the most detailed rebuke I have seen yet. Thank you for adding this to the conversation. My weasley counterpoint is to say that FDR ultimately made more right moves than wrong, and he did not become, as he feared, "the last president". Economic manipulation aside, his public works initiatives like the Tennessee valley authority gave people good work when there was none, and strengthened our national infrastructure for the economy to use as it grew. The common conclusion is that the only real cure for the Great Depression was World War II, but from a Mars-eye view, wasn't that essentially an enormous public works program?

protomyth 11y ago
> The common conclusion is that the only real cure for the Great Depression was World War II Probably the common conclusion, but I think 1946-1948 congressional action had quite a bit to do with the the baby boom years. Its an interesting era to read up on.
Amezarak 11y ago
http://economics-charts.com/gdp/gdp-1929-2004.html#table http://economics-charts.com/gdp/gdp-1929-2004.html#table The New Deal had already kickstarted the economy by the time WWII rolled around - although obviously WWII served as an even larger public works and employment program. (The government did, however, have wage and price controls for many decades after the Great Depression.) As you can see in the chart, GDP had already doubled by 1941, returning to pre-Depression levels, with New Deal programs beginning in 1933. You can see that WWII again nearly doubled GDP from 1941 to 1945.
- AnimalMuppet 11y ago
  OK, but Europe was at war starting in 1939, and was trying to buy all kinds of stuff from the US. That's still WWII kickstarting the US economy, even though the US wasn't in the war yet.
  - Amezarak 11y ago
    The very same table I linked showed that story doesn't make sense. Look at the exports column. Nothing to write home about until after 1945. Definitely not an impact remotely comparable to the huge increase in government spending.

Mikeb85 11y ago

Look at an economic chart pre and post New Deal. Not only did FDR's policies help the US recover from the depression, it set the framework for the strongest economic growth of the US' history (pre-1930s growth was much slower than it has been post 1945). Furthermore, your source is as partisan as they come. 'Austrian' economics exists pretty much only on the internet. Mainstream economics has progressed since 1930.

AnimalMuppet 11y ago
But post 1945, Europe had been bombed nearly to destruction, as had Japan. Even Russia had been devastated. The US was exporting to the whole world as everybody else tried to rebuild. You can't take 1945-1970 US economic growth as a measure of the quality of FDR's economic policies.
- Amezarak 11y ago
  That's a common narrative, but it doesn't make sense when you look at the facts on the ground. And putting some thought into it, bombed-out economies are not good customers. http://graphics8.nytimes.com/images/2012/11/19/opinion/111912krugman3/111912krugman3-blog480.jpg http://graphics8.nytimes.com/images/2012/11/19/opinion/11191... As you can see, there was nothing more than a brief spike in the general upward trend in exports. The "Europe bought tons of stuff from us, fueling our economy" story is simply not true. Exports as a share of GDP briefly peaked at 8% and then rapidly returned to prewar levels by the early 1950s.
  - AnimalMuppet 11y ago
    OK, but what about imports? I'd bet that the US didn't import much until 1970 or so - at least, not in the form of finished goods (and apart from imports from Canada).
    - Amezarak 11y ago
      The graph shows both. They track pretty closely until the 1980s, with the exception being that brief couple year export spike which was not matched by imports.

anonbanker 11y ago

Why does everyone overlook that Roosevelt invoked the "Trading with the Enemy Act of 1917" in order to declare taxpayers (the people) to be enemies of the state that they must conduct trade with? Why does everyone overlook the ramifications of this action?

Retric 11y ago

This reads like revisionist history. people had called the great depression of 1873 - 1896 the "Great Depression" yet here it was happening again just worse in 30 years. And in those 30 'good' years you had the first world war. Banks where and still are considered a major cause of economic downturns and even today we stress test banks on a regular basis. Further, environmental devastation played a huge role in the Great Depression. https://en.wikipedia.org/wiki/Dust_Bowl https://en.wikipedia.org/wiki/Dust_Bowl