Study: U.S. Economic Status: Again, #1 in the World

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So, have you even studied the great depression in any detail aside from your standard high school history course? Financial excess is a Keynesian view that not even many neo-Keynesians buy today. I could right pages on the subject, but since this is on a forum I'll try to be brief. The Great Depression had a few main causes; one of the primary was the fact a hidden deflation occurred during the mid to late twenties (inflation was rising, but worker productivity and wages were rising at a faster rate). When the stock market crashed, the Fed at the time was still mostly concerned with inflation, and allowed the money supply to essentially shrink by a third (which is one the main reasons the current economic slowdown will not equal the Great Depression, since the Fed won't make that mistake again). When the depression was still relatively mild, Hoover rejected the "leave it alone approach" and hosted the White House wage summit in which he encouraged businesses to maintain high wages (which was probably a mistake if you want to alleviate the depression). He also more significantly signed the Smoot-Hawley tariff which essentially imposed a prohibitive tariff in imports and other countries followed suite (another mistake if you wish to alleviate the depression). He also carried out other ineffective government spending programs and to pay for them, he increased income tax on the top from 25% to 63%. These policies combined with the Fed's poor monetary policy made the depression worse, turning it into the Great Depression (and FDR made it even worse with his "New Deal" programs). Some Keynesians will argue "animal spirits" contributed as well, while it is possible they contributed some, it is not clear as to the extent they enhanced the problem.

Also, do you understand what I mean by productivity? If you did then you should know of course technological progress enhances productivity (which in turn lead to higher wages).

No, I didn't have to study the great depression in high school, I lived through it and was well aware of the unsupervised crooks and scoundrels who undermined the economic system for quick easy financial gain. The USA was on the edge of a social revolution over the skulduggery of the banking system and farmers were ganging up to prevent banks from foreclosing mortgages on farms and tossing farmers out on their asses. Roosevelt, if anything, did his damndest to save the structure from total collapse and the government managed to keep the country limping along until the second world war got all the machinery going again with living wages for the workers and government subsidies for armament production. All this permitted, in the long run, the rise of the middle class until the same idiots in the Republican Party started the same foolishness with their anti-labor laws and the slow decline of the middle class and the huge accretion of wealth of the very rich and the general screwing of the bulk of the citizens with which we are settling into today.

This NY Times editorial is revealing about corporate compassion and business concern for worker safety.

http://www.nytimes.com/2008/05/27/opini ... nn.html?hp

This NY Times editorial is revealing about corporate compassion and business concern for worker safety.

http://www.nytimes.com/2008/05/27/opini ... nn.html?hp

I know which factors were chiefly to blame for the great depression. It was partly due to hidden deflation. Almost everyone, by a certain point, was in employment, and most Americans, at least, had their hands on the new appliances, and new goods. Prices started to go down, and people kept waiting for the prices to go down. Businesses had to cut back, share prices crashed. Wall street crash, etc. This might have been stopped by the government, which could have used price controls to effectively stop price cuts. This would thus have stopped deflation head-on, as people would realise that prices weren't going to go any lower, and buy then and there. Low inflation is better than deflation, also.

I don't think that FDR made it bad at all, giving people basic support to ensure that they didn't starve was definitely the humane thing to do, and would at least keep agriculture, the most important of all industries, on the go. Never mind that it slowed down recovery, people would have suffered even more if Roosevelt hadn't done something. The people matter above all else.

And that last statement that technological progress inevitably leads to higher wages is obviously not true. When skilled men such as steel workers and machinists are replaced by automatic machinery their employment options are radically reduced to flipping burgers or other service jobs demanding little or no skills and very low wages.

Welcome back!
Hope you all had a wonderful Memorial weekend!
I sure did. I enjoyed the greatness and freedom of my country,
as I flew my new radio-controlled helicopter over a nearby field
with my wife at my side.

God bless America!

And now, to let the evidence speak for itself concerning the validity of my point on Page 1 of this thread,
I now bring to you an AP article illustrating that my point was SPOT ON.

First, below I have reproduced and bolded the Page-1 point to which I'm referring.
Enjoy!

The Associated Press article from today (at the link below) reports yet another "unexpected" positive American economic development,
confirming the trend of incompetent-or-lying, overly-negative economists which I cited above.

Ever notice that virtually ALL positive American economic developments that occur -- and they occur frequently --are reported as "unexpected"? That's more than a little suspect. And it shows that those who unwaveringly predict doom and gloom are often going to be wrong, and "surprised". Naturally! Because doom and gloom isn't always happening!

http://www.foxbusiness.com/story/markets/economy/new-home-sales-rise-remain-near--year-low/

What I found interesting from the data was: 1) countries like Denmark, Sweden, Canada, Norway and the Netherlands all did quite well, in spite of the fact that conservatives like to denounce them for being 'socialist', and . 2) The UK (often held up as a model by conservatives) was not in the top 20.

http://www.imd.ch/research/publications ... elease.pdf

Yes. They all have extensive social welfare, public education, and universal healthcare systems, and are all prosperous nations, with a healthier populace, and overall better quality of life for all, not just the wealthy, than in the US. GDP is not the sole indicator of wellbeing and prosperity, sorry to say.

And in GDP per capita, Luxemburg and Switzerland are well ahead of the US. The latest forecasts I remember are that China would catch up with the US in total GDP by 2015 and would catch up in GDP per capita ~ 2050. Brits do better than Americans in health even after adjusting for obesity rates, despite spending (public + private) a lot less on health.
Incidentally, according to a survey of developed nations, British and American children are the most unhappy, with Dutch, Scandinavian and Swiss children being the happiest.

I love living in Canada . Anyone who tries to convince me that responsible socialism is a bad idea is in for an uphill struggle. Irrational patriotism FTW!

Seriously though, while it's not perfect it honestly seems better to me then the american free-for-all. And you can't accuse us of spending beyond our means - we've been getting surpluses for years now, and our debt is shrinking. You can point out that the oil boom in Alberta might be helping things, though; I'll admit that might be distorting the current picture a bit. But the run of surpluses started before the oil boom, so you can't blame all of it on that.

Controlling for obesity rates plus other non-health rates (i.e. murder), Americans have a much lower mortality rate than the rest of the world (http://gregmankiw.blogspot.com/2007/11/ ... -sick.html). Considering the main reason we care about "overall health" is to have a less chance of dying, I'd say the mortality rate matters more.

I also indicated earlier that some these smaller countries do enjoy a higher GDP per capita than the U.S., but the tradeoff is their overall GDP is much smaller. The assumption that China will catch up in 2015 is assuming they will maintain these high growth rates, which historically counties have not been able to do (Japan enjoyed decades of growth and never caught up to the U.S., although everyone feared they would).

Happiness research is by and large a load of crap (for various reasons, including their methodology), and is probably one of the least useful areas of research if you are going to make any policy decisions on.



See, above, if you control for factors, they are "healthy", but the U.S. has a higher longevity rate. GDP and GDP per capita are probably the best two indicators of quality of life and living standards in a country. Using some math, you can calculate based off GDP growth how long it will take for living standards to double (which right now I think they say it is around 22 years for the U.S. and a bit higher for Europe). With Europe increasing heading towards more socialism-like policies, we see their GDP growth slowing, which over time will make a more noticeable difference in the standard of living between the U.S. and Europe.



I did not say it was inevitable, only that if technological progress increases their productivity, you'd see higher wages. If workers in a field become obsolete, then obviously those workers will not receive higher wages (since their productivity is now zero). They would only transition to burger flipping if they are very much unskilled, and even then would not stay there in the longer run. Also, other jobs are created by that technological progress (to run said technology), which usually requires more skill than the person they replaced.



So, you did not study something, but yet you decide you "know" what caused it and prolonged it. Isn't that being a bit conceited (and not too much different from the Bush supporters I might add, who willingly disagree with experts because "they know better" or it makes them "feel good"/or whatever reason they come up with)? I also notice you seem to naively believe that it was FDR, whose only interest was to save America from the Great Depression, who saved us all. I suppose Gould's quote that, "The most erroneous stories are those we think we know best - and therefore never scrutinize or question." certainly applies here. Since we're on FDR, I suppose I should start there (even though Hoover still had significant contributions. Since the Great Depression is rather vast and you are mentioning the banking problems, I'll try and focus on that. When FDR ran for election, he indicated he supported the gold standard, however, after he got elected he created rumors that he would go off the gold standard prompting a series of bank runs (banking failures were already occurring under Hoover and the Fed's poor monetary policy, so this increased the number of failures and further shrinking the money supply by 9.4%). FDR actually encouraged the banks to fail on purpose so "we" could take them over. In a usual politician type move, he actually blamed the bankers for these problems, which gave him grounds to institute his various "programs". Later, he actually did force the U.S. off the gold standard essentially and forced gold holders to sell their gold to the government well below the world price. Some of these programs which if not immoral are borderline illegal include the AAA, which paid farmers to destroy their crops to keep prices high when many people were starving, the NRA, which essentially encouraged workers to unionize and keep labor costs high probably had fairly devastating results. Before the NRA passed, industrial production was actually on the rise, afterwards, labor costs went up ~ 54% per unit, industrial production index went from 100 to 74 (lower is bad), and unemployment went up by over 500,000. In 1935, the SC overturned the NRA, and industrial production improved as did unemployment for awhile until FDR passed the Wagner act, which again encouraged unionization and unemployment. The SC did not overturn this one because our hero and defender of democracy, FDR threatened to pack the SC with his judges if they opposed him. As we all know, after he "dealt" with the SC, he was able to pretty much pass any legislation without worrying about the constitution (which he did). He knew some of these programs would cause unemployment, yet he instituted them anyway. The Fair Labor Standards act among other things established a national minimum wage as well as overtime. The Labor department estimated 40,000 to 50,000 more people would be unemployed by it nationwide; but around 3 million lost their jobs and unemployed rose from 12% to 18% after it was passed.

I'm sure you would say "Oh, but those poor people need a living wage during this terrible time" or something like that. However you look at it, I don't see how could justify giving some people higher wages (who are usually going to be the ones with better abilities anyway) at the expense of so many others having no jobs and starving (while FDR burns crops). Also, it would have been better to let business adjust on their own when the depression first started, sure it would have been bad for a year or so, but after that it would be over (look towards the post WW1 depression for an example). Instead, the government prolonged it and made a depression into the Great Depression. Ironically, people to this day view the government and FDR as the savior of America during that time, when in fact the opposite is very much true.

Umm... only one of those was an economist used by Speckles, and that was Paul Krugman who is often viewed as becoming a partisan hack.

Umm.... not really. The only positive economic developments that are reported are going to be unexpected. If people expect it, then is it really worth a news article from their view?

That makes no sense. The overall GDP is lower because the population is smaller. Why would it matter if there were 20 million or 40 million or 400 million people in a country --- the issue is what is the average income, is it distributed normally around the mean, etc.

Because, GDP gives you a sense of the size of the economy, which matters (if you live on an Island with 10 other people engaging in various internet activites and your GDP per capita is $100,000, it is not necessarily a good thing because the size of your overall economy is small). Places like Luxembourg do benefit from having high GDP per capita mostly because they aren't a real country, and rely on trade with their neighbors (if everyone cut off trade with Luxembourg, they'd be screwed). Overall GDP would be more indicative of "stuff" available to buy (larger economies tend to have more stuff) as well as the fact that large GDP can be funneled into various projects (strong military, scientific research (and many modern scientific/medical breakthroughs have occurred in countries with higher GDP, not necessarily high GDP per capita), etc) making the populace better off. Also, both can be used for difference types of analysis, India likes to claim their economy's growth has almost caught up with China's, but their population is expanding much faster. However, in the past 5 years, China had an average of 10.2% increase per capita, while India has only 6.8% (and having a high population has other benefits that is not necessarily going to be shown in GDP per capita). Also, if a population is declining it increases GDP per head. Immigrants generally lower GDP per capita, which could indicate some countries are lower in rankings than what they really should be if you control for non-immigrants. What I was saying is you should really use both to get an idea of the wealth of an economy, one is not better than the other so to speak.

Again, you assume that GDP, and its growth, is the sole measurement of a nation's wellbeing and quality of life. Yet there are other factors to be taken into consideration, such as the distribution of wealth. Take mid 19th century Britain as a prime example. Compared to its rivals, it was much richer. However, it also had more heavy industry and worse working conditions overall, than most of continental Europe. The wealth wasn't really trickling down, the old labour party had to demand alot of the basic pensions and national insurance, etc, in place today. The welfare of Britain's workforce drastically increased, and the UK didn't lose out at all.

Haha. Have you looked at Europe these days? Germany, France, Sweden, and Norway, for example, are still competitive nations, and the quality of life is overall better for all. With basic provisions for all, there is a basic standard of life in most of these nations, which is not generally provided in the US. With the European Union, their competitiveness is here to increase. And no, they aren't suffering because of lower GDP. They are smaller in comparison to the US, lest we forget. Though this is also true of Japan, so size isn't really such an issue. Also, alot of the USA's growth is due to its unsustainable consumerism, which is draining the Earth's resources at a rapid rate. People spend spend spend, and borrow borrow borrow(at least until 2007), and now look.