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

To: steve harris who wrote (344958)	7/31/2007 1:30:29 AM
From: Tenchusatsu	Respond to of 1572191

LOL ...

To: steve harris who wrote (344958)	7/31/2007 1:30:32 PM
From: TimF	Read Replies (1) \| Respond to of 1572191

The New Deal Debunked (again) By Thomas DiLorenzo Posted on 9/27/2004 Macroeconomic model builders have finally realized what Henry Hazlitt and John T. Flynn (among others) knew in the 1930s: FDR's New Deal made the Great Depression longer and deeper. It is a myth that Franklin D. Roosevelt "got us out of the Depression" and "saved capitalism from itself," as generations of Americans have been taught by the state's educational establishment. This realization on the part of macroeconomists comes in the form of an article in the August 2004 Journal of Political Economy entitled "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," by UCLA economists Harold L. Cole and Lee E. Ohanian. This is a big deal, since the JPE is arguably the top academic economics journal in the world. "Real gross domestic product per adult, which was 39 percent below trend at the trough of the Depression in 1933, remained 27 percent below trend in 1939," the authors write. And "Similarly, private hours worked were 27 percent below trend in 1933 and remained 21 percent below trend in 1939." This should be no surprise to anyone who has studied the reality of the Great Depression, for U.S. Census Bureau statistics show that the official unemployment rate was still 17.2 percent in 1939 despite seven years of "economic salvation" at the hands of the Roosevelt administration (the normal, pre-Depression unemployment rate was about 3 percent). Per capita GDP was lower in 1939 than in 1929 ($847 vs. $857), as were personal consumption expenditures ($67.6 billion vs. $78.9 billion), according to Census Bureau data. Net private investment was minus $3.1 billion from 1930–40... ...FDR and his advisors mistakenly believed that the Depression was caused by low prices, therefore, high prices—enforced by threats of violence, coercion and intimidation by the state—would be the "solution." Moreover, it is hardly a secret that if less production takes place, fewer workers will be needed by employers and unemployment will subsequently be higher. Thus, the First New Deal could not possibly have been anything but a gigantic unemployment-producing scheme according to standard neoclassical economic theory. FDR's tripling of taxes, his regulation of business, and his relentless anti-business propaganda also contributed to a worsening of the Great Depression, but his labor policies were probably the most harmful to the employment prospects of American workers. In this regard the most disappointing thing about the Cole-Ohanian article is that they do not even cite the pioneering work of Richard Vedder and Lowell Gallaway—Out of Work: Unemployment and Government in Twentieth Century America—first published in 1993. Indeed, it is somewhat scandalous that they do not cite this well-known work while making essentially the same arguments that Vedder and Gallaway do. They recite many of the same facts about labor policy: The NIRA codes established minimum wages for less-skilled and higher-skilled workers alike; employers were told that they must bargain collectively with unions, which were given myriad legislated advantages in the bargaining process, all enforced by the newly-created National Labor Relations Board. All of these policies made labor more expensive. Consequently, as the economic law of demand informs us, the inevitable result had to be less employment. Strike activity doubled from 14 million strike days in 1936 to 28 million a year later, and wages rose by about 15 percent in 1937 alone. The union/nonunion wage differential increased from 5 percent in 1933 to 23 percent by 1940. Newly-enacted Social Security payroll and unemployment insurance taxes made employment even more expensive. What all of this means is that during a period of weak or declining derived demand for labor, government policy pushed up the price of labor very significantly, causing employers to purchase less and less of it. Vedder and Gallaway conducted an econometric evaluation of these labor cost-increasing policies and concluded that most of the abnormal unemployment of the 1930s would have been avoided were it not for these policies. They estimated that by 1940 the unemployment rate was eight percentage points higher than it would have been without the legislation-induced growth of unionism and government-mandated employment costs. They conclude that "The Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs" (p. 141). Cole and Ohanian reach the exact same conclusions, but express them in the somewhat convoluted language of the "top economic journals": "New Deal labor and industrial policies did not lift the economy out of the Depression . . . . Instead, the joint policies of increasing labor's bargaining power and linking collusion with paying high wages prevented a normal recovery by creating rents and an inefficient insider-outsider friction that raised wages significantly and restricted employment . . . . the abandonment of these policies coincided with the strong economic recovery of the 1940s." This last conclusion—that the abandonment of FDR's policies "coincided" with the recovery of the 1940s is very well documented by another author who is also ignored by Cole and Ohanian, Robert Higgs. In "Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War" (Independent Review, Spring 1997), Higgs showed that it was the relative neutering of New Deal policies, along with a reduction (in absolute dollars) of the federal budget from $98.4 billion in 1945 to $33 billion in 1948, that brought forth the economic recovery. Private-sector production increased by almost one-third in 1946 alone, as private capital investment increased for the first time in eighteen years... mises.org

To: steve harris who wrote (344958)	8/1/2007 12:14:23 AM
From: tejek	Read Replies (1) \| Respond to of 1572191

Iraq role to last years, cost more -US officials Tue Jul 31, 2007 9:40PM EDT By Susan Cornwell and Richard Cowan WASHINGTON, July 31 (Reuters) - President George W. Bush's nominee to be top military adviser said on Tuesday the United States would be in Iraq for "years not months" and a Pentagon official said the war was costing even more than expected. Navy Adm. Michael Mullen, picked as chairman of the Joint Chiefs of Staff, warned U.S. lawmakers unhappy with the conflict against seeking a rapid pullout from Iraq, saying it could turn the country into a "caldron." While prudence dictated planning for an eventual pullout, Mullen said that under one scenario it could take three to four years just to halve the 160,000 U.S. troops now in Iraq. Many Democrats want to pull out combat troops by April. "I do think we will be there for years, not months," Mullen told the Senate Armed Services Committee at his confirmation hearing. "But I don't see it (Iraq) as a permanent -- you know, on a permanent base at this point." Mullen, 60, now chief of naval operations, was nominated last month after the Bush administration decided against seeking a second two-year term in the job for Marine Gen. Peter Pace. Defense Secretary Robert Gates concluded Pace's role in the unpopular Iraq war would have led to contentious hearings to reconfirm him. Mullen appeared headed for approval. In testimony to the House Budget Committee, Deputy Defense Secretary Gordon England said next year's war tab would exceed the administration's existing request for $141.7 billion. That's on top of over $600 billion in war checks already written for Iraq and Afghanistan, with 70 percent for Iraq. Besides needing more money to build and deliver mine-resistant vehicles to repel insurgent attacks, England said Bush's request did not include next year's costs for the extra 30,000 U.S. troops sent into combat this year. Bush later on Tuesday sent House Speaker Nancy Pelosi a letter asking for an additional $5.3 billion for the armored vehicles, bringing the current total request to at least $147 billion. Continued... Page 1 \| 2 \| 3 Next Page reuters.com