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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (190783)	6/22/2004 1:11:00 PM
From: TimF	Respond to of 1576238

I would suggest that the economy is more regulated now with much less ups and downs in econ. performance than occurred all thru the 19th century right up to the 1930s. That gov't has been responsible for making private industry more responsible. 1 - Laws and government regulations can mess things up if they are extremely stupid government regulation, even if the overall level of regulation is not high. The level of regulation in 1930 was by most measures less, even much less then the current level, but the regulators or law makers generally haven't been as economically ignorant and foolish as they where in the 30s. 2 - The regulation in 1903 was much less then today but later in the depression a lot of the regulation was more severe then today. People where sent to jail for offering discounts. Life stock and grains where destroyed, not in response to government incentives to destroy it but in response to government orders. Fortunately a lot of the worst regulations where eventually tossed out by the Supreme Court or things could have been even worse. 3 - Regulation isn't the only type of government action. While regulation probably did make the depression worse and make it last longer I don't think new types of regulation caused the depression. Part of the cause was the normal business cycle downturn which was exaggerated by a bubble in the 20s. We had a bubble in the stock market pop in recent years and didn't get a depression. The difference is the Bush cut taxes while Hoover and then FDR greatly raised taxes and raised tariffs resulting in a trade war. Also the fed cut interest rates during our recession while the Fed had a tight money policy as the economy turned south at the beginning of the depression. The bubble wasn't caused by under or over regulation either in the 20s or in the 90s. Yes private industry has a lot to do with the creation of a bubble but having such a bubble is not unusual and doesn't have to result in a disaster. The bubbles can be exaggerated by fiscal or monetary policies but the negative fallout can be contained if fiscal and monetary policies don't kick the economy when its down. 90+% tax rates and tight money when the economy was already in horrible shape are great ways to deepen and prolong an economic downturn. Almost all of the major branches of economic theory would agree on that (something which isn't too common except for the simplest things), and the depression gives us a real world example of what the theories would predict Tim