Posted on 08/30/2009 10:28:19 AM PDT by Mobile Vulgus
An economist is saying that President Hoover set the stage to worsen The Great Depression because of his pro-labor union stance.
Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation's gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.Lee E. Ohanian, a UCLA professor of economics, lays the worst of the Depression at the feet of Hoover who, in his opinion, made the recession “three times worse” by keeping industrial wages too high which “sharply depressed employment.”
Ohanian’s study is being published by the peer-reviewed Journal of Economic Theory in December and was also posted at www.nber.org, the site of the National Bureau of Economic Research.
Hoover's approach is unlikely to be considered today as a means of responding to economic crisis, but it does illustrate the perils of ill-conceived government policies in times of economic upheaval and confusion, says Ohanian, a macroeconomist who specializes in economic crises.Of course, President Roosevelt made matter worse by continuing and even expanding many of Hoover’s worst mistakes, many economists are concluding."Hoover's response illustrates the danger of knee-jerk policy reactions in a time of crisis," he said. "Almost always when bad policies are adopted, it's during a period of crisis. The real risk is picking a cure that turns out to be worse than the disease."
Your warnings will fall on deaf ears, Obama is intent on mismanaging a BIG CRISIS!
Oh, they know their history, alright.
Just too arrogant/elitist/psychopathic to think that they can get different results doing the same thing over and over again.
Well yes, but you have to remember that the boom of the 1920s was financed on credit and so when deflation hit it was taking people with them. We can’t say how it would have played out if the deflation had just carried its course with no government intervention at all. However, what we do know is that most of the growth in the 1920s was speculative and wasn’t really there
However, the truth is, given how divided the country is right now if the government is perceived as doing nothing while people are desperate then the country will have high unrest. As it was, the 1930s were full of unrest. What Roosevelt did really did not bring back the economy but what it at least did was make people think “The government is at least doing something so there’s no need for me to join this Communist Party local or support this demagogic politician with a cult of personality around him”
Of course, this was when people had faith in America and in the system. The end of that started with the year of 1968 and continues into the present time. The biggest problem we have now is how many people are going to lose their homes. Yes, many made irresponsible decisions but if you have a critical mass of people who have been foreclosed, have lost their jobs and can’t get a new one and have no hope, that is just the kind of environment that potential demagogues hope to feed upon to service their ambitions
bump
Obama doesn’t care.
My exact take on this as well.
Obama is owned by the unions and will do their bidding no matter how badly it hurts the country.
He is deliberately mismanaging
0bama is purposely destroying the economy, national defense, and is intent upon taking away our freedom. Most of the country is sound asleep though.
Big blunder. Hoover was NOT beholden to UNIONS. He was pro-LABOR in the sense that he held an economic theory, a proto-Keynesianism, that high wages were necessary to keep demand and consumption up.
Result: High unemployment, deeper Depression.
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