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Posted on 10/16/2002 9:07:45 PM PDT by Pokey78
Edited on 04/23/2004 12:04:54 AM PDT by Jim Robinson. [history]
LONDON--Americans have been angered by the hostile attitude of some Europeans to U.S. efforts to take the war against terrorism to its countries of origin in the Middle East--a recent example of which was the suggestion, by Nobel jurors, that Jimmy Carter deserved the Peace Prize for his opposition to war with Iraq. They are puzzled by European irrationalism and weakness. They wonder, too, how the Continental economies can sustain double-digit unemployment for years on end. But the causes for all this are deep-rooted. There is no longer a "sick man of Europe." The whole of Europe is sick.
(Excerpt) Read more at opinionjournal.com ...
The former interevened during the great Depression and earlier because they wished to defend our system of democratic capitalism.
How in the world can you compare their motives or actions to anything Hitler did?
Perhaps so, but European science, at least, is alive and well.
The article attempts to argue by analogy with the '30s, blaming the length and depth of the Great Depression on the actions of Hoover and the Roosevelts. I think that's false, for the reasons I've stated.
There you go again. You just can't help yourself, can you? Pure mush for brains. Remember, a mind is a terrible thing to waste.
You were the one who suggested the Gold Standard: they all "meant well."
Best regards
I didn't say all. I said the Roosevelts and Hoover - intervening in the great Depression to try to alleviate suffering and jump-start the economy (rescue it from seemingly unending deflation)...or before that to try to prevent bank failures, save some of the natural world from commercial exploitation, and prevent the concentration of power and wealth. That's very different from what Hitler tried to do.
"Meant well" is synonymous with mush-headed in the current conservative lexicon. That's too bad...because it has a legitimate meaning; Very smart and clear thinking people, strongly motivated to do the right thing, can still make terrible mistakes.
Easily - they bear comparison. I would certainly understand your objection to comparing them with everything Hitler did. FDR was not Hitler (no mustache) but both of them presided over a period of recovery from economic crises. Their means bear studying.
Each is an example of state intervention to rectify economic depression; in Hitler's case it was a depression following a period of hyperinflation and largescale flight of capital. Hitler's priming of the armaments industries came before FDR was obliged by world events to follow, but both injected government money into a moribund manufacturing industry even outside of armaments, created jobs by doing so, and generated satellite manufacturers. It wasn't, properly speaking, a "Keynesian multiplier" because of the disposable nature of the final product; tanks, once made, generate little further wealth. But it did begin a bubble of expansion.
Where did the actual capital come from? Mostly it was simply printed up by the respective governments, hardly a recipe for permanence, and in fact both countries would have faced economic disaster at some point anyway had not the war placed the principal burden on the losers. Postwar U.S. industrial expansion was brisk in those areas which were either necessary for defense technologies (aeronautics, electronics, etc) or easily convertible to civilian applications (consumer goods such as household appliances and automobiles), or both. That part wasn't sleight-of-hand, it was a real increase in the production of wealth. Its surplus primed the pump for a similar process in Europe.
The point is that (IMHO obviously and subject to debate) while governmental intervention primed the pump it did not cause the economic expansion by itself. The war masked this central fact and in a truly dreadful manner created a market (if you can trivialize razing a city as "creating a market") which allowed the real expansion growing room. I suggest that it also masked the inadequacy of government to do anything but prime the pump and encouraged people that government intervention was responsible for more than it really was. There, I think, is the real playing field for debate between liberal and conservative economic policy proponents.
Let me elaborate a little bit on the mindset of the interwar years - which was truly quite different than that of today. Keynesianism looked much better than it does now and people were very, very worried about the future of the American dream. Look at how many sided with Hitler or Stalin. In this context let me ask you to elaborate on your statement
and in fact both countries would have faced economic disaster at some point anyway
and what you would have done had you been in Hoover's or FDR's shoes.
...and in a truly dreadful manner created a market (if you can trivialize razing a city as "creating a market")...
It may be truly dreadful but far too often this is the manner in which markets are created. See my earlier post about the Black Death.
To return to today. Nobody deals well with economic contraction, failure, eviction, starvation, etc. Priming the pump obviously has a down side. Safety nets are a function of prosperity. They disappear when the going gets really tough. The contention that downsides will be short and sharp sans government intervention seems to me about as reliable as the contention that war will be short and victorious. I am not persuaded that anyone - anyone at all - has a real grasp on what makes the economy tick.
TONIGHT! 6pm PDT/9pm EDT Unspun With AnnaZ and Guest Hostess DIOTIMA!
ELECTIONS and OMISSIONS!
Plus, let's hear from FReepers around the country about what you're doing in YOUR local area with the midterm elections!
Call in! 1-868-RadioFR!
I didn't say it was proof. It is merely prima facie evidence that government intervention to "rescue" the banking system had the exact opposite effect to it's stated purpose. Before the government intervened to "fix" things, there was never an economic crisis on the scale of the Great Depression. Within sixteen years of the "fix," the whole system went to hell in a handbasket. Whatever else you can say, that doesn't speak well for the wisdom of government meddling in the economy, does it?
I'm not familiar enough with economic history to give you a proper answer. I know there were all sorts of tremendous bank failures in this country during the 19th century. I know that the '30s on the West coast were hardly the great depression that the rest of the country felt. I know the depression was world-wide...and that in many other countries it was far worse than here.
Maybe the depression of the '30s was so bad due to an accumulation of things. Maybe it was a result of the world-wide integration of the economy. Maybe it was the result of the unrestrained and unregulated boom of the '20s. Maybe it was due to Smoot-Hawley. Maybe to an uninformed and misguided response of the monetary authorities.
All these reasons and many more have been advanced as causes. I can't figure out which ones - if any - are correct.
I'll stick with my original response. I don't know whether things would have been better or worse had the government not intervened. I don't know whether the Europeans should be criticized for their welfare state - or whether it will turn out that we can handle the down-side of capitalism better than they can. I'm hoping that Bush's Iraq strategy will obviate the need to find out.
Unlikely. Highly distributed economic systems provide greater scope for capital reallocation in the event of large-scale malinvestment, while simultaneously buffering random-walk behaviour and seasonal cycles characteristic of subordinate economic sectors. All other things being equal, cyclic behaviour and uncontrolled feedback effects are more pronounced the smaller and more closed the system.
Maybe it was the result of the unrestrained and unregulated boom of the '20s.
What caused that boom? Did it have anything to do with soft money? What made the money "soft"? Did that have anything to do with the Federal Reserve Act and government "reformers" attempt to "fix" the financial system?
Maybe it was due to Smoot-Hawley. Maybe to an uninformed and misguided response of the monetary authorities.
Those would be two concrete examples of the federal government screwing things up, certainly.
We agree 100% there, that's for sure! All of what economists do is only a mental model after all, and I've seen cases made that the economy is what is termed an "unsimulatable system" - a system no model less complex than the system itself can accurately reproduce. I'm beginning to believe it.
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