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

To: combjelly who wrote (463459)	3/12/2009 11:29:51 PM
From: i-node	3 Recommendations Read Replies (1) \| Respond to of 1578177

But, you are ignoring the fact that people were out of work for other reasons than the cost of labor. The reason why there was a lack of demand had a lot to do with the debt ratio and the concentration of wealth in a small percentage of the population. I'm not ignoring it, as I explained to you last week; I just disagree with the premise. It is a chicken-or-egg problem of the highest order. But what we learned in the 30s, if nothing else, is that you cannot artificially create demand by having the government hire people. Now, there were a contingent of socialist and liberals within the FDR administration -- including important individuals like Francis Perkins, a socialist who was very influential with FDR, and many in the so-called "brain trust" -- who believed that capitalism always tended toward concentrating wealth in the hands of the view. And it is true these people believed that by virtue of an insufficient "distribution" of wealth, the money isn't sufficiently "churned" throughout the economy -- the wealthy few would just sit on the money while the poor, I suppose, starved to death -- with the end result presumably being a lack of demand. But like most of the socialist constructs you seem to adhere to, there is no evidence at all to suggest this is true. While one can see in special cases that if all wealth were concentrated in the hands of 1, or 10, or 100, or 1000 persons, while the others had nothing, it would create the problem you describe. But when the vast majority of people are employed, eating, spending money, living, surviving, whatever, there is no evidence to suggest these special cases are root causes for a depression. In effect, it is little more than a theoretical proposition with no real life application. The argument that demand has dropped because there is too much wealth concentrated in the hands of a few is an utterly absurd proposition, one akin to your notion that dumping a few carloads of salt into puget sound would cause some kind of environmental catastrophe. Now, once the Depression is upon us what gets it the economy started again? This, we simply don't know. What we DO know is that government jobs will NOT make it happen. We tried that throughout the 30s and it didn't help. While many attribute the end of the Depression to the massive spending coincident with WWII, the reality is we don't know for certain whether it was spending or some other aspect of that time frame that ended the Depression. My personal belief is that it was a combination of spending with America having a sense of purpose that it lacked throughout the 30s but that obviously cannot be proven. These things are hard to prove one way or the other, but we can see specifically that some things did work while others didn't in the 30s.

To: combjelly who wrote (463459)	3/13/2009 9:24:31 PM
From: TimF	3 Recommendations Read Replies (1) \| Respond to of 1578177

The cost of labor wasn't the only reason people where out of work but it was significant. Not only did you have the normal problem during downturns where wages are slightly sticky, but real wages need to be lower if your not going to lay a bunch of people off, you also had deflation (making the same nominal wages higher in real terms), and you had government efforts (under both Hoover and FDR) to push labor compensation up, ranging from talking up the idea, to threatening regulation, to actual law and regulation, to indirect methods such as strengthening unions. Without these factors unemployment would have been lower, and then demand would have been higher.