| When FDR was president, the unemployment level dropped somewhat, but spiked by his second term. The Depression persisted through his first two terms, and recovery only started with the advent of war. This in spite of various efforts to counter the effect of the Depression by his Administration. Even now, we do not have it in our power to tweak the economy so efficiently as to guarantee a particular result, it is too complex, and, like weather systems, the longer the predictive horizon, the less accurate the forecast. There are many reasons for this. For example, budget deficits never produced the credit crunch predicted in the '80s and early '90's. The reason is that foreign investors like to hold our bonds, so they were absorbed by a very large pool of investors, with a lot of money. Hardly anyone anticipated that foreign investors would use them as hedges, to balance the more speculative sides of their portfolios. Again, no one anticipated the digital revolution. PC's were still conceived of as useful for home bookkeeping and gaming, and even Bill Gates did not anticipate needing more than a couple of megs of memory to perform all useful functions. The Internet was still something for computer jockeys, and even once it was opened for commercial uses, Gates did not take it seriously until 1995. Anyway, the upshot is that although government policy matters to some extent, for the most part things occurring outside of the control of government will dictate the pace of recovery and so forth. That is why Republicans mainly want to stay out of the way and free the dynamism of the economy........ |
