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Old 07-04-2010, 08:48 AM   #41
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Om a macro level, the FDR programs during the Depression may not have been the catalyst for ending the Depression, but the fact is many who would not have had a job found employment in those programs. I watched a PBS program a few months back about the CCC (or was it the WPA, the LMNOP, ?). They were interviewing some of those workers. Many talked about owning their first pairs of shoes EVER, and having three squares and such. Also, some say that the discipline instilled by these programs provided cannon fodder a ready-made group ready to start fighting in WWII.

Edit to add: Many of the projects resulting from that era are still in use today.
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Old 07-04-2010, 09:06 AM   #42
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My mother's family was dirt poor, and they all believed (and I think correctly so) that the New Deal programs kept them from starving. Her father was crippled with a broken hip, but her brothers all worked in one alphabet-soup program or another, and kept the family alive.

The programs may not have lifted the economy out of recession, but they were beyond value to millions of the poor who couldn't find any other work.
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Old 07-04-2010, 09:19 AM   #43
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My mother's family was dirt poor, and they all believed (and I think correctly so) that the New Deal programs kept them from starving. Her father was crippled with a broken hip, but her brothers all worked in one alphabet-soup program or another, and kept the family alive.
I think almost everyone believes in at least some basic form of a social safety net. Heck, just for starters think about how much worse this last meltdown would have been without trust in FDIC insurance.

The disagreements mostly come in terms of the size and the approach to building it: how big do we build it? And do we design it (and the rest of economic policy) in a way that those who fall into it will be more likely to use it like a trampoline instead of as a hammock?
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Old 07-04-2010, 09:27 AM   #44
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I think almost everyone believes in at least some basic form of a social safety net. Heck, just for starters think about how much worse this last meltdown would have been without trust in FDIC insurance.

The disagreements mostly come in terms of the size and the approach to building it: how big do we build it? And do we design it (and the rest of economic policy) in a way that those who fall into it will be more likely to use it like a trampoline instead of as a hammock?
Oops. That post was just a bit of not-quite-awake nostalgia prompted by the previous post. I wasn't thinking of the context of the thread, and didn't mean to imply anything about social security or present day social safety nets, or lack of them.
If it had a point at all, it was that government programs can do good in ways that economic measures cannot capture.
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Old 07-04-2010, 09:31 AM   #45
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Oops. That post was just a bit of not-quite-awake nostalgia prompted by the previous post. I wasn't thinking of the context of the thread, and didn't mean to imply anything about social security or present day social safety nets, or lack of them.
If it had a point at all, it was that government programs can do good in ways that economic measures cannot capture.
I know. I'm just adding that the main points of discussion aren't *whether* some programs as a safety net are appropriate, but how much and in what ways.

Social Security is a New Deal era "safety net" and is incredibly popular despite its shortcomings. Even those who think it should be dismantled and replaced with something else don't usually wax nostalgic about, say, the 1920s or earlier when the only "safety nets" were family and charity.
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Old 07-04-2010, 09:59 AM   #46
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I'm not thrilled about the deficit increase, but I think I could swallow it more easily if the spending was actually accomplishing something. Maybe the CCC should be resurrected. The fire roads where I camp are in pretty rough shape.

Seriously, though, what about targeting some of the spending? We don't need cash for clunkers, the car industry isn't going to die. If a couple companies fail, others will pick up the slack. Green energy? Fine, if it adds value. But no matter where the energy comes from, our power grids could use some serious upgrading. Same with water. I'm no kind of expert on this stuff, and I don't even play one on the internet. But I suspect there might be less complaint about the expenditures if there was real and demonstrable results from it, including employment with value. We don't need more bureaucrats, and I know we're not going to get out of work IT guys building cabins in the woods. I guess I'm in the position of not knowing what will really work, but having a pretty good idea that what we're doing now isn't it.
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Old 07-04-2010, 11:05 AM   #47
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My mother's family was dirt poor, and they all believed (and I think correctly so) that the New Deal programs kept them from starving. Her father was crippled with a broken hip, but her brothers all worked in one alphabet-soup program or another, and kept the family alive.

The programs may not have lifted the economy out of recession, but they were beyond value to millions of the poor who couldn't find any other work.
Funny that I was talking to my mother the other day about this and how she had to live with her dirt poor grandmother..... and that GM refused to sign over the farm to the state so they COULD receive food... so they did not eat well... lucky for her she did some work at the local high school (where she was a student) and got free food... they also lived off the charity of others... the gvmt did not help her or her GM...

I do think that some of the family did work in the CCC or something like that... IIRC, my dad did some work there... I might have to ask mom tonight when she comes over...
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Old 07-04-2010, 11:08 AM   #48
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I think almost everyone believes in at least some basic form of a social safety net. Heck, just for starters think about how much worse this last meltdown would have been without trust in FDIC insurance.

The disagreements mostly come in terms of the size and the approach to building it: how big do we build it? And do we design it (and the rest of economic policy) in a way that those who fall into it will be more likely to use it like a trampoline instead of as a hammock?
That is the core of many questions today e.g. health ins. - both repubs and dems wanted it - the question was how to do it or the recent extension of unemployment benefits - repubs pay for it out of unspent money, dems debt.
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Old 07-04-2010, 11:11 AM   #49
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I'm not thrilled about the deficit increase, but I think I could swallow it more easily if the spending was actually accomplishing something. Maybe the CCC should be resurrected. The fire roads where I camp are in pretty rough shape.

Seriously, though, what about targeting some of the spending? We don't need cash for clunkers, the car industry isn't going to die. If a couple companies fail, others will pick up the slack. Green energy? Fine, if it adds value. But no matter where the energy comes from, our power grids could use some serious upgrading. Same with water. I'm no kind of expert on this stuff, and I don't even play one on the internet. But I suspect there might be less complaint about the expenditures if there was real and demonstrable results from it, including employment with value. We don't need more bureaucrats, and I know we're not going to get out of work IT guys building cabins in the woods. I guess I'm in the position of not knowing what will really work, but having a pretty good idea that what we're doing now isn't it.

I will be a fly in the ointment.... one of the problems with doing some of what you suggest is unions... in a number of places you can not do the work unless you are a member of the union.... so the feds do not want to rock the boat and have a program that would fix any of the things that need fixing because of the backlash of the unions...
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Old 07-04-2010, 11:19 AM   #50
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Funny that I was talking to my mother the other day about this and how she had to live with her dirt poor grandmother..... and that GM refused to sign over the farm to the state so they COULD receive food... so they did not eat well...
Golly, that sounds horrible. Which New Deal program required signing over the family farm to receive aid? Do you mean state in the broad sense, or a particular state government?
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Old 07-04-2010, 12:39 PM   #51
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When it comes to the example of WWII bringing us out of the Great Depression, that is true but it leads to the myth that government spending is efficient and, as a general principle, will help in an economic crisis. War is quite a different thing from the government running the economy for the various needs of a diverse society. The government (of the US during WWII at least) was indeed efficient at the single goal of winning the war. This does not mean that A) all enormous spending by the government is economically helpful or B) it will be efficient in it's spending on whatever it chooses to direct the funds towards.

As for the New Deal there are two sides to that. You have the post-depression programs which focused on relief and recovery. Those you could argue were needed due to the extraordinary circumstances. But programs like that are wholly different from things like wage and price controls which some (many?) say actually increased the duration and intensity of the depression.
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Old 07-04-2010, 12:45 PM   #52
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As for the New Deal there are two sides to that. You have the post-depression programs which focused on relief and recovery. Those you could argue were needed due to the extraordinary circumstances. But programs like that are wholly different from things like wage and price controls which some (many?) say actually increased the duration and intensity of the depression.
Ironically enough, our present employer-paid medical insurance and pension systems began as unintended results of those wage controls.
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The Emergency Stabilization Act was passed in October 1942, which placed wages and agricultural prices under control. There were immediate wage restrictions, and in order to attract labor, the employers offered a range of such fringe benefits as pensions, medical insurance, paid holidays, and vacations. Because the foregoing were not paid out in cash, they did not violate the wage ceiling. Controlling output proved easier than controlling wages.
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Old 07-04-2010, 01:14 PM   #53
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I think almost everyone believes in at least some basic form of a social safety net.
But today's society would not tolerate the social safety nets of The Great Depression. Can you conceive of the current administration sending masses of people off to do hard manual labor while living in spartan camps for minimum wage?

It ain't gona happen........
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Old 07-04-2010, 01:32 PM   #54
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Social Security is a New Deal era "safety net" and is incredibly popular despite its shortcomings. Even those who think it should be dismantled and replaced with something else don't usually wax nostalgic about, say, the 1920s or earlier when the only "safety nets" were family and charity.
Sorry for the repeat, but I think the best case for SS comes from Bill Bernstein in "God Bless This Ponzi Scheme." Emphasis added.
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Long, long ago, around the turn of the last century, we lived in a world of unfettered Ayn-Randian capitalism, with minimal government interference in daily life and commerce. And no income tax, a gauzy sort of New-Right Valhalla. The only problem was that the reaction to this system's excesses and inequities led to a backlash that inflicted communism and fascism on most of the planet. The US escaped these modern plagues, but just barely. This was largely because our political leadership had the courage and foresight to modestly redistribute income and wealth via antitrust legislation, a progressive income tax, and finally, Social Security. Of course, social and political peace also require a functioning market economy—Bismark’s prototypical welfare system did not save German society from the depredations of the Versailles Treaty, and the social benefits of the communist state did not overcome its crippling economic and political disadvantages. Social Security has not been a lousy investment; it never was an "investment" in the first place. It makes no sense to talk about the "rate of return" of a pass-through wealth redistribution scheme. But it also just may have saved the republic. . . I'm as unhappy as everyone else with the huge crater made by the layers of deductions in my monthly paycheck. But the New Right just doesn't get it; that hole in our take-home is largely responsible for a prolonged period of social peace and prosperity nearly unique in world history.
Mobs can take to the streets and undermine the social structure needed to have a functioning economy. The poor can turn to crime and inflict costs on the economy far higher than the goods they steal. The bits of collectivism and redistribution we have in our laws buys peace--it throws bread to the poor and those who cannot or will not work in order to keep them satisfied enough that they don't take to the streets. To some extent, it buys their passivity so they are less likely to vote, which serves as a counter to the natural impulse of those who have less to have the government take, on their behalf, from those who have more.

Some may view this as a cynical take on this program, but I think it makes some sense.

The balancing act is a tricky one. A small dose of redistribution buys social peace. A larger dose encourages more of the same by the ever-larger population of "net takers," and from this there's no obvious route of return. I think right now, with nearly a 50-50 split between those who pay no income tax and those who pay, we're way closer to the "too much" side than the "not enough" side of the see-saw.
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Old 07-04-2010, 02:03 PM   #55
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Mobs can take to the streets and undermine the social structure needed to have a functioning economy. The poor can turn to crime and inflict costs on the economy far higher than the goods they steal. The bits of collectivism and redistribution we have in our laws buys peace--it throws bread to the poor and those who cannot or will not work in order to keep them satisfied enough that they don't take to the streets. To some extent, it buys their passivity so they are less likely to vote, which serves as a counter to the natural impulse of those who have less to have the government take, on their behalf, from those who have more.

Some may view this as a cynical take on this program, but I think it makes some sense.

The balancing act is a tricky one. A small dose of redistribution buys social peace. A larger dose encourages more of the same by the ever-larger population of "net takers," and from this there's no obvious route of return. I think right now, with nearly a 50-50 split between those who pay no income tax and those who pay, we're way closer to the "too much" side than the "not enough" side of the see-saw.
I certainly agree with that. There's certainly something to be said for "keeping the peasants away from torches and pitchforks" in a metaphorical sense.

We should be able to learn from the French Revolution, and even in a twisted sense the Cuban Revolution (not that the revolt's success means things improved under Castro's boot heel, but the huge wealth differentials and the sheer number of extremely poor relative to a small number of very wealthy are illustrative of the "peasants with pitchforks" idea). Poverty is an unfortunate human condition as it is, but when you allow too many people to become poor and desperate it is almost an invitation to social unrest, particularly when they see a ruling class which is wealthy beyond anyone's wildest dreams.

Just the same, if you make things *too* tough on capital, it doesn't need to revolt -- it just flees to another state, or another country, or goes underground. So I think on balance we want to provide enough to keep the civil order, while making sure we don't encourage the capital base from withdrawing.
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Old 07-04-2010, 02:09 PM   #56
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But today's society would not tolerate the social safety nets of The Great Depression. Can you conceive of the current administration sending masses of people off to do hard manual labor while living in spartan camps for minimum wage?

It ain't gona happen........

The CCC was voluntary.

Civilian Conservation Corps - Wikipedia, the free encyclopedia

Each enrollee volunteered, and upon passing a physical exam and/or a period of conditioning, was required to serve a minimum six month period with the option to serve as many as four periods, or up to two years if employment outside the Corps was not possible


Also, just as Nixon going to China, Regan running up the debt and Clinton changing welfare to workfare, it would take a democrat president with image of helping the poor to start "sending masses of people off to do hard manual labor while living in spartan camps for minimum wage". A republican would be vilified.

- What does it mean if I put 2x the number of laughing things at the end of my post? I never use them - just curious.
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Old 07-04-2010, 02:47 PM   #57
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I think it means you see the humor in your next to the last paragraph.
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Old 07-04-2010, 02:53 PM   #58
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It's fine so long as it ends there. Laughing smiley faces that grow exponentially for an extended period of time... God help us all.
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Old 07-04-2010, 03:34 PM   #59
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The question is - does the Keynesian theory of increasing deficit spending get an economy out of a recession/depression. Again, there is no evidence or examples that it does.
What do you think would have happened in the fall of 2008 if the govt. did nothing, just let things fall where they may as some were advocating? Arguably, they should not have let Bear Stearns fail.

Andrew Ross Sorkin quotes some people as saying the carnage would have continued and would have hit sound companies like GE.


Where would we be if there wasn't a stimulus? As feeble as the economy is now, could it have been even worse if we decided to do the Austrian School experiement?
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Old 07-04-2010, 03:40 PM   #60
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What do you think would have happened in the fall of 2008 if the govt. did nothing, just let things fall where they may as some were advocating? Arguably, they should not have let Bear Stearns fail.
This is an aside, but perhaps you're thinking of Lehman? As I recall, the government engineered a buyout of Bear by JP Morgan in March 2008, and aside from investors and creditors of Bear it wasn't a cataclysmic macroeconomic event. It was Lehman that was allowed to fail, IIRC, and *that* seemed to really destroy 401K retirements start the market tanking in earnest in September 2008.
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