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I don't know what to think here. There seems to be some very obvious issues with his analysis that he didn't even mention. Now this is a very qualified guy so

I don't know what to think here. There seems to be some very obvious issues with his analysis that he didn't even mention. Now this is a very qualified guy so I hesitate to point these out but I can't help but think his agenda (to calm people) is clouding the issue. I'll run down the list... 1. The government has goosed numbers that are used to caclulate GDP like the CPI. See here: http://tinyurl.com/3rxzxhs http://tinyurl.com/3rxzxhs 2. Unemployment is calculated differently today because we factor out "discouraged workers". See here where Motley Fool put 2009 Unemployment closer to 17.5% : http://tinyurl.com/3lappx9 http://tinyurl.com/3lappx9 3. Yes the FDIC prevented people's savings from disappearing when the banks hit crisis mode and that prevented the banks from going out of business. But the wealth destruction still happened. All we did is shift it from the banks to the Federal Government thereby saving the banks (who wouldn't have survived with that much debt) while burdening the general populace for decades to come. I'm not saying he's wrong as much as I'm saying he clearly had an agenda here and is making the argument for that agenda without giving the other side of the coin. If you don't believe me ask yourself this: Why didn't he use GNP in his first comparison? We still calculate GNP and using GNP now vs GNP in the 30s (when that's all we tracked) makes a lot more sense than using GDP now and retroactively calculating GDP in the 30s. But economists agree GDP is more forgiving and makes the nation look wealthier in a global market than GNP would (since most manufacturing was still done domestically in the 30s). So again there seems to be an agenda here.

RyanMcGreal 15y ago
> Unemployment is calculated differently today because we factor out "discouraged workers" The author addresses that: > Even by the highest estimates - which include people discouraged from looking for a job, thus not registered as unemployed - the jobless rate reached around 16 to 17 percent.
- TomOfTTB 15y ago
  Your point (and jabits below) is valid but my issue is he didn't spell out the fact that "discouraged workers" were counted in the Great Depression. Also (if you follow the link provided) you'll see we didn't hit the 20%+ numbers until 4 years after the crash and by that measure we still have over a year. I concede we're talking semantics I just think a more accurate way to say it would be "unemployment rose above 20% in the Great Depression while by that same standard we're only at around 17%". Rather than comparing their 20% to our 10% and then mentioning the real unemployment rate as an addendum.
  - trevelyan 15y ago
    17 percent is very much in the range of the Great Depression. Especially since the higher unemployment statistics from the 1930s included workers who were actually employed. Scroll down for the details: http://edgeofthewest.wordpress.com/2008/10/10/very-short-reading-list-unemployment-in-the-1930s/ http://edgeofthewest.wordpress.com/2008/10/10/very-short-rea...
  - RyanMcGreal 15y ago
    > you'll see we didn't hit the 20%+ numbers until 4 years after the crash and by that measure we still have over a year. It will be very interesting to follow this over the next year or so and watch how this trends. I'm not at all persuaded that this isn't another Depression; but like such things, it's hard to tell except in retrospect. Another ongoing employment issue in the USA is the extraordinarily high prison rate. In other countries, most of those inmates would be unemployed rather than incarcerated.
jabits 15y ago
... 2. Unemployment is calculated differently today because we factor out "discouraged workers". See here where Motley Fool put 2009 Unemployment closer to 17.5% : http://tinyurl.com/3lappx9 http://tinyurl.com/3lappx9 ... I think he covered this here: "Even by the highest estimates — which include people discouraged from looking for a job, thus not registered as unemployed — the jobless rate reached around 16 to 17 percent. It’s a jobs disaster, to be sure, but not the same scale as the Great Depression."
rauljara 15y ago
You seem to be accusing the man of ignoring "obvious" issues to push an agenda to calm people, but I don't think that's fair. 1) The CPI is controversial, but so is every proposed system to replace it. For the moment, the CPI is the gold standard, and even if it turns out that its universal adoption is as silly as the actual gold standard was, using it is certainly _not_ a sign of pushing an agenda. 2) He specifically mentions what you accuse him of not mentioning - "Even by the highest estimates — which include people discouraged from looking for a job, thus not registered as unemployed — the jobless rate reached around 16 to 17 percent. It’s a jobs disaster, to be sure, but not the same scale as the Great Depression." 3) Fair, there was a destruction of wealth. But I don't see how that would undermine any of his points. And your last un-numbered point about GNP is also kind of silly. There's a reason we use GDP now instead of GNP, GNP doesn't accurately reflect our wealth. One could argue that neither does GDP, but again, using the commonly accepted numbers isn't a sign of deliberately concealing an agenda. There are a billion ways one could measure the economy, and I'm sure we could do better than what we do now. But using them doesn't mean you're deliberately leaving things out in order to push an agenda. It means you're using the vocabulary that economists use.
yummyfajitas 15y ago
2. Unemployment is calculated differently today because we factor out "discouraged workers". You are correct that unemployment is calculated differently, but you are incorrect as to the reason. The BLS only started gathering proper data on unemployment in 1940. ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt http://www.bls.gov/cps/eetech_methods.pdf http://www.bls.gov/cps/eetech_methods.pdf The data before 1940 is based mostly on extrapolation and guesswork - I believe it was Christina Romer who pioneered this field.

RyanMcGreal 15y ago

> Unemployment is calculated differently today because we factor out "discouraged workers" The author addresses that: > Even by the highest estimates - which include people discouraged from looking for a job, thus not registered as unemployed - the jobless rate reached around 16 to 17 percent.

TomOfTTB 15y ago
Your point (and jabits below) is valid but my issue is he didn't spell out the fact that "discouraged workers" were counted in the Great Depression. Also (if you follow the link provided) you'll see we didn't hit the 20%+ numbers until 4 years after the crash and by that measure we still have over a year. I concede we're talking semantics I just think a more accurate way to say it would be "unemployment rose above 20% in the Great Depression while by that same standard we're only at around 17%". Rather than comparing their 20% to our 10% and then mentioning the real unemployment rate as an addendum.
- trevelyan 15y ago
  17 percent is very much in the range of the Great Depression. Especially since the higher unemployment statistics from the 1930s included workers who were actually employed. Scroll down for the details: http://edgeofthewest.wordpress.com/2008/10/10/very-short-reading-list-unemployment-in-the-1930s/ http://edgeofthewest.wordpress.com/2008/10/10/very-short-rea...
- RyanMcGreal 15y ago
  > you'll see we didn't hit the 20%+ numbers until 4 years after the crash and by that measure we still have over a year. It will be very interesting to follow this over the next year or so and watch how this trends. I'm not at all persuaded that this isn't another Depression; but like such things, it's hard to tell except in retrospect. Another ongoing employment issue in the USA is the extraordinarily high prison rate. In other countries, most of those inmates would be unemployed rather than incarcerated.

jabits 15y ago

... 2. Unemployment is calculated differently today because we factor out "discouraged workers". See here where Motley Fool put 2009 Unemployment closer to 17.5% : http://tinyurl.com/3lappx9 http://tinyurl.com/3lappx9 ... I think he covered this here: "Even by the highest estimates — which include people discouraged from looking for a job, thus not registered as unemployed — the jobless rate reached around 16 to 17 percent. It’s a jobs disaster, to be sure, but not the same scale as the Great Depression."

rauljara 15y ago

You seem to be accusing the man of ignoring "obvious" issues to push an agenda to calm people, but I don't think that's fair. 1) The CPI is controversial, but so is every proposed system to replace it. For the moment, the CPI is the gold standard, and even if it turns out that its universal adoption is as silly as the actual gold standard was, using it is certainly _not_ a sign of pushing an agenda. 2) He specifically mentions what you accuse him of not mentioning - "Even by the highest estimates — which include people discouraged from looking for a job, thus not registered as unemployed — the jobless rate reached around 16 to 17 percent. It’s a jobs disaster, to be sure, but not the same scale as the Great Depression." 3) Fair, there was a destruction of wealth. But I don't see how that would undermine any of his points. And your last un-numbered point about GNP is also kind of silly. There's a reason we use GDP now instead of GNP, GNP doesn't accurately reflect our wealth. One could argue that neither does GDP, but again, using the commonly accepted numbers isn't a sign of deliberately concealing an agenda. There are a billion ways one could measure the economy, and I'm sure we could do better than what we do now. But using them doesn't mean you're deliberately leaving things out in order to push an agenda. It means you're using the vocabulary that economists use.

yummyfajitas 15y ago

2. Unemployment is calculated differently today because we factor out "discouraged workers". You are correct that unemployment is calculated differently, but you are incorrect as to the reason. The BLS only started gathering proper data on unemployment in 1940. ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt http://www.bls.gov/cps/eetech_methods.pdf http://www.bls.gov/cps/eetech_methods.pdf The data before 1940 is based mostly on extrapolation and guesswork - I believe it was Christina Romer who pioneered this field.