Why no pledge to avoid layoffs?
dol.gov
New Deal promise. In 1933, under the "New Deal" program, Roosevelt's advisers developed a National Industrial Recovery Act (NRA).4 The act suspended antitrust laws so that industries could enforce fair-trade codes resulting in less competition and higher wages. On signing the bill, the President stated: "History will probably record the National Industrial Recovery Act as the most important and far-reaching legislation ever enacted by the American Congress." The law was popular, and one family in Darby, Penn., christened a newborn daughter Nira to honor it. 5
Minimum wage, maximum work week - no more free markets.
I travel to mexico in 2004 - I see many children working in the grocery stores - 8 and 9 years old.
The Supreme Court had been one of the major obstacles to wage-hour and child-labor laws. Among notable cases is the 1918 case of Hammer v. Dagenhart in which the Court by one vote held unconstitutional a Federal child-labor law. Similarly in Adkins v. Children's Hospital in 1923, the Court by a narrow margin voided the District of Columbia law that set minimum wages for women. During the 1930's, the Court's action on social legislation was even more devastating.3
I am very curious your take on this Mish - walmart major employer and funny things going on there.
At walmart the other night - 1 check out aisle open - about 2am - queue of people backed up about 30 deep. I ask the girl what is going on - she says they have cut back to 1 checkout aisle open on the graveyard shift - I said why - you have customers backing up and they are getting pissed - she says I don't know - but I am gonna quit if they don't do something - I said "quit and work where?" She said yah I guess I won't quit. She said they were cutting thier hours back to 10 or 12 hour work week shifts - that some of her friends would have to start selling thier sex to make enough food to feed baby because that was not enough hours. Said she was cut back from 32 to 20 hours a week!!
Now walmart getting people used to this RFID self checkout stuff thats coming - if you raise wages - you cut PEOPLE right? At least bernanke and rothbard thought so. I was working with district manager of KFC back in 89 - he said if he could automate that chicken house and cut the LABOR - he would have great profit - he was very excited about robot type technology and eliminate all but 1 worker to oversee automatic machines.
timesizing.com
1932, Hoover avoids mass layoffs by cutting the federal government from 44 to a 40-hour week and, calling shorter hours the fastest and most efficient way to "create" jobs, builds momentum for a maverick Democrat's Senate passage of a 30-hour week on April 6, 1933 (the Black Bill). Progress by Democrats Cleveland, 1888, and Wilson, 1916, is then reversed by FDR's tragic flipflop: he blocks the 30-hour workweek in the House in a pressured and panicked switch from sharework to makework (the New Deal), in 1935 admitting his mistake, flipflopping again, and using a 30-hour workweek (four 6-hour shifts instead of three 8-hour shifts) in the TVA program. With too little too late, he cuts the nation's workweek to 44 hours in 1938, 42 hours in 1939 and 40 hours in 1940 (implemented each year on Oct. 24, we believe) and still achieves a roughly two-percent drop in the unemployment rate (UE) each year (from 1938's UE of 19.0% to 17.2% in '39, 14.6% in '40, and 9.9% in '41 amplified by the rampup to war), yielding the same 1-hour-cut ::1%-UE-drop corelation that France achieved between 1997 (UE 12.6%) and 2001 (8.6%) when they cut from 39 to 35 hours a week.
The 38-hour week that many people are expecting in 1941 never comes. The Democrats cite war and later Cold War. So the workweek is stuck at its 1940 level, despite all past U.S. history and all future technology. No further free-time benefits of wave after wave of efficient technological innovation will be experienced while the workweek remains frozen. All free-time benefits will be converted into economy-stifling unemployment and under-employment, not to mention welfare (2m families), disability (5.7m persons), homelessness (940k youth alone), incarceration (2.2m), and suicide (30,000 yearly). And the management-controlled media and economics profession succeed in almost completely obliterating from the historical record the powerful and reliable 'corelation' of workweek cuts and unemployment drops, and even in spinning shorter hours as "been tried and failed" (no specifics) - e.g., MIT's Lester Thurow at a Boston University public lecture in Morse Auditorium, c.1981. ....Refs: Wilbur & Hyde, The Hoover Policies (Scribner's: 1937) p.135; Roediger & Foner, Our Own Time (Verso: 1989), p.252
Bernanke and Rothbard both seem to have done extensive analysis on wage floors - check this out: European unemployment and the great depression
gmu.edu
Rothbard's main contribution: debunking "the myth of laissez-faire." Herbert Hoover was the most extreme interventionist to occupy the White House prior to FDR. A few interesting pieces of evidence.
1. FDR supported Hoover's presidential bid in 1920.
2. Hoover unsuccessfully pushed for federal anti-depression policy in 1920-21.
3. Hoover repeatedly indicated that he believed that low wages cause unemployment, apparently on the basis of nonsensical "buy-back-the-product"-type arguments.
4. Hoover quote, 1932 presidential campaign (p.127)
C. What were Hoover's actual anti-depression policies like?
1. Major conferences held, in which Hoover elicited pledges from major industrial leaders not to cut nominal wages. (Why no pledge to avoid lay-offs?)
2. Federal spending increases from $3.3 billion in 1929 to $4.6 billion in 1932 in nominal terms. (3.1% S/GDP to 7.9% S/GDP). Large increase in public works spending.
3. Rothbard actually attacks the "inflationist" policies of Hoover. In terms of the monetary base, this is not wrong.
4. Reconstruction Finance Corporation created, partly in order to encourage sound banks to help shaky ones. $2.3 billion in loans in 1932.
5. Federal Farm Board to cartelize agriculture actually pushed through by Hoover in early 1929 before the depression even began: $500 million revolving fund for price support. Government purchases try to hold up agricultural prices once depression hits, but these fail due to lack of compulsory quantity limits.
6. Why does anyone believe that Hoover followed laissez-faire policies then? Based almost entirely on Hoover's opposition to the dole (note that evidence of negative consequences on British economy were already evident), and the fact that FDR took the policies considerably further. |
