Difference between revisions of "User:Jers/blog/2011/11/27/What Fixed the Great Depression Really"
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This is a common view of the cause and cure of the Great Depression, but it needs a little unpacking. First, the reduction in unemployment from 25% to 15% during FDR’s tenure still leaves it at ludicrously high levels. If FDR prescribed a cure, it was only slightly better than the disease. WW2 did the job, though..</let> | This is a common view of the cause and cure of the Great Depression, but it needs a little unpacking. First, the reduction in unemployment from 25% to 15% during FDR’s tenure still leaves it at ludicrously high levels. If FDR prescribed a cure, it was only slightly better than the disease. WW2 did the job, though..</let> | ||
<let name=data index=TextBelow>[[File: | <let name=data index=TextBelow>[[File:Gdp-1929-2004-semilog.png|500px|left|thumb| | ||
http://www.economics-charts.com/gdp/gdp-1929-2004.html#semilog<br> | http://www.economics-charts.com/gdp/gdp-1929-2004.html#semilog<br> | ||
http://www.infoplease.com/ipa/A0104719.html]]This is a common view of the cause and cure of the Great Depression, but it needs a little unpacking. First, the reduction in unemployment from 25% to 15% during FDR’s tenure stills leaves it at ludicrously high levels. If FDR prescribed a cure, it was only slightly better than the disease. WW2 did the job, though, reducing unemployment drastically, from 14.2% in 1940 to 4.7% in 1942. But living standards declined during the war. Even though GDP rose, personal consumption fell (see graph). No new cars were made, few new houses and appliances, etc. – which just shows how misleading GDP can be as a measure of living standards. Government can, in a pinch, keep people employed, at least for a while. But it cannot make them richer. | http://www.infoplease.com/ipa/A0104719.html]]This is a common view of the cause and cure of the Great Depression, but it needs a little unpacking. First, the reduction in unemployment from 25% to 15% during FDR’s tenure stills leaves it at ludicrously high levels. If FDR prescribed a cure, it was only slightly better than the disease. WW2 did the job, though, reducing unemployment drastically, from 14.2% in 1940 to 4.7% in 1942. But living standards declined during the war. Even though GDP rose, personal consumption fell (see graph). No new cars were made, few new houses and appliances, etc. – which just shows how misleading GDP can be as a measure of living standards. Government can, in a pinch, keep people employed, at least for a while. But it cannot make them richer. | ||
Revision as of 01:17, 17 April 2012
Our Greatest Generation presid … <blockquote>Our Greatest Generation president, FDR, drove unemployment down from 25% to 15% [!] during the ‘30s using this recipe [government spending on infrastructure, etc.]. Some make the point that WW2 ended the Great Depression…That’s true, but only because the war required the government to raise money to build the infrastructure for war...</blockquote> (Frank Hyman, p 1A Raleigh News & Observer, December 2011)This is a common view of the cause and cure of the Great Depression, but it needs a little unpacking. First, the reduction in unemployment from 25% to 15% during FDR’s tenure still leaves it at ludicrously high levels. If FDR prescribed a cure, it was only slightly better than the disease. WW2 did the job, though.han the disease. WW2 did the job, though. +