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1AsYouKnow_Bob
(Well, the third Bush recession, if you count Bush 41's recession, too....)
NBER: U.S. In Recession That Began Last December
Reuters ran an interesting sidebar that lists U.S. recessions back to 1923.
It makes interesting reading, as it highlights one of the key difference between Republican and Democratic administrations.
Since March of 1929 there have been 10 Democratic administrations and 10 Republican administrations in the White House.
Look at the economy over the past 80 years (and assume - as seems likely - that we'll still be in recession until Inaugural Day next month):
In those 480 months of Republican presidents, the nation was in recession for 144 months: 30% of the time.
In those 478 months of Democratic presidents, the nation was in recession for 38 months: 8% of the time.
This is not a small difference: the economy is nearly four times as likely to be in recession when there's a Republican in the White House.
In 40 years of Democratic administrations - two generations - the economy lost just over 3 years of growth.
In 40 years of Republican administrations, the economy lost twelve years of growth - over half a generation of growth lost, in just two generations of Republican governance.
In just my lifetime, there's been one Democratic recession - which lasted six months - and eight Republican recessions (which have lasted 89 months to date). The one Democratic recession I've lived through was the shortest recession since at least the '20s. Every one of the eight Republican recessions was longer than that single Democratic recession.
And there are still Americans who think that Republicans are somehow "better" at managing the economy.
Edited to fix a typo
NBER: U.S. In Recession That Began Last December
Reuters ran an interesting sidebar that lists U.S. recessions back to 1923.
It makes interesting reading, as it highlights one of the key difference between Republican and Democratic administrations.
Since March of 1929 there have been 10 Democratic administrations and 10 Republican administrations in the White House.
Look at the economy over the past 80 years (and assume - as seems likely - that we'll still be in recession until Inaugural Day next month):
In those 480 months of Republican presidents, the nation was in recession for 144 months: 30% of the time.
In those 478 months of Democratic presidents, the nation was in recession for 38 months: 8% of the time.
This is not a small difference: the economy is nearly four times as likely to be in recession when there's a Republican in the White House.
In 40 years of Democratic administrations - two generations - the economy lost just over 3 years of growth.
In 40 years of Republican administrations, the economy lost twelve years of growth - over half a generation of growth lost, in just two generations of Republican governance.
In just my lifetime, there's been one Democratic recession - which lasted six months - and eight Republican recessions (which have lasted 89 months to date). The one Democratic recession I've lived through was the shortest recession since at least the '20s. Every one of the eight Republican recessions was longer than that single Democratic recession.
And there are still Americans who think that Republicans are somehow "better" at managing the economy.
Edited to fix a typo
2codyed
Post hoc ergo propter hoc.
Please explain how having a Republican president in office contributes to the longevity of a recession.
You are making an erroneous assumption, whether intentional or not, that economic phenomena fits neatly within demarcated political time periods, from one administration to the next. But economic phenomena can brew under one administration and carry over into the next, such as the dot-com bubble under the Clinton administration. The remedy for that disease is awfully similar to the remedy our betters are recommending to us today--spend, spend, spend!
Please explain how having a Republican president in office contributes to the longevity of a recession.
You are making an erroneous assumption, whether intentional or not, that economic phenomena fits neatly within demarcated political time periods, from one administration to the next. But economic phenomena can brew under one administration and carry over into the next, such as the dot-com bubble under the Clinton administration. The remedy for that disease is awfully similar to the remedy our betters are recommending to us today--spend, spend, spend!
3AsYouKnow_Bob
Please explain how having a Republican president in office contributes to the longevity of a recession.
Oh, that's easy: It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
And your claim is that this history is sheer coincidence, that the strong correlation is simply by chance??
The data clearly shows that Republican administrations are bad for the economy. Your only claim is that the data doesn't mean what it says?
Oh, that's easy: It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
And your claim is that this history is sheer coincidence, that the strong correlation is simply by chance??
The data clearly shows that Republican administrations are bad for the economy. Your only claim is that the data doesn't mean what it says?
4lriley
Hard to argue that those %'s are just coincidence. They're damning. I guess you'll just have to argue about the definition of what a recession exactly is codyed.
5codyed
You are also leaving out Congress, the Federal Reserve, and other governmental institutions that have played roles in engineering our various economic messes. These institutions are not always commensurate with each other. A Federal Reserve Chairman could serve during multiple presidential administrations; Congress, of course, could oscillate between one party or the other during one presidential administration and have varying influence on economic policy. Congress, the Fed Chief, and other governmental institutions may not be the ultimate causes of our economic messes, nor do they absolve the president's influence, but they certainly complicate matters when one is trying to make a connection between recessions and their length and Republican presidential administrations.
Oh, that's easy: It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
Unless Republicans have whispered into the ear of Alan Greenspan to artificially lower interest rates, therefore creating economic booms and eventual busts, this is nothing more than a conspiracy theory.
Oh, that's easy: It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
Unless Republicans have whispered into the ear of Alan Greenspan to artificially lower interest rates, therefore creating economic booms and eventual busts, this is nothing more than a conspiracy theory.
6Lunar
It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
Actually, the big three auto manufacturers' troubles are a good example of how problems are created by the kind of unionism that tends to be lauded by Democrats. I think laborers should have the freedom to unionize all they want, but when the government steps in to force businesses to negotiate with certain unions, that's just the other side of the same corporatist coin. So tying economic guilt to political affiliations rings rather hollow unless you can point out the actual cause and effect relationships between policies and economic consequences.
Another thing to consider is that a recession means people are spending less. While those who belong to the Church of Consumerism may take as anathema, it isn't necessarily that much worse than spending willy-nilly on bad prospects, even though bad spending choices and malinvestment may grow the economy in the short-term.
Actually, the big three auto manufacturers' troubles are a good example of how problems are created by the kind of unionism that tends to be lauded by Democrats. I think laborers should have the freedom to unionize all they want, but when the government steps in to force businesses to negotiate with certain unions, that's just the other side of the same corporatist coin. So tying economic guilt to political affiliations rings rather hollow unless you can point out the actual cause and effect relationships between policies and economic consequences.
Another thing to consider is that a recession means people are spending less. While those who belong to the Church of Consumerism may take as anathema, it isn't necessarily that much worse than spending willy-nilly on bad prospects, even though bad spending choices and malinvestment may grow the economy in the short-term.
7margd
Wow, I googled "recessions during Democratic and Republican administrations", trying to find an article I read a while back that took into account the party controlling Congress as well as Presidency--and this thread was the first item on Google's list!
8theoria
At least economists can build models that anticipate Bush recessions. I think they can also find solutions, such as never again allowing a Bush to be elected president. I hope this matter is taken up by Bernanke and Paulson.
9Carnophile
Responding to a few earlier posts:
Economic policies have their effects over a long time. Geneg claims (plausibly) that we’re still feeling the effects of Reagan’s policies.
I do not like the NBER’s somewhat ad hoc approach to recession dating. I prefer the core definition among macroeconomists, which is at least two consecutive quarters of declining output. All kinds of mischief came about when the NBER made the standard for a recession them sticking their finger into the wind and saying “Yeah, I’m kinda getting a recesion vibe these days.”
However, since it has become very common for people to use the NBER’s recession dates, they have this to say (pdf) on that subject:
“On November 26, 2001, the committee determined that the peak of economic activity had occurred in March of that year...The March 2001 peak marked the end of the expansion that began in March 1991...”
President Bush was elected in 2000 and took office in late January of 2001, so to blame the 2001 recession on him entails a claim that in less than two months he somehow implemented policies that turned an expansion into a recession. That’s just silly.
Please note that standard estimates of the effects of macroeconomic policies are stated in terms of time periods that are typically more than a year. (There is a spread here because the lag depends on (among other things) the kind of policy.)
In the second part of the quote, note the expansion started under Bush I, so if we are going to use the standard of ignoring policy lags and giving blame/credit to the President, Clinton should not get the credit for that expansion.
Economic policies have their effects over a long time. Geneg claims (plausibly) that we’re still feeling the effects of Reagan’s policies.
I do not like the NBER’s somewhat ad hoc approach to recession dating. I prefer the core definition among macroeconomists, which is at least two consecutive quarters of declining output. All kinds of mischief came about when the NBER made the standard for a recession them sticking their finger into the wind and saying “Yeah, I’m kinda getting a recesion vibe these days.”
However, since it has become very common for people to use the NBER’s recession dates, they have this to say (pdf) on that subject:
“On November 26, 2001, the committee determined that the peak of economic activity had occurred in March of that year...The March 2001 peak marked the end of the expansion that began in March 1991...”
President Bush was elected in 2000 and took office in late January of 2001, so to blame the 2001 recession on him entails a claim that in less than two months he somehow implemented policies that turned an expansion into a recession. That’s just silly.
Please note that standard estimates of the effects of macroeconomic policies are stated in terms of time periods that are typically more than a year. (There is a spread here because the lag depends on (among other things) the kind of policy.)
In the second part of the quote, note the expansion started under Bush I, so if we are going to use the standard of ignoring policy lags and giving blame/credit to the President, Clinton should not get the credit for that expansion.
10AsYouKnow_Bob
I had overnight to brood on cody's Please explain how having a Republican president in office contributes to the longevity of a recession.
Here are the first three theories that occur to me:
1)Theory: the two parties vary by their professed commitment to "free-market" principles: one is ideologically opposed to intervention in the "free market", while the other is significantly more willing to intervene in the economy.
Hypothesis: If the parties act on their professed ideologies, you would expect Republican administrations to show more extreme business cycles.
Conclusion: the historical record of "recessions-by-administration" strongly supports this theory.
2) Theory: one of the parties gives higher priorities to business interests, while the other party gives higher priorities to the interests of working people.
Hypothesis: Republican administrations will be more willing to allow recessions, as a means of weakening the relative power of labor.
Conclusion: the historical record of "recessions-by-administration" strongly supports this theory.
3) codyed's Theory: There is a lag in the business cycle, and recessions just happen to occur when Republicans are in office, simply because it's a well established Republican talking point that "Democrats are bad at managing the economy".
Hypothesis: the second term of Republican presidents should therefore be recession-free, as the alleged damage of previous Democratic governance will be well behind us.
Conclusion: the historical record of "recessions-by-administration" strongly contradicts this theory.
The data shows that there every time there have been uninterrupted Republican administrations, a SECOND recession has occurred.
There was a second recession in the second Nixon/Ford administration, a second recession in the third Reagan/Bush administration and a second recession in the second Bush43 administration.
On the other hand:
There was NO second recession in the second Clinton administration - (Oh, that's right: in fact, there was never any Clinton recession at all).
There was no second recession in the second LBJ administration - (in fact, there was never any LBJ recession at all).
This is not a "10-percent-more-likely" correlation: this is a difference of a factor of four - or eight- or (arguably) even fifteen times (89 months of R recessions vs. 6 months of D) as likely.
The inargueable fact remains that Republican administrations are strongly correlated with recessions.
Now, while past performance is no guarantee of future returns, that remains the way to bet:
When you vote for Republicans, you're voting for the party that is four-to-fifteen times as likely to manage the economy in a way that directly harms great numbers of people.
And if you yourself work for a living, you need to think carefully about the possible consequences of this.
Edited to clean up some line breaks etc.
Here are the first three theories that occur to me:
1)Theory: the two parties vary by their professed commitment to "free-market" principles: one is ideologically opposed to intervention in the "free market", while the other is significantly more willing to intervene in the economy.
Hypothesis: If the parties act on their professed ideologies, you would expect Republican administrations to show more extreme business cycles.
Conclusion: the historical record of "recessions-by-administration" strongly supports this theory.
2) Theory: one of the parties gives higher priorities to business interests, while the other party gives higher priorities to the interests of working people.
Hypothesis: Republican administrations will be more willing to allow recessions, as a means of weakening the relative power of labor.
Conclusion: the historical record of "recessions-by-administration" strongly supports this theory.
3) codyed's Theory: There is a lag in the business cycle, and recessions just happen to occur when Republicans are in office, simply because it's a well established Republican talking point that "Democrats are bad at managing the economy".
Hypothesis: the second term of Republican presidents should therefore be recession-free, as the alleged damage of previous Democratic governance will be well behind us.
Conclusion: the historical record of "recessions-by-administration" strongly contradicts this theory.
The data shows that there every time there have been uninterrupted Republican administrations, a SECOND recession has occurred.
There was a second recession in the second Nixon/Ford administration, a second recession in the third Reagan/Bush administration and a second recession in the second Bush43 administration.
On the other hand:
There was NO second recession in the second Clinton administration - (Oh, that's right: in fact, there was never any Clinton recession at all).
There was no second recession in the second LBJ administration - (in fact, there was never any LBJ recession at all).
This is not a "10-percent-more-likely" correlation: this is a difference of a factor of four - or eight- or (arguably) even fifteen times (89 months of R recessions vs. 6 months of D) as likely.
The inargueable fact remains that Republican administrations are strongly correlated with recessions.
Now, while past performance is no guarantee of future returns, that remains the way to bet:
When you vote for Republicans, you're voting for the party that is four-to-fifteen times as likely to manage the economy in a way that directly harms great numbers of people.
And if you yourself work for a living, you need to think carefully about the possible consequences of this.
Edited to clean up some line breaks etc.
12timspalding
Shall we do Democratic and Republican Congressional and Senate control?
13AsYouKnow_Bob
Well, sure - but you'll have to find a political wonk to crunch the numbers. I'm just working from the data on the Reuters sidebar.
And while looking at Congress may very likely add some subtlety to the analysis, it won't change the first-order correlation that Republican presidents demonstrably harm the economy.
(#11: Thanks!)
And while looking at Congress may very likely add some subtlety to the analysis, it won't change the first-order correlation that Republican presidents demonstrably harm the economy.
(#11: Thanks!)
14timspalding
Do you acknowledge any time lags—for example that Bush didn't send the economy into recession exactly two months in office. If not, can you explain the mechanism?
15AsYouKnow_Bob
Can I explain the mechanism? I can hardly balance my checkbook.
I'm not an economist: I read a newspaper sidebar. But those ARE the facts of the matter as laid out by the reasonably non-partisan NBER. To quote my summary:
If somebody wants to do a better analysis, by all means, show me.
The lags sometimes can be surprisingly short, though: the economy apparently changed direction within days of FDR's inaugural and the Bank Holiday.
I wonder if we'll be needing something similar 50 days from now.
I'm not an economist: I read a newspaper sidebar. But those ARE the facts of the matter as laid out by the reasonably non-partisan NBER. To quote my summary:
In those 480 months of Republican presidents, the nation was in recession for 144 months: 30% of the time.
In those 478 months of Democratic presidents, the nation was in recession for 38 months: 8% of the time.
This is not a small difference: the economy is nearly four times as likely to be in recession when there's a Republican in the White House.
If somebody wants to do a better analysis, by all means, show me.
The lags sometimes can be surprisingly short, though: the economy apparently changed direction within days of FDR's inaugural and the Bank Holiday.
I wonder if we'll be needing something similar 50 days from now.
16timspalding
So, if the economy is in recession when Obama is 60 days in office, Obama is to blame?
17theoria
In his interview with Charles Gibson, I believe G W Bush blamed Kondratieff long waves for the current predicament, not his own ineptitude as the chief steward of economic progress.
18AsYouKnow_Bob
#16: Well, the right-wing noise machine is already blaming him NOW. Rush is already talking about this as the "Obama recession".
Seventy years after the fact, the right is STILL trying to make the astonishing claim that FDR - who Brought Us Out Of The Great Depression - somehow actually prolonged the Great Depression.
So, if the economy is in recession when Obama is 60 days in office, Obama is to blame?
Shrug. I suppose it depends on just how deep the hole is, and how fast it does turn around. For several months now, the current situation has been described as "the worst since The Great Depression". If the recession that started in Dec. 2007 does turn around in March of 2009, it's hard to realistically blame Obama.
On the other hand, if, in the midst of the current recession, China finally decides to call in its paper, and the entire global economy collapses - and we're all freezing in the dark and eating squirrel next winter - then, yeah, Obama will get the blame.
One wonders if that was the Republican plan all along.
Seventy years after the fact, the right is STILL trying to make the astonishing claim that FDR - who Brought Us Out Of The Great Depression - somehow actually prolonged the Great Depression.
So, if the economy is in recession when Obama is 60 days in office, Obama is to blame?
Shrug. I suppose it depends on just how deep the hole is, and how fast it does turn around. For several months now, the current situation has been described as "the worst since The Great Depression". If the recession that started in Dec. 2007 does turn around in March of 2009, it's hard to realistically blame Obama.
On the other hand, if, in the midst of the current recession, China finally decides to call in its paper, and the entire global economy collapses - and we're all freezing in the dark and eating squirrel next winter - then, yeah, Obama will get the blame.
One wonders if that was the Republican plan all along.
19timspalding
I did some number crunching on house and senate.
Since January 1, 1929 Republicans have controlled the house 240 months, Democrats 747 months; Republicans have controlled the house during a recession 63 months, Democrats 163 months. Therefore, Republicans cause recessions 26% of the time, Democrats 22% of the time.
Since January 1, 1929 Republicans have controlled the senate 240 months, 30 in recession. Democrats have controlled the Senate 720 months, 152 in recession. Therefore Republicans cause recessions 12.5% of the time, Democrats 21% of the time.
I have not yet attempted to quantify the effect the Supreme Court has on recessions. But as we have established that presidential effects are instantaneous, I can report that Nixon is to thank for all US moon landings.
Since January 1, 1929 Republicans have controlled the house 240 months, Democrats 747 months; Republicans have controlled the house during a recession 63 months, Democrats 163 months. Therefore, Republicans cause recessions 26% of the time, Democrats 22% of the time.
Since January 1, 1929 Republicans have controlled the senate 240 months, 30 in recession. Democrats have controlled the Senate 720 months, 152 in recession. Therefore Republicans cause recessions 12.5% of the time, Democrats 21% of the time.
I have not yet attempted to quantify the effect the Supreme Court has on recessions. But as we have established that presidential effects are instantaneous, I can report that Nixon is to thank for all US moon landings.
20timspalding
Oh, and if we start from the end of WWII, Democratic control of the House causes 77% more recessions than Republican control.
Then we have what Bob Dole once mean-spiritedly called "Democrat Wars," the many years of war (WWII, Korea, Vietnam) "caused" by Democratic presidents. Shall we tally up combat deaths during Democratic vs. Republican administrations since 1929? By my rough count it's roughly 100-to-1. Democrats are monsters!
Are we done with this foolishness yet?
Then we have what Bob Dole once mean-spiritedly called "Democrat Wars," the many years of war (WWII, Korea, Vietnam) "caused" by Democratic presidents. Shall we tally up combat deaths during Democratic vs. Republican administrations since 1929? By my rough count it's roughly 100-to-1. Democrats are monsters!
Are we done with this foolishness yet?
21AsYouKnow_Bob
(Reply to #19) Well played.
Still, those numbers are nothing like the 4:1 ratio (or higher) seen in the case of control of the White House - the numbers for Congress really are more like the less significant "10% differences" I was alluding to.
Which rather proves the point: the party that controls the White House is highly correlated with the condition of the economy - and the correlation is not nearly as stark for majority party in the Congress. Control of the presidency matters more.
(Presumably there are interactions between the branches, too - but the sample sizes aren't likely to be significant for all eight of the various possible combinations of White House/Senate/House (R/R/R, D/D/D, R/R/D, etc. etc.))
Still, those numbers are nothing like the 4:1 ratio (or higher) seen in the case of control of the White House - the numbers for Congress really are more like the less significant "10% differences" I was alluding to.
Which rather proves the point: the party that controls the White House is highly correlated with the condition of the economy - and the correlation is not nearly as stark for majority party in the Congress. Control of the presidency matters more.
(Presumably there are interactions between the branches, too - but the sample sizes aren't likely to be significant for all eight of the various possible combinations of White House/Senate/House (R/R/R, D/D/D, R/R/D, etc. etc.))
22AsYouKnow_Bob
(Reply to #20)
Not sure why it's "foolishness". At minimum, it's certainly an interesting correlation. And 8:1 (8 R recessions to 1 D recession) is a LOT different from 1.77:1.
The federal government is a significant fraction of the entire economy - it's not unreasonable to infer that control of the government gives significant control of macroeconomic conditions.
That's why there ARE different political parties: because they enact different policies when they gain the power to do so. One party's policies are highly correlated with economic recessions. One party's set of policies isn't. That's more interesting than it is "foolish".
It's also interesting that this correlation - which is clearly real, and is likely to mean something (if only that Republican presidents are consistently really, really unlucky) - isn't much discussed. Or that pointing it out is called "foolishness".
(P.S. You want foolish correlations?
The Space Shuttle only fails during Republican administrations.)
Not sure why it's "foolishness". At minimum, it's certainly an interesting correlation. And 8:1 (8 R recessions to 1 D recession) is a LOT different from 1.77:1.
The federal government is a significant fraction of the entire economy - it's not unreasonable to infer that control of the government gives significant control of macroeconomic conditions.
That's why there ARE different political parties: because they enact different policies when they gain the power to do so. One party's policies are highly correlated with economic recessions. One party's set of policies isn't. That's more interesting than it is "foolish".
It's also interesting that this correlation - which is clearly real, and is likely to mean something (if only that Republican presidents are consistently really, really unlucky) - isn't much discussed. Or that pointing it out is called "foolishness".
(P.S. You want foolish correlations?
The Space Shuttle only fails during Republican administrations.)
23Lunar
That's why there ARE different political parties: because they enact different policies when they gain the power to do so.
Do they really? You haven't been able point to any such cause and effect relationship between policies and economic outcomes. You did make a vague stab at "free market principles," but that requires one to confuse campaign rhetoric with actual polices.
Do they really? You haven't been able point to any such cause and effect relationship between policies and economic outcomes. You did make a vague stab at "free market principles," but that requires one to confuse campaign rhetoric with actual polices.
24AsYouKnow_Bob
OK, have it your way: whoever is in control of the White House makes no difference.
However, Googling for "first policy initiative of the Clinton/Bush administration" yields
But here in the real world, it's obvious that control of the government makes a great difference in how resources are allocated, what priorities get addressed, and who benefits.
The historical record shows a clear, solid, and unambiguous correlation between "political party in control of the White House" and "number and duration of economic downturns". It's a defensible assertion that "Republican presidencies are bad for the economy."
Ignore it or wave it away as a coincidence if you like, but the correlation remains true.
However, Googling for "first policy initiative of the Clinton/Bush administration" yields
Shortly after taking office, Clinton signed the Family and Medical Leave Act of 1993, which required large employers to allow their employees to take unpaid leave because of pregnancy or serious medical condition.
Days into his first term, Bush announced his commitment to channeling more federal aid to faith-based service organizations. Bush created the Office of Faith-Based and Community Initiatives to assist faith-based service organizations.
But here in the real world, it's obvious that control of the government makes a great difference in how resources are allocated, what priorities get addressed, and who benefits.
The historical record shows a clear, solid, and unambiguous correlation between "political party in control of the White House" and "number and duration of economic downturns". It's a defensible assertion that "Republican presidencies are bad for the economy."
In those 480 months of Republican presidents, the nation was in recession for 144 months: 30% of the time.
In those 478 months of Democratic presidents, the nation was in recession for 38 months: 8% of the time.
This is not a small difference: the economy is nearly four times as likely to be in recession when there's a Republican in the White House.
Ignore it or wave it away as a coincidence if you like, but the correlation remains true.
25Lunar
It remains debatable which of us is residing in a fantasy land. You can't circumvent the laws of causality and claim that a president just has to wave his magic wand and thereby harm the economy. Not correlate with the economy. You're making a claim of harm to the economy. I don't know what siginificance you're putting on medical leave acts or faith-based initiatives other than personal likes or dislikes. If you can't show how a policy actually affects an economic outcome, you've got nothing but superstitious correlations of the likes of "dropping bombs on people is good for the economy." And that's already assuming booms are "good" and that recessions are "bad" to begin with. Recessions are the come-uppance for booms of poor spending and investment choices. They're a form of economic accountability. Here in the real world, accountability matters.
26Carnophile
Bob, all you do is keep repeating Correlation implies causation. I still want an explanation of how Bush causd a recession in the first two months of his Presidency. What specific policies did he implement, and what's your theory about how they turned an expansion into a recession? And so quickly?
27AsYouKnow_Bob
Bob, all you do is keep repeating Correlation implies causation.
And the defenders of the Republican record keep implying that the correlation is meaningless.
As I said above, I am not an economist. If I knew what caused business cycles, I'd be in a different line of work, selling that expertise on Wall Street.
But I'm pretty sure that the actions of government have an effect upon the business cycle. And the history incontrovertibly establishes that the two parties have glaringly different records on how they manage the business cycle.
The Reuters sidebar summarized the last eighty years of American economic history; in the initial post I added it up and noted that Republican presidencies are highly correlated with economic downtowns.
If the fact of that correlation bothers you so, then you're equally welcome to explain the converse: why is it that in, say, the last twenty years of Democratic presidencies, there have been only 6 months of economic recession? Why have the last twenty years of Republican administrations seen 36 months of recession?
That is not a subtle effect: that's a 6:1 difference, a difference which the defenders of Bush seem willing to pretend doesn't mean anything unless *I* can come up with an economic mechanism to explain it. Why did the 2001 recession start only two months into a Republican administration? I don't know.
I could just as easily ask any of the various defenders of the Republican record here: Why don't you explain to me why the 1991 recession began after a full decade of Republican governance?
You know, you two claim to be libertarians, but when the chips are down you seem awfully eager to defend the indefensible record of Republicans.
And the defenders of the Republican record keep implying that the correlation is meaningless.
As I said above, I am not an economist. If I knew what caused business cycles, I'd be in a different line of work, selling that expertise on Wall Street.
But I'm pretty sure that the actions of government have an effect upon the business cycle. And the history incontrovertibly establishes that the two parties have glaringly different records on how they manage the business cycle.
The Reuters sidebar summarized the last eighty years of American economic history; in the initial post I added it up and noted that Republican presidencies are highly correlated with economic downtowns.
If the fact of that correlation bothers you so, then you're equally welcome to explain the converse: why is it that in, say, the last twenty years of Democratic presidencies, there have been only 6 months of economic recession? Why have the last twenty years of Republican administrations seen 36 months of recession?
That is not a subtle effect: that's a 6:1 difference, a difference which the defenders of Bush seem willing to pretend doesn't mean anything unless *I* can come up with an economic mechanism to explain it. Why did the 2001 recession start only two months into a Republican administration? I don't know.
I could just as easily ask any of the various defenders of the Republican record here: Why don't you explain to me why the 1991 recession began after a full decade of Republican governance?
You know, you two claim to be libertarians, but when the chips are down you seem awfully eager to defend the indefensible record of Republicans.
28jmcgarve
Well -- we can do more than correlate. We can actually point to the specific programs and associate them with what happened in the economy subsequently. The problem, of course, is that economics is primarily a contest of competing ideologies, so nobody tells the story the same way.
There are still three stories of the great depression.
The monetarist story is that the great depression was caused and prolonged by tight money policies in defense of the gold standard. The problem with this story is that Hoover did dramatically increase the money supply, to no avail -- people's fear caused them to require high liquidity and not to invest.
The second story is the Austrian school story, favored by libertarians, which is that recessions and depressions happen every now and again, as a necessary corrective, and we should just let them blow over -- kind of Bush's approach to Katrina I guess. They think that we should have kept to the gold standard during the great depression, and just let it take care of itself, after a period not to exceed the length of the dark ages. I think I have captured all the subtleties of this school and expressed them fairly ;-).
The third story is the Keynesian story, where during a deflationary spiral you need to have government deficit spending to drive up demand, because the "animal spirits" of economic participants will otherwise keep demand very low. Roosevelt was not a Keynesian -- for one thing, the General Theory of Employment ... was only written in 1937. Roosevelt did do things to improve people's confidence in the system, and the economy steadily improved except in 37, when Roosevelt decided to try to balance the budget. And then WWII came along, and solved the problem BECAUSE it forced enormous government deficit spending, which restored demand!
Subsequently:
Kennedy's tax cuts drove up demand and grew the economy enough so that tax receipts increased, but also created some inflationary pressures.
Johnson implemented a war surtax which was intended to curtail inflation, which was at 1% when he left office -- but government and trade deficits were starting to grow.
During the Nixon administration, the productivity of the US did not grow as fast as the rest of the world -- but exchange rates were still pegged under the old Bretton Woods system, so US gold reserves were being drained. Nixon was forced to let the dollar float. Unfortunately this measure was not accompanied by any monetary restraint -- for one thing, that would have led to a recession. And so we had horrible stagflation.
Then Carter appointed Paul Volker, who drove up interest rates so as to drive the inflation out of the economy. It worked ... but this combined with dramatically rising oil prices caused a bad recession, continuing into Reagan's term.
Reagan adopted a policy of massive government deficits. Some sluggish growth ensued -- but so much of the spending went to the military that US productivity rose only very slowly in this period.
Clinton raised taxes, and spending rose only slowly (in part because of the Republican seizure of Congress). The reduced government deficits meant that interest rates could drop without inflationary effect, and the economy grew fast. Too fast actually, due to policies of Rubin and Greenspan -- there weren't enough regulations on the financial system to prevent absurd speculative bubbles. Clinton did act quickly to resolve financial crises in Asian nations, and kept things going. Also, at that time, the country did have an industrial program of sorts, which dramatically grew US exports.
And Bush -- huh. Cut taxes on the wealthy. That didn't do much -- growth has been absurdly low. No industrial program of any kind. An energy policy that was almost entirely based on giveaways to oil companies. More foreign debt accumulated than in all the years since the founding of the nation. No action to correct speculative bubbles. Two utter boobs for treasury secretary.
Republicans can't run the economy. Well -- Eisenhower did ok, I guess.
There are still three stories of the great depression.
The monetarist story is that the great depression was caused and prolonged by tight money policies in defense of the gold standard. The problem with this story is that Hoover did dramatically increase the money supply, to no avail -- people's fear caused them to require high liquidity and not to invest.
The second story is the Austrian school story, favored by libertarians, which is that recessions and depressions happen every now and again, as a necessary corrective, and we should just let them blow over -- kind of Bush's approach to Katrina I guess. They think that we should have kept to the gold standard during the great depression, and just let it take care of itself, after a period not to exceed the length of the dark ages. I think I have captured all the subtleties of this school and expressed them fairly ;-).
The third story is the Keynesian story, where during a deflationary spiral you need to have government deficit spending to drive up demand, because the "animal spirits" of economic participants will otherwise keep demand very low. Roosevelt was not a Keynesian -- for one thing, the General Theory of Employment ... was only written in 1937. Roosevelt did do things to improve people's confidence in the system, and the economy steadily improved except in 37, when Roosevelt decided to try to balance the budget. And then WWII came along, and solved the problem BECAUSE it forced enormous government deficit spending, which restored demand!
Subsequently:
Kennedy's tax cuts drove up demand and grew the economy enough so that tax receipts increased, but also created some inflationary pressures.
Johnson implemented a war surtax which was intended to curtail inflation, which was at 1% when he left office -- but government and trade deficits were starting to grow.
During the Nixon administration, the productivity of the US did not grow as fast as the rest of the world -- but exchange rates were still pegged under the old Bretton Woods system, so US gold reserves were being drained. Nixon was forced to let the dollar float. Unfortunately this measure was not accompanied by any monetary restraint -- for one thing, that would have led to a recession. And so we had horrible stagflation.
Then Carter appointed Paul Volker, who drove up interest rates so as to drive the inflation out of the economy. It worked ... but this combined with dramatically rising oil prices caused a bad recession, continuing into Reagan's term.
Reagan adopted a policy of massive government deficits. Some sluggish growth ensued -- but so much of the spending went to the military that US productivity rose only very slowly in this period.
Clinton raised taxes, and spending rose only slowly (in part because of the Republican seizure of Congress). The reduced government deficits meant that interest rates could drop without inflationary effect, and the economy grew fast. Too fast actually, due to policies of Rubin and Greenspan -- there weren't enough regulations on the financial system to prevent absurd speculative bubbles. Clinton did act quickly to resolve financial crises in Asian nations, and kept things going. Also, at that time, the country did have an industrial program of sorts, which dramatically grew US exports.
And Bush -- huh. Cut taxes on the wealthy. That didn't do much -- growth has been absurdly low. No industrial program of any kind. An energy policy that was almost entirely based on giveaways to oil companies. More foreign debt accumulated than in all the years since the founding of the nation. No action to correct speculative bubbles. Two utter boobs for treasury secretary.
Republicans can't run the economy. Well -- Eisenhower did ok, I guess.
29A_musing
For the 2001 recession, I think the key is that Bush failed the crisis management game.
The tech crash started in 2000, and was clearly well under way by the time Bush was in office. But, part of the freeze-up in investing that worsened that crisis related to Clinton having been very good to venture capital investment while Bush was much more favorable to big company and oil and gas investment (not surprising, given venture's core being in two very blue states, Mass. and California). The shift in favor ranges from tax policy to stem cell research. So, when Bush took office, the sector that most needed government focus got the cold shoulder instead, and the tech crash went from a burst bubble to what a lot of people described as a "nuclear winter". Essentially, there were two years where the entire sector was dead in the water.
But the tech crash was localized and had a fairly shallow impact on the economy as a whole. Bush didn't excite confidence in the financial community, and growth peaked about 4 months after his election and began a slow slide. His tax bill, the most significant bit of policy in his first six months in office, did nothing to change that slide, because it was fundamentally a hands-off, let the economy steer itself but cut the rates, message. So the story of the first six months of his administration is the spread of the capital freeze from the tech sector to the DJ industrials, a spread that I don't think was inevitable at all.
With hindsight, a slow, modest recession began about the second quarter of 2001, but we went into a tail spin after 9-11. It's not hard to see what happened there. After the attac, the market crashed, a lot of credit froze, decisions on investment were deferred - and Bush stoked the crisis atmosphere rather than calming it, mainly because his biggest policy prescription was war, war was making him quite popular and giving him added weight in Congress, and he wanted war in Iraq as well as Afghanistan. Bush used his support in Congress to get the war expanded and to add additional tax cuts (as a "stimulus" package") rather than to find ways to revive growth and increase the availability of growth capital. He had virtually no opposition to his programs in Congress in 2002 and 2003, and yet was unable to put together any policy prescription to end the recession - only to expand the war.
I remember making layoff decisions in those days, and many company's, mine included, decided in October to stand pat and keep everyone on board for at least three months despite the precipitous drop in business to give the economy time to bounce back from 9-11, only to find that we needed to do layoffs twice as deep three months later because it had gotten worse rather than better. The recession lasted over TWO AND A HALF YEARS - the markets crashed again late in 2002, and investment and growth didn't revive until the beginning of 2004. This is a very long recession.
So, Bush was handed a small, brewing set of problems that he pretty much ignored; those problems got worse, a new crisis made them considerably worse, and his management of that crisis prolonged the problems even more. His policy priorities meant he still kept fiddling, and he didn't change his policies when they didn't work, just kept arguing for a tax "stimulus" as the solution for every ill.
I believe that if Clinton policies had remained in effect we probably still would have had a recession. It's possible that he could have deferred the recession until 9-11, and even conceivable that he could have engineered a "soft landing" where a slide didn't happen until 9-11 and then lasted less than the three consecutive quarters that makes up a recession. But, I have almost no doubt that he would not have left us with a 10 to 11 quarter recession like the doozy Bush gave us.
The tech crash started in 2000, and was clearly well under way by the time Bush was in office. But, part of the freeze-up in investing that worsened that crisis related to Clinton having been very good to venture capital investment while Bush was much more favorable to big company and oil and gas investment (not surprising, given venture's core being in two very blue states, Mass. and California). The shift in favor ranges from tax policy to stem cell research. So, when Bush took office, the sector that most needed government focus got the cold shoulder instead, and the tech crash went from a burst bubble to what a lot of people described as a "nuclear winter". Essentially, there were two years where the entire sector was dead in the water.
But the tech crash was localized and had a fairly shallow impact on the economy as a whole. Bush didn't excite confidence in the financial community, and growth peaked about 4 months after his election and began a slow slide. His tax bill, the most significant bit of policy in his first six months in office, did nothing to change that slide, because it was fundamentally a hands-off, let the economy steer itself but cut the rates, message. So the story of the first six months of his administration is the spread of the capital freeze from the tech sector to the DJ industrials, a spread that I don't think was inevitable at all.
With hindsight, a slow, modest recession began about the second quarter of 2001, but we went into a tail spin after 9-11. It's not hard to see what happened there. After the attac, the market crashed, a lot of credit froze, decisions on investment were deferred - and Bush stoked the crisis atmosphere rather than calming it, mainly because his biggest policy prescription was war, war was making him quite popular and giving him added weight in Congress, and he wanted war in Iraq as well as Afghanistan. Bush used his support in Congress to get the war expanded and to add additional tax cuts (as a "stimulus" package") rather than to find ways to revive growth and increase the availability of growth capital. He had virtually no opposition to his programs in Congress in 2002 and 2003, and yet was unable to put together any policy prescription to end the recession - only to expand the war.
I remember making layoff decisions in those days, and many company's, mine included, decided in October to stand pat and keep everyone on board for at least three months despite the precipitous drop in business to give the economy time to bounce back from 9-11, only to find that we needed to do layoffs twice as deep three months later because it had gotten worse rather than better. The recession lasted over TWO AND A HALF YEARS - the markets crashed again late in 2002, and investment and growth didn't revive until the beginning of 2004. This is a very long recession.
So, Bush was handed a small, brewing set of problems that he pretty much ignored; those problems got worse, a new crisis made them considerably worse, and his management of that crisis prolonged the problems even more. His policy priorities meant he still kept fiddling, and he didn't change his policies when they didn't work, just kept arguing for a tax "stimulus" as the solution for every ill.
I believe that if Clinton policies had remained in effect we probably still would have had a recession. It's possible that he could have deferred the recession until 9-11, and even conceivable that he could have engineered a "soft landing" where a slide didn't happen until 9-11 and then lasted less than the three consecutive quarters that makes up a recession. But, I have almost no doubt that he would not have left us with a 10 to 11 quarter recession like the doozy Bush gave us.
30A_musing
Bob - I think you may be looking at quarters of recessions not months. Since a recession is defined as three consequtvie down quarters, you can't have 6 months of recession.
But, this points out a general trend. Republican recessions are LOOOONNNNNNGGGGGG. Why? Well, their economic policy is driven by ideolgy (low taxes, free markets), where the Dem's are, as a whole, are eminantly practical about managing the economy. That is certainly part of what kept Bush fiddling while the economy burned.
But, this points out a general trend. Republican recessions are LOOOONNNNNNGGGGGG. Why? Well, their economic policy is driven by ideolgy (low taxes, free markets), where the Dem's are, as a whole, are eminantly practical about managing the economy. That is certainly part of what kept Bush fiddling while the economy burned.
31AsYouKnow_Bob
#28, #29 thanks for chiming in.
#30 Bob - I think you may be looking at quarters of recessions not months. Since a recession is defined as three consequtvie down quarters, you can't have 6 months of recession.
The numbers I'm using in this thread are the NBER numbers from the Reuters sidebar, the second link in the initial post.
It's the NBER that calls the Carter recession "6 months"; having been there myself when it was in progress, I would have thought it was longer, too. But then, the NBER also calls the first Bush43 recession - the one followed by the famous 'jobless recovery ' - only 8 months long. That one seemed a lot longer, too.
As I said, anybody who wants to re-run this analysis with better or even just different numbers, feel free.
Several people in this thread feel that it's somehow unfair to blame Bush43 for the 2001 recession; but then, it's been demonstrated several times (FDR/1933, most obviously) that changes in Washington can have near-instantaneous effects on economic activity - so there's real-world proof that sudden change in direction CAN happen.
But moving a few months of various recessions from the R to D column here-and-there won't change the fundamental correlation:
Republican administrations are highly correlated with economic downturns. Democratic administrations just aren't.
If this makes you unhappy, well, please take it up with the NBER.
Or with the Republicans' next candidate.
#30 Bob - I think you may be looking at quarters of recessions not months. Since a recession is defined as three consequtvie down quarters, you can't have 6 months of recession.
The numbers I'm using in this thread are the NBER numbers from the Reuters sidebar, the second link in the initial post.
The NBER does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.
It's the NBER that calls the Carter recession "6 months"; having been there myself when it was in progress, I would have thought it was longer, too. But then, the NBER also calls the first Bush43 recession - the one followed by the famous 'jobless recovery ' - only 8 months long. That one seemed a lot longer, too.
As I said, anybody who wants to re-run this analysis with better or even just different numbers, feel free.
Several people in this thread feel that it's somehow unfair to blame Bush43 for the 2001 recession; but then, it's been demonstrated several times (FDR/1933, most obviously) that changes in Washington can have near-instantaneous effects on economic activity - so there's real-world proof that sudden change in direction CAN happen.
But moving a few months of various recessions from the R to D column here-and-there won't change the fundamental correlation:
Republican administrations are highly correlated with economic downturns. Democratic administrations just aren't.
If this makes you unhappy, well, please take it up with the NBER.
Or with the Republicans' next candidate.
32timspalding
It's the NBER that calls the Carter recession "6 months"; having been there myself when it was in progress, I would have thought it was longer, too. ... 's been demonstrated several times (FDR/1933, most obviously) that changes in Washington can have near-instantaneous effects on economic activity
Recessions feel longer because an end to negative economic output means only that—it gets no worse. It doesn't mean the output increases significantly, far less that it jumps back to where it was. Thus, despite your repeated references to FDR's miraculous ability to halt the recession—although there was a second recesion recession three years later—it didn't feel that great to contemporaries and we talk of "The Great Depression"—covering more than just Hoover—because the country stayed in a big funk for a long time. Much the same is true when you fall off a cliff—you don't fall forever, but the bottom is not the end of the problem.
Recessions feel longer because an end to negative economic output means only that—it gets no worse. It doesn't mean the output increases significantly, far less that it jumps back to where it was. Thus, despite your repeated references to FDR's miraculous ability to halt the recession—although there was a second recesion recession three years later—it didn't feel that great to contemporaries and we talk of "The Great Depression"—covering more than just Hoover—because the country stayed in a big funk for a long time. Much the same is true when you fall off a cliff—you don't fall forever, but the bottom is not the end of the problem.
33AsYouKnow_Bob
All true.
When you measure the various outputs, you can more-or-less-reliably say "This is when it changed from positive-to-negative"(or vice-versa), or "This when things took a turn for the better/worse". Changing the directionality is the necessary first step: it's called "turning things around", not "rainbows and ponies for everybody".
And with regard to 1933 in particular: the fact remains that things were still headed downward - and accelerating - with no sign of improvement until the Democrats turned it around.
Which is why my parents' generation called it "The Hoover Depression" for the rest of their lives.
When you measure the various outputs, you can more-or-less-reliably say "This is when it changed from positive-to-negative"(or vice-versa), or "This when things took a turn for the better/worse". Changing the directionality is the necessary first step: it's called "turning things around", not "rainbows and ponies for everybody".
And with regard to 1933 in particular: the fact remains that things were still headed downward - and accelerating - with no sign of improvement until the Democrats turned it around.
Which is why my parents' generation called it "The Hoover Depression" for the rest of their lives.
34Carnophile
>3 AsYouKnow_Bob: It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
Dude, this is just loopy.
>10 AsYouKnow_Bob: 1) Theory: the two parties vary by their professed commitment to "free-market" principles: one is ideologically opposed to intervention in the "free market"... Hypothesis: If the parties act on their professed ideologies, you would expect Republican administrations to show more extreme business cycles.
I wouldn’t expect that. You just assert this. There’s no argument here.
Also, macroeconomists date the Great Moderation - a marked decline in business cycle volatility - from around 1984 to (?). NB Reagan was President then.
Hypothesis: the second term of Republican presidents should therefore be recession-free, as the alleged damage of previous Democratic governance will be well behind us.
Only if you think all recessions are caused by changes in policy (and are commited to the specific view that the lag in the effect is somewhere between 4 and 8 years). The most famous statement on this is Milton Friedman’s phrase “long and variable lags,” in the effects of policy, emphasis on variable.
Actually, gov’t intervention is a sufficient condition in some circumstances, but not a necessary condition, for a recession. The idea that an economy can always avoid recessions is crazy; like the notion that a person could run marathons all the time and never sleep.
Worse, if policy changes are bad and cause recessions, why doesn’t the recession last until that policy is reversed? E.g., someone said that the Bush tax cuts were bad for the economy. Well, then, we should have been in a recession until/unless those tax cuts were reversed.
(Someone else said, “Kennedy's tax cuts drove up demand and grew the economy...” Lol, so tax cuts are good when and only when Democrats implement them?)
Dude, this is just loopy.
>10 AsYouKnow_Bob: 1) Theory: the two parties vary by their professed commitment to "free-market" principles: one is ideologically opposed to intervention in the "free market"... Hypothesis: If the parties act on their professed ideologies, you would expect Republican administrations to show more extreme business cycles.
I wouldn’t expect that. You just assert this. There’s no argument here.
Also, macroeconomists date the Great Moderation - a marked decline in business cycle volatility - from around 1984 to (?). NB Reagan was President then.
Hypothesis: the second term of Republican presidents should therefore be recession-free, as the alleged damage of previous Democratic governance will be well behind us.
Only if you think all recessions are caused by changes in policy (and are commited to the specific view that the lag in the effect is somewhere between 4 and 8 years). The most famous statement on this is Milton Friedman’s phrase “long and variable lags,” in the effects of policy, emphasis on variable.
Actually, gov’t intervention is a sufficient condition in some circumstances, but not a necessary condition, for a recession. The idea that an economy can always avoid recessions is crazy; like the notion that a person could run marathons all the time and never sleep.
Worse, if policy changes are bad and cause recessions, why doesn’t the recession last until that policy is reversed? E.g., someone said that the Bush tax cuts were bad for the economy. Well, then, we should have been in a recession until/unless those tax cuts were reversed.
(Someone else said, “Kennedy's tax cuts drove up demand and grew the economy...” Lol, so tax cuts are good when and only when Democrats implement them?)
35timspalding
It's deliberate Republican policy - they throw the country into recession to weaken the power of labor.
And, of course, it's Democratic policy to throw the country into prolonged growth which, as we know, weakens executives.
At the moment, I'd vote for the party that promised to destroy Boston real estate prices. I'm afraid that might be beyond party, though.
And, of course, it's Democratic policy to throw the country into prolonged growth which, as we know, weakens executives.
At the moment, I'd vote for the party that promised to destroy Boston real estate prices. I'm afraid that might be beyond party, though.
36AsYouKnow_Bob
Dude, this is just loopy.
Agreed: but it's the primary effect. Wages go down in recessions.
Republicans like this. Democrats don't.
Agreed: but it's the primary effect. Wages go down in recessions.
Republicans like this. Democrats don't.
37AsYouKnow_Bob
And, of course, it's Democratic policy to throw the country into prolonged growth which, as we know, weakens executives.
Terrible of them, isn't it? Like the Onion headline of eight years ago:
Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'
Terrible of them, isn't it? Like the Onion headline of eight years ago:
Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'
38Carnophile
First, I’ve never heard any macroeconomist say they think Bush caused the 2001 recession. I’m sure there are few (the ever-insane Paul Krugman comes to mind), but they’re a small minority.
What’s this thing about the bank holiday? The bank holiday certainly stopped bank runs, by definition, but are you saying it turned output growth from negative to positive (and “within days”)? Weird, if so. This is one big huge correlation implies causation argument. Lots of things happened in March 1933. My Great Aunt Sally scratched her ass, for example. That must have been what ended the recession.
Actually, Bob, recessions and expansions are the turning points of a huge ship; like the Titanic; an economy doesn’t turn on a dime. If a recession ended in March 1933, it must be because developments for months before that were in process to make it happen. Firms have to hire more people, purchase more inputs, etc. If they’re going to expand a lot they also must gear up their capital equipment. Orders for capital goods when placed aren’t filled instantaneously, not within months for many kinds of capital (most?). Especially not in the 1930s.
You can’t turn this around in like two weeks, let alone, as you said in 15, “within days.”
Furthermore, a banking holiday would make it impossible for firms to get bank loans. This is BAD for output. For a little compare-and-contrast here, the current policy is geared toward encouraging banks to make loans, not to discouraging it. In fact, regulators have issued a statement encouraging banks to do more lending. See paragraphs 2 - 4.
I’ve never heard a macroeconomist attributing the ending of the negative output growth in 1933 to the banking holiday. That is, er, a new one. In fact, I strongly suspect there is no macroeconomist who thinks that. I haven’t checked, but even there is one or a few, it certainly is a fringe view.
What’s this thing about the bank holiday? The bank holiday certainly stopped bank runs, by definition, but are you saying it turned output growth from negative to positive (and “within days”)? Weird, if so. This is one big huge correlation implies causation argument. Lots of things happened in March 1933. My Great Aunt Sally scratched her ass, for example. That must have been what ended the recession.
Actually, Bob, recessions and expansions are the turning points of a huge ship; like the Titanic; an economy doesn’t turn on a dime. If a recession ended in March 1933, it must be because developments for months before that were in process to make it happen. Firms have to hire more people, purchase more inputs, etc. If they’re going to expand a lot they also must gear up their capital equipment. Orders for capital goods when placed aren’t filled instantaneously, not within months for many kinds of capital (most?). Especially not in the 1930s.
You can’t turn this around in like two weeks, let alone, as you said in 15, “within days.”
Furthermore, a banking holiday would make it impossible for firms to get bank loans. This is BAD for output. For a little compare-and-contrast here, the current policy is geared toward encouraging banks to make loans, not to discouraging it. In fact, regulators have issued a statement encouraging banks to do more lending. See paragraphs 2 - 4.
I’ve never heard a macroeconomist attributing the ending of the negative output growth in 1933 to the banking holiday. That is, er, a new one. In fact, I strongly suspect there is no macroeconomist who thinks that. I haven’t checked, but even there is one or a few, it certainly is a fringe view.
39Carnophile
>36 AsYouKnow_Bob:
LOL!!! Don't ever change, dude.
By the way - I can't believe I'm even bothering to argue with this, it's so insane - profits also go down in recessions. I look forward to hearing your bizarre explanation about why The Party of Big Business deliberately makes profits decline.
LOL!!! Don't ever change, dude.
By the way - I can't believe I'm even bothering to argue with this, it's so insane - profits also go down in recessions. I look forward to hearing your bizarre explanation about why The Party of Big Business deliberately makes profits decline.
40Carnophile
>18 AsYouKnow_Bob: Seventy years after the fact, the right is STILL trying to make the astonishing claim that FDR - who Brought Us Out Of The Great Depression - somehow actually prolonged the Great Depression.
The standard view among economists is that policy mistakes, both fiscal and monetary, prolonged and worsened the Great Depression. If this is not known to the general public, it is a shame. Economists do disagree on the extent to which this mattered, but FDR is only regarded as a saint who saved us among a certain branch of the left-leaning general public. As Tim said, if he was so smart, and if fiscal policy works so fast, why did the Great Depression last another 7 years after he took office? The NBER says an official recession started again in 1937. So FDR caused that?
I don’t have time to go into all the idiocy that FDR imposed on the US economy, but consider this: Social Security was put into place. It was (as it still is) funded by a payroll tax, i.e., a tax on labor, at a time when unemployment was in the double digits. Do you think this was a good idea?
If the recession that started in Dec. 2007 does turn around in March of 2009, it's hard to realistically blame Obama.
But easy to unrealistically blame him. I’ll just say that there was some policy move at his disposal that would have turned the economy around “within days,” like the banking holiday, but that he foolishly didn’t see it.
The standard view among economists is that policy mistakes, both fiscal and monetary, prolonged and worsened the Great Depression. If this is not known to the general public, it is a shame. Economists do disagree on the extent to which this mattered, but FDR is only regarded as a saint who saved us among a certain branch of the left-leaning general public. As Tim said, if he was so smart, and if fiscal policy works so fast, why did the Great Depression last another 7 years after he took office? The NBER says an official recession started again in 1937. So FDR caused that?
I don’t have time to go into all the idiocy that FDR imposed on the US economy, but consider this: Social Security was put into place. It was (as it still is) funded by a payroll tax, i.e., a tax on labor, at a time when unemployment was in the double digits. Do you think this was a good idea?
If the recession that started in Dec. 2007 does turn around in March of 2009, it's hard to realistically blame Obama.
But easy to unrealistically blame him. I’ll just say that there was some policy move at his disposal that would have turned the economy around “within days,” like the banking holiday, but that he foolishly didn’t see it.
41theoria
"FDR is only regarded as a saint who saved us among a certain branch of the left-leaning general public."
I guess the general public was left-leaning in 1936 and 1940.
I believe FDR was one of Reagan's heroes. Go figure.
I guess the general public was left-leaning in 1936 and 1940.
I believe FDR was one of Reagan's heroes. Go figure.
42AsYouKnow_Bob
#39: I look forward to hearing your bizarre explanation about why The Party of Big Business deliberately makes profits decline.
That's easy too: rich people can ride out Hard Times more easily than poor people can.
And then move in to pick up the bargains. Such as laborers willing to work for any wage, without worrying about niceties like safety or dignity.
That's easy too: rich people can ride out Hard Times more easily than poor people can.
And then move in to pick up the bargains. Such as laborers willing to work for any wage, without worrying about niceties like safety or dignity.
43timspalding
>42 AsYouKnow_Bob:
So you really think Republicans try to depress the economy? It's not that they believe the wrong things, or manage things poorly, they're actually trying to hurt the economy.
I have to say, you have a good basic argument going about correlations. I think it's bogus but it's not a slam-dunk, as Tennet would say. But Republicans try to hurt the economy? That's tinfoil hat stuff, I think.
So you really think Republicans try to depress the economy? It's not that they believe the wrong things, or manage things poorly, they're actually trying to hurt the economy.
I have to say, you have a good basic argument going about correlations. I think it's bogus but it's not a slam-dunk, as Tennet would say. But Republicans try to hurt the economy? That's tinfoil hat stuff, I think.
44AsYouKnow_Bob
The NBER at the link above ("Sixteen of the 31 American Nobel Prize winners in Economics and six of the past Chairmen of the President's Council of Economic Advisers have been researchers at the NBER" blah blah blah) gives the dates of the Hoover recession as:
If you have better information for when the inflection point was, fine. Yes, obviously, hard times continued for years and years after the low point. But March of 1933 is officially defined as the inflection point when things finally began to get better.
Given that FDR was sworn in on March 5th, declared a 4-day bank holiday on the 9th, with banks reopening on the 13th - and the NBER says the Hoover recession ended that very month - then it's accurate to say that things turned around within days.
1929 RECESSION (43 months)
Began August 1929
Ended March 1933
If you have better information for when the inflection point was, fine. Yes, obviously, hard times continued for years and years after the low point. But March of 1933 is officially defined as the inflection point when things finally began to get better.
Given that FDR was sworn in on March 5th, declared a 4-day bank holiday on the 9th, with banks reopening on the 13th - and the NBER says the Hoover recession ended that very month - then it's accurate to say that things turned around within days.
45AsYouKnow_Bob
But Republicans try to hurt the economy? That's tinfoil hat stuff, I think.
#43: Not all of the economy, obviously. Just the people who don't rely on their investments for most of their income.
It's pretty irrefutable that the Republican party certainly does what they can to shake out whatever gains labor has made under Democratic administrations. Look at who votes for and against increasing the minimum wage: it lines up pretty perfectly by party.
#43: Not all of the economy, obviously. Just the people who don't rely on their investments for most of their income.
It's pretty irrefutable that the Republican party certainly does what they can to shake out whatever gains labor has made under Democratic administrations. Look at who votes for and against increasing the minimum wage: it lines up pretty perfectly by party.
46jmcgarve
Carnophile, you seem to be trying to get into the market on "loopy".
Yes, the Great Depression was extended by policy mistakes. Hoover did all the wrong things. FDR did the right things, but too timidly, so while the economy improved steadily under Roosevelt (after falling steadily under Hoover , it didn't really escape the depression. (The economy did recede under Roosevelt when he tried to balance the budget in 1937.) I think we all agree that WWII ended the depression, but I only have heard one theory of why it did, and that is a Keynesian theory: Massive government spending on military buildup, paid for by equally massive deficits, restored demand so that investment started growing again.
Social Security made the depression more tolerable for old people who were really in tough straits at the time. The main constraint on the economy was demand, and Social Security transferred money from one group to another, with no consequent reduction in aggregate demand, so I doubt that it slowed the economy.
Yes, Republicans do try to drive down wages -- by deferring increases in the minimum wage, by making unionization more difficult, by introducing bracero programs where foreign workers can only work for one employer at a rate below the minimum, etc. In general, Republicans do not think demand is an issue affecting economic growth, so low wages are seen as a consistent spur to growth. A Nixon appointee candidly admitted that a policy goal was "to zap labor, and we did."
I don't think, however, that Republicans try to create or prolong recessions in order to drive wages down. However, their answer to every question is that the US should cut or eliminate the capital gains tax and the inheritance tax. It's called "trickle down". The wealthy will then benevolently invest and hire ... in theory. In practice they often invest in treasury bonds, so the US government can borrow back the money to make up for the loss of tax receipts, which produces no jobs whatsoever, making cutting wealthy people's taxes one of the most inefficient ways to recover from recessions.
The Kennedy tax cut did grow the economy, so that the tax cut could be paid for out of tax receipts, not borrowing. The highest marginal tax rates at the time were 91% though. The tax cuts were made in a very specific way, via a big tax credit for new investment in plants and equipment, and that approach works -- but it also promotes a lot of inefficiency and leads to inflation. The Bush tax cuts did diddly squat.
Yes, the Great Depression was extended by policy mistakes. Hoover did all the wrong things. FDR did the right things, but too timidly, so while the economy improved steadily under Roosevelt (after falling steadily under Hoover , it didn't really escape the depression. (The economy did recede under Roosevelt when he tried to balance the budget in 1937.) I think we all agree that WWII ended the depression, but I only have heard one theory of why it did, and that is a Keynesian theory: Massive government spending on military buildup, paid for by equally massive deficits, restored demand so that investment started growing again.
Social Security made the depression more tolerable for old people who were really in tough straits at the time. The main constraint on the economy was demand, and Social Security transferred money from one group to another, with no consequent reduction in aggregate demand, so I doubt that it slowed the economy.
Yes, Republicans do try to drive down wages -- by deferring increases in the minimum wage, by making unionization more difficult, by introducing bracero programs where foreign workers can only work for one employer at a rate below the minimum, etc. In general, Republicans do not think demand is an issue affecting economic growth, so low wages are seen as a consistent spur to growth. A Nixon appointee candidly admitted that a policy goal was "to zap labor, and we did."
I don't think, however, that Republicans try to create or prolong recessions in order to drive wages down. However, their answer to every question is that the US should cut or eliminate the capital gains tax and the inheritance tax. It's called "trickle down". The wealthy will then benevolently invest and hire ... in theory. In practice they often invest in treasury bonds, so the US government can borrow back the money to make up for the loss of tax receipts, which produces no jobs whatsoever, making cutting wealthy people's taxes one of the most inefficient ways to recover from recessions.
The Kennedy tax cut did grow the economy, so that the tax cut could be paid for out of tax receipts, not borrowing. The highest marginal tax rates at the time were 91% though. The tax cuts were made in a very specific way, via a big tax credit for new investment in plants and equipment, and that approach works -- but it also promotes a lot of inefficiency and leads to inflation. The Bush tax cuts did diddly squat.
47timspalding
>45 AsYouKnow_Bob:
There's no question Republicans are more hostile to the agenda of Labor. That isn't quite the same thing as (lower-case) labor.*
So, for example, Republicans want to maintain secret ballots over unionizing the workplace. Labor want secret ballot rules removed. (See http://en.wikipedia.org/wiki/Card_check). The former is what management wants, the latter what Labor wants. Of course, not every issue is just a struggle between competing interests. There might just be a just and fair answer to the issue.
*To take an obvious historical example—one I in no way allege is true today!—Labor was not always on the right side of Civil Rights issues, when blacks were seen as a threat to union jobs.
There's no question Republicans are more hostile to the agenda of Labor. That isn't quite the same thing as (lower-case) labor.*
So, for example, Republicans want to maintain secret ballots over unionizing the workplace. Labor want secret ballot rules removed. (See http://en.wikipedia.org/wiki/Card_check). The former is what management wants, the latter what Labor wants. Of course, not every issue is just a struggle between competing interests. There might just be a just and fair answer to the issue.
*To take an obvious historical example—one I in no way allege is true today!—Labor was not always on the right side of Civil Rights issues, when blacks were seen as a threat to union jobs.
48theoria
Low wages, low corporate taxes, high profits: isn't this the Republican recipe for economic progress?
On the judgment of economists: political economy is saturated with ideology, which is presented with a statistical face.
On the judgment of economists: political economy is saturated with ideology, which is presented with a statistical face.
49AsYouKnow_Bob
(Reply to #47) That, of course, is the way management frames the issue, and the way the American media report the issue.
The unions are not against secret ballots: they think workers should be able to organize without having to arrange formal elections as the first step.
Card Check and Union Coercion
The unions are not against secret ballots: they think workers should be able to organize without having to arrange formal elections as the first step.
Card Check and Union Coercion
Employers don't hate card check because they despise coercion. And they don't hate it because they are committed to union "democracy." They hate it because they want to bust unions. It's pretty much that simple.
51timspalding
>49 AsYouKnow_Bob:
You've stepped in a bear trap I tried to point out to you. I do not dispute that management wants secret ballots because secret ballots hurt unions. They are acting out of interest, not a commitment to democracy. If the situation were reversed, no doubt they'd be arguing the other side. Perhaps that is evil. It is certainly self-interested.
That does not, however, answer whether unionization decisions should or should not require a secret ballot. I'd like you to construct an argument against secret ballots that revolves around the rights and wrongs of secret ballots, not of its proponents.
In politics, the arguments against secret ballots—accountability, mostly—have lost of out to the arguments for them—coercion, discrimination, corruption. It seems to me that, if you are to transcend "Unions are always right" argumentation, you must either defend secret ballots generally or explain why unionization decisions should involve different rules than political ones. Perhaps you think accountability is more important for union decisions, and coercion, discrimination and corruption are less important? What's the argument?
You've stepped in a bear trap I tried to point out to you. I do not dispute that management wants secret ballots because secret ballots hurt unions. They are acting out of interest, not a commitment to democracy. If the situation were reversed, no doubt they'd be arguing the other side. Perhaps that is evil. It is certainly self-interested.
That does not, however, answer whether unionization decisions should or should not require a secret ballot. I'd like you to construct an argument against secret ballots that revolves around the rights and wrongs of secret ballots, not of its proponents.
In politics, the arguments against secret ballots—accountability, mostly—have lost of out to the arguments for them—coercion, discrimination, corruption. It seems to me that, if you are to transcend "Unions are always right" argumentation, you must either defend secret ballots generally or explain why unionization decisions should involve different rules than political ones. Perhaps you think accountability is more important for union decisions, and coercion, discrimination and corruption are less important? What's the argument?
52AsYouKnow_Bob
That does not, however, answer whether unionization decisions should or should not require a secret ballot. I'd like you to construct an argument against secret ballots that revolves around the rights and wrongs of secret ballots, not of its proponents.
It's not an argument against secret ballots: it's an argument that card-check is easier and faster than a formal election.
Did you look at the link in #49? Card-check was used for years here, for half-a-century in Ontario. It was how lots of American unions got started under the Wagner Act, before the Republicans got Taft-Hartley to stop it. It works, it's fast and easy. It can be challenged, and a formal election can be held if needed.
(Which rather confirms some of the above discussion: when the GOP re-took Congress in '46, the top of their priorities was to pass Taft-Hartley, over HST's veto: the Republicans' first priority is always to weaken the power of labor.)
But perhaps The History of American Labor is a separate thread....
It's not an argument against secret ballots: it's an argument that card-check is easier and faster than a formal election.
Did you look at the link in #49? Card-check was used for years here, for half-a-century in Ontario. It was how lots of American unions got started under the Wagner Act, before the Republicans got Taft-Hartley to stop it. It works, it's fast and easy. It can be challenged, and a formal election can be held if needed.
(Which rather confirms some of the above discussion: when the GOP re-took Congress in '46, the top of their priorities was to pass Taft-Hartley, over HST's veto: the Republicans' first priority is always to weaken the power of labor.)
But perhaps The History of American Labor is a separate thread....
53timspalding
It's certainly easier for a union proponent to go around the shop with a pen and a card, checking people off a list who haven't submitted one yet, but doesn't that raise any coercion issues with you?
Is an election so onerous a thing? After all, it would be easier if we didn't vote in political elections either, but instead signed petitions. We could have neighbors, coworkers and employers show up at our doors to take our names and record who and what we're voting for--and make sure all are other neighbors knew our votes too. Would that be better for being easier and faster or are there important values other than facility and rapidity of result?
>52 AsYouKnow_Bob:
I notice you really want to bring in who supported what. Ultimately, if that's what it boils down to, we shouldn't be talking, but merely slamming into each other like football players. I readily concede that the Republican and Democratic party have different constituencies in the labor/management issue, and will make various, mendacious and hypocritical argument in favor of their side. So, what's new?
Is an election so onerous a thing? After all, it would be easier if we didn't vote in political elections either, but instead signed petitions. We could have neighbors, coworkers and employers show up at our doors to take our names and record who and what we're voting for--and make sure all are other neighbors knew our votes too. Would that be better for being easier and faster or are there important values other than facility and rapidity of result?
>52 AsYouKnow_Bob:
I notice you really want to bring in who supported what. Ultimately, if that's what it boils down to, we shouldn't be talking, but merely slamming into each other like football players. I readily concede that the Republican and Democratic party have different constituencies in the labor/management issue, and will make various, mendacious and hypocritical argument in favor of their side. So, what's new?
54AsYouKnow_Bob
but doesn't that raise any coercion issues with you?
From the link at #49:
From the link at #49:
I used advanced research techniques unknown to many reporters, and called up Harry Arthurs of York University, Canada's pre-eminent labour law scholar. Arthurs literally wrote the book on this stuff. And I asked him: what does the evidence show?
Arthurs answered that in all of his research about labour law complaints under card check, he could not find a single case where the employer complained of a union intimidating workers to unionize when they didn't want to.
That's right: zero. Zilch. Nada. Efes. Rien.
Arthurs did find two cases complaining of union intimidation in the card check process: but they were both in cases where two unions were competing against one another, i.e. both the Teamsters and SEIU were trying to organize a particular plant. That's it.
This isn't some obscure jurisdiction. It's Ontario, the largest and richest province in the country. 50 years. A half a century. Zero.
If you think about it for a moment, it becomes clearer why this is so. Employers will have their ears to the ground to find out about such things, and if they have a credible claim, they will be able to call for a secret ballot decertification election. And the workers who are intimidated will take their revenge then. It's just not in the union's interest to do it.
55timspalding
Ah, I see. So, according to you, because Ontario employers have never filed a complaint about intimidation—which is surely a high bar—nobody will ever feel pressured to sign a union card by a co-worker? Are union workers unlike all other human beings, or shall we abolish the secret ballot in other circumstances too?
56AsYouKnow_Bob
I dunno, Tim: the expert in the topic says "Fifty years, hasn't actually happened". When it was done here, unions were stronger, and living standards of American workers were higher.
So, you know, it sounds to me like the "threat" of making it easier to organize a union is not actually the greatest problem facing the American worker.
What, are you hearing rumblings from your workfloor?
So, you know, it sounds to me like the "threat" of making it easier to organize a union is not actually the greatest problem facing the American worker.
What, are you hearing rumblings from your workfloor?
57A_musing
My understanding is that an authorization card system is an alternative to an election - e.g., a union can show majority support either through an election or through a card system. If more than 50% of workers don't just privately, but publicly, support the union, no need for an election. The alternative is that you have to get 30% to show support on cards to petition for an election, and where you do the 30% and then election, employers, who have and use enormous coercive pressure (they control the jobs), have time to retaliate against the 30% and exercise other pressure without there being a protective organization in place. 30% is also not a trivial figure: it is a mini-election of its own in a way, but one where the burden is solely on the union.
That's why unions opt for collecting the 50% and making them public all at once, rather than exposing 30% willing to stick their neck out knowing that a second fight is still ahead, a fight where the leverage is disproportionate, since the employer has the job.
Anyone want to even attempt to argue that employers do not behave coercively and do not retaliate in union elections? Because there's a lot of NLRB jurisprudence out there, even if you're only looking at the last few years, and not the grand life and death battles to originally form the unions.
None of this is to say that there is not a better way, but it's to lay out the problem with the current system of elections. How about management accept a system where we have a secret ballot in every workplace every four years?
But, another question: why not have secret ballots for shareholder elections if management is so committed to the principal of free elections?
That's why unions opt for collecting the 50% and making them public all at once, rather than exposing 30% willing to stick their neck out knowing that a second fight is still ahead, a fight where the leverage is disproportionate, since the employer has the job.
Anyone want to even attempt to argue that employers do not behave coercively and do not retaliate in union elections? Because there's a lot of NLRB jurisprudence out there, even if you're only looking at the last few years, and not the grand life and death battles to originally form the unions.
None of this is to say that there is not a better way, but it's to lay out the problem with the current system of elections. How about management accept a system where we have a secret ballot in every workplace every four years?
But, another question: why not have secret ballots for shareholder elections if management is so committed to the principal of free elections?
58A_musing
By the way, filing a complaint about intimidation is not a high bar. The average NLRB unionization fight includes multiple complaints filed on each side about a whole range of issues; my understanding is Canada is pretty similar. It keeps labor lawyers busy.
But, remember, Canadians are nice. The lack of coercion by unions there doesn't mean it doesn't happen in the US or elsewhere. I have no doubt that union guys don't ask no voters to go drinking with them and may even call them bad names and that management guys fire, demote or otherwise punish yes voters in the workplace.
But, remember, Canadians are nice. The lack of coercion by unions there doesn't mean it doesn't happen in the US or elsewhere. I have no doubt that union guys don't ask no voters to go drinking with them and may even call them bad names and that management guys fire, demote or otherwise punish yes voters in the workplace.
59theoria
For an historical account of the benevolence of employers, I recommend Karen Orren, Belated Feudalism: Labor, the Law, and Liberal Development in the United States. It is curious to me that arguments about the nefarious power of unions (and the threat of "card check") are presented as if unions were always welcomed with open arms by employers and federal-state-local governments.
60margd
My understanding is that there are far more protections--make that FAR MORE protections--for workers in Canada. For one, it's against the law to fire without cause. ("Unjustified dismissal"--something like that?)
ETA: http://www.hrsdc.gc.ca/en/labour/publications/employment_standards/unjust/page00...
ETA: http://www.hrsdc.gc.ca/en/labour/publications/employment_standards/unjust/page00...
61geneg
I don't understand a business plan that involves manufacturing 100 cars that only ten people can afford. Even that old reprobate Henry Ford knew that was stupid.
With a little jiggering of labor law, it seems to me union and non-union workers could work the same jobs, side by side, with union employees benefiting or losing from their union membership and both groups seeing how it works out for the other.
With a little jiggering of labor law, it seems to me union and non-union workers could work the same jobs, side by side, with union employees benefiting or losing from their union membership and both groups seeing how it works out for the other.
62margd
When I had way too much fun in college, my dad significantly reduced my support such that I had to pay much of my own tuition, etc., and thus I found summer employment in two factories, one union and the other non-union. Based on that limited experience, this then-sheltered girl would never question that unions are a good thing!
63theoria
61>
Why would unions (in general) and individual union members want to give up on rights that have been won over many decades through significant struggles, sometimes involving the loss of life of workers seeking to unionize workplaces?
Why would unions (in general) and individual union members want to give up on rights that have been won over many decades through significant struggles, sometimes involving the loss of life of workers seeking to unionize workplaces?
64geneg
I don't know. Why?
My suggestion does not penalize the union workers. It merely gives the workers an opportunity to decide whether thay want a union job, with its dues and whatever other expenses go with it or not.
The part about jiggering labor law is the part that allows labor and non-labor to work side by side with neither being penalized through their choice other than the way they are treated by labor or management.
My suggestion does not penalize the union workers. It merely gives the workers an opportunity to decide whether thay want a union job, with its dues and whatever other expenses go with it or not.
The part about jiggering labor law is the part that allows labor and non-labor to work side by side with neither being penalized through their choice other than the way they are treated by labor or management.
65jmcgarve
>64 geneg: Geneg, this idea of union and non-union workers side by side is called "right to work". "Right to work", meaning the right to work the job without joining the union, even if a union contract is in place, is called called "right to work for less" by union advocates. The union can attempt to negotiate in such cases, but because many employees are not union members, the union has no real power in the situation. This is why unions are essentially absent or powerless throughout the south, including in your state of Texas and my state of North Carolina: All these states have "right to work" laws.
66Jesse_wiedinmyer
How 'bout them employment numbers?
67Carnophile
You know, you two claim to be libertarians, but when the chips are down you seem awfully eager to defend the indefensible record of Republicans.
Yeah, I’m taking pills for that now. Like Lunar, my radar went up at the “free-market principles” thing you said in post 10. But I’d also object if someone said that in general Democratic presidents cause recessions, which is equally indefensible as an unqualified generalization. Sorry if I wasn’t clear about this.
>41 theoria: “I guess the general public was left-leaning in 1936 and 1940.”
Certainly. Just as they were right-leaning in 1980 and 1984. What’s the difficulty?
Yeah, I’m taking pills for that now. Like Lunar, my radar went up at the “free-market principles” thing you said in post 10. But I’d also object if someone said that in general Democratic presidents cause recessions, which is equally indefensible as an unqualified generalization. Sorry if I wasn’t clear about this.
>41 theoria: “I guess the general public was left-leaning in 1936 and 1940.”
Certainly. Just as they were right-leaning in 1980 and 1984. What’s the difficulty?
68Carnophile
>28 jmcgarve: And then WWII came along, and solved the problem BECAUSE it forced enormous government deficit spending, which restored demand!
>29 A_musing: Bush stoked the crisis atmosphere rather than calming it, mainly because his biggest policy prescription was war...
Amusing and jmc, you need to huddle and decide whether war is good or bad for the economy.
>29 A_musing: Bush stoked the crisis atmosphere rather than calming it, mainly because his biggest policy prescription was war...
Amusing and jmc, you need to huddle and decide whether war is good or bad for the economy.
69Carnophile
All this stuff about labor, card check, etc., is a distraction from the assertion that prompted it, Bob’s notion that Republicans cause recessions on purpose. This is beyond tinfoil hat stuff; it’s “The patient is foaming at the mouth, having a siezure, and speaking in tongues” stuff. I actually thought Bob just made that assertion in an overexcited moment and that when the silliness was mentioned he’d retract it. We’d all have a laugh together, then continue with the debate in a relatively serious way. But in 42 you continued to seriously defend it, Bob.
I’m agog.
Edit: Unless the whole thing is one big huge troll and Tim and I are falling for it?
I’m agog.
Edit: Unless the whole thing is one big huge troll and Tim and I are falling for it?
70geneg
> 65
The inequity between union and non-union in right to work states is part of the jiggering that has to be done to the labor laws to make this work. I don't know enough about the law to make suggestions about how to do this, but hey, We're Americans right. There ain't nothin' we can't figure out if we put our minds to it.
I'm aware of right to work states, I live in one.
The inequity between union and non-union in right to work states is part of the jiggering that has to be done to the labor laws to make this work. I don't know enough about the law to make suggestions about how to do this, but hey, We're Americans right. There ain't nothin' we can't figure out if we put our minds to it.
I'm aware of right to work states, I live in one.
71Carnophile
>29 A_musing:
As you said, the bust of the dot-com bubble started in 2000. The NASDAQ peaked in MArch of that year.
The notion that Bush's attitude toward venture capital had something to do with the recession that started in March 2001 is bizarre. I've never heard any economist say that. It seems weird.
The recession of 2001 lasted less than one year, whether one uses the NBER's definition or the "declining GDP" definition. That recession was not particularly severe or long; it is one of the shorter and milder ones for the 20th century. It was 8 months long by the NBER’s dating; of the 21 recessions in the 20th century only 2 were shorter and a couple were equally long. Regarding its (lack of) severity, it was such a hard call that at the time, the NBER went back and forth a couple times in calling it a recession.
72A_musing
Just for the record, I don't think Republicans cause recessions on purpose.
But, I can't think of a Republican who I think has done a good job of managing the economy. Maybe Reagan and Eisenhower get the best grades, but they are still barely passing, and the thing Reagan gets the highest grades for in managing the economy is Gramm-Rudman, ultimately dismantled under Bush. And many of the Republicans have been downright awful at managing the economy - Hoover, Nixon, Ford, both Bushes - these are not people who did a good job on the economy.
However, the only Democratic President I can think of in the last century who did a downright bad job was Carter. Clinton, LBJ, Kennedy, Roosevelt, Truman, Wilson - I'd give them grades from good to great in terms of managing the economy.
But, I can't think of a Republican who I think has done a good job of managing the economy. Maybe Reagan and Eisenhower get the best grades, but they are still barely passing, and the thing Reagan gets the highest grades for in managing the economy is Gramm-Rudman, ultimately dismantled under Bush. And many of the Republicans have been downright awful at managing the economy - Hoover, Nixon, Ford, both Bushes - these are not people who did a good job on the economy.
However, the only Democratic President I can think of in the last century who did a downright bad job was Carter. Clinton, LBJ, Kennedy, Roosevelt, Truman, Wilson - I'd give them grades from good to great in terms of managing the economy.
74Carnophile
I'm an economist. I don't believe that Bush did something to venture capital that caused a recession, let alone in two months. Nor have I ever heard any of my colleagues express that view.
76margd
>1 AsYouKnow_Bob: And there are still Americans who think that Republicans are somehow "better" at managing the economy.
Even if Republicans aren't worse at it than Republicans, sure doesn't seem like they're any better! Why does market believe otherwise?
Even if Republicans aren't worse at it than Republicans, sure doesn't seem like they're any better! Why does market believe otherwise?
77Carnophile
>75 codyed: That must lead to some hard-core cognitive dissonance!
79jmcgarve
Carnophile, what's your theory of why the great depression ended? I have asserted a Keynesian explanation. I haven't heard an alternative.
80Lunar
#79: By not bombing people.
81Carnophile
>78 A_musing:
I was thinking of the first paragraph or so in post 29. Did I misinterpret it?
>79 jmcgarve:
jmc, I don't have a pre-existing theory, but like Instapundit I'm happy to make one up on the spot. It was, uh, certain key technological changes.
As to the WWII story, it's such a common story, but seems to be false. If you look at the data from the Commerce Department's Bureau of Economic Analysis, GDP started rising in 1939. We didn't even declare war on Japan or Germany until December 1941.
If you want to geek out: www.bea.gov. First click "Gross Domestic Product," then "Interactive Tables: GDP and the National Income and Product Account (NIPA) Historical Tables," then "Frequently Requested NIPA Tables." The great thing about this is that you can select you own desired series: Pick a range of years, specify whether you want yearly or quarterly data, etc.
I was thinking of the first paragraph or so in post 29. Did I misinterpret it?
>79 jmcgarve:
jmc, I don't have a pre-existing theory, but like Instapundit I'm happy to make one up on the spot. It was, uh, certain key technological changes.
As to the WWII story, it's such a common story, but seems to be false. If you look at the data from the Commerce Department's Bureau of Economic Analysis, GDP started rising in 1939. We didn't even declare war on Japan or Germany until December 1941.
If you want to geek out: www.bea.gov. First click "Gross Domestic Product," then "Interactive Tables: GDP and the National Income and Product Account (NIPA) Historical Tables," then "Frequently Requested NIPA Tables." The great thing about this is that you can select you own desired series: Pick a range of years, specify whether you want yearly or quarterly data, etc.
82A_musing
Look at the first sentence of the second paragraph, where I say the tech crisis was localized and didn't have a huge impact on the economy as a whole. Yes, I think that Bush & Co. really didn't have much concern about the tech crash, seeing it as a natural market correction to an overheated sector. And there is no secret that Bush & Co. attitudes ranged from apathetic to fairly hostile about venture investing and the tech community as a whole.
But how did we get a recession out of the bursting of the tech bubble? I think he lost the confidence of wall street and we saw a credit and equity freeze more broadly as a result.
But how did we get a recession out of the bursting of the tech bubble? I think he lost the confidence of wall street and we saw a credit and equity freeze more broadly as a result.
83Carnophile
The problem with strange theories like Bush causing a recession in two months is that they’re so easy to assert but so hard to refute. Nevertheless I’ve found some free time. I don’t know why I’m bothering really; it’s all just so weird.
Before I really start in, a reminder: The tech crash came in March 2000, 10 months before Bush took office. Bush may be pretty powerful, but he can’t go back in time.
Now: The Fed noted in January 2001 that industrial production started falling several months before Bush took office. The money line is this:
“Industrial production fell 0.6 percent in December (of 2000) after two months of smaller losses. After having slowed in the third quarter, industrial output contracted at an annual rate of 1.1 percent in the fourth quarter, the first negative quarterly reading since 1991.”
So key parts of output were falling before Bush took office. And this isn’t due to normal seasonal fluctuations or something like that, as the second sentence indicates.
Also, to forestall any huffing about Bush’s election shaking the economy even before he took office, note that industrial production had also been falling even before the election (first sentence).
Also, “Manufacturing output dropped 1.1 percent in December... Among durable goods, the losses were widespread.... The output of nondurables has declined, on balance, over the last six months...
Capacity utilization had also been falling, which is another harbinger of a recession (not always, but often).
O, why am I bothering? Y’all are so goddam bulletproof when it comes to facts. There will just be some new conspiracy theory about how Bush told all his industrial buddies to slow production in 2000 so he could blame the recession on Clinton, etc.
Before I really start in, a reminder: The tech crash came in March 2000, 10 months before Bush took office. Bush may be pretty powerful, but he can’t go back in time.
Now: The Fed noted in January 2001 that industrial production started falling several months before Bush took office. The money line is this:
“Industrial production fell 0.6 percent in December (of 2000) after two months of smaller losses. After having slowed in the third quarter, industrial output contracted at an annual rate of 1.1 percent in the fourth quarter, the first negative quarterly reading since 1991.”
So key parts of output were falling before Bush took office. And this isn’t due to normal seasonal fluctuations or something like that, as the second sentence indicates.
Also, to forestall any huffing about Bush’s election shaking the economy even before he took office, note that industrial production had also been falling even before the election (first sentence).
Also, “Manufacturing output dropped 1.1 percent in December... Among durable goods, the losses were widespread.... The output of nondurables has declined, on balance, over the last six months...
Capacity utilization had also been falling, which is another harbinger of a recession (not always, but often).
O, why am I bothering? Y’all are so goddam bulletproof when it comes to facts. There will just be some new conspiracy theory about how Bush told all his industrial buddies to slow production in 2000 so he could blame the recession on Clinton, etc.
84timspalding
Who was leading 6m. before the election? Can the recession be Gore's fault? ;)
85geneg
Carny, I'll agree that Bush did not start the recession that began during his early Presidency if it will make you feel better. I distinctly remember telling the person on the bus with me a week or so befor the election that whoever the next president (Gore or Bush) was they were going to be faced with an economic problem right off the bat. My hint was the beginning of the slow down in internet infrastructure projects. I know that's a very small part of the economy, but it had been in a real boom and was sliding toward a bust.
86Carnophile
It does make me feel better. Personally, I blame sunspots, Kondratieff long waves, interplanetary trade with cheap Martian labor.
87theoria
Bush wars. Bush recessions. Bush bailouts. When he hasn't been on vacation, he's been a very busy bee. He's even made Keynes required reading again.
Not to fear: the Obama recovery begins on January 20th. Or maybe it's already begun. There's already an elementary school named after him. Can Mt Rushmore be far behind? http://www.nytimes.com/2008/12/07/nyregion/long-island/07schoolli.html
Not to fear: the Obama recovery begins on January 20th. Or maybe it's already begun. There's already an elementary school named after him. Can Mt Rushmore be far behind? http://www.nytimes.com/2008/12/07/nyregion/long-island/07schoolli.html
