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Dateline: New Jersey 2/02/09 11:16 AM

How Government Prolonged the Depression   

Policies that decreased competition in product and labor markets were especially destructive.

 

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that FDR's policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.

Even comparing hours worked at the end of 1930s to those at the beginning of FDR's presidency doesn't paint a picture of recovery. Total hours worked per adult in 1939 remained about 21% below their 1929 level, compared to a decline of 27% in 1933. And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover at all, remaining 25% below its trend level throughout the New Deal, and per-capita nonresidential investment averaged about 60% below trend. The Great Depression clearly continued long after FDR took office.

Why wasn't the Depression followed by a vigorous recovery, like every other cycle? It should have been. The economic fundamentals that drive all expansions were very favorable during the New Deal. Productivity grew very rapidly after 1933, the price level was stable, real interest rates were low, and liquidity was plentiful. We have calculated on the basis of just productivity growth that employment and investment should have been back to normal levels by 1936. Similarly, Nobel Laureate Robert Lucas and Leonard Rapping calculated on the basis of just expansionary Federal Reserve policy that the economy should have been back to normal by 1935.

So what stopped a blockbuster recovery from ever starting? The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net through Social Security and unemployment benefits, and by stabilizing the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.

The most damaging policies were those at the heart of the recovery plan, including The National Industrial Recovery Act (NIRA), which tossed aside the nation's antitrust acts and permitted industries to collusively raise prices provided that they shared their newfound monopoly rents with workers by substantially raising wages well above underlying productivity growth. The NIRA covered over 500 industries, ranging from autos and steel, to ladies hosiery and poultry production. Each industry created a code of "fair competition" which spelled out what producers could and could not do, and which were designed to eliminate "excessive competition" that FDR believed to be the source of the Depression.

These codes distorted the economy by artificially raising wages and prices, restricting output, and reducing productive capacity by placing quotas on industry investment in new plants and equipment. Following government approval of each industry code, industry prices and wages increased substantially, while prices and wages in sectors that weren't covered by the NIRA, such as agriculture, did not. We have calculated that manufacturing wages were as much as 25% above the level that would have prevailed without the New Deal. And while the artificially high wages created by the NIRA benefited the few that were fortunate to have a job in those industries, they significantly depressed production and employment, as the growth in wage costs far exceeded productivity growth.

These policies continued even after the NIRA was declared unconstitutional in 1935. There was no antitrust activity after the NIRA, despite overwhelming FTC evidence of price-fixing and production limits in many industries, and the National Labor Relations Act of 1935 gave unions substantial collective-bargaining power. While not permitted under federal law, the sit-down strike, in which workers were occupied factories and shut down production, was tolerated by governors in a number of states and was used with great success against major employers, including General Motors in 1937.

The downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court's 1937 decision that upheld the constitutionality of the National Labor Relations Act. These wage hikes led to further job loss, particularly in manufacturing. The "recession in a depression" thus was not the result of a reversal of New Deal policies, as argued by some, but rather a deepening of New Deal polices that raised wages even further above their competitive levels, and which further prevented the normal forces of supply and demand from restoring full employment. Our research indicates that New Deal labor and industrial policies prolonged the Depression by seven years.

By the late 1930s, New Deal policies did begin to reverse, which coincided with the beginning of the recovery. In a 1938 speech, FDR acknowledged that the American economy had become a "concealed cartel system like Europe," which led the Justice Department to reinitiate antitrust prosecution. And union bargaining power was significantly reduced, first by the Supreme Court's ruling that the sit-down strike was illegal, and further reduced during World War II by the National War Labor Board (NWLB), in which large union wage settlements were limited by the NWLB to cost-of-living increases. The wartime economic boom reflected not only the enormous resource drain of military spending, but also the erosion of New Deal labor and industrial policies.

By 1947, through a combination of NWLB wage restrictions and rapid productivity growth, we have calculated that the large gap between manufacturing wages and productivity that emerged during the New Deal had nearly been eliminated. And since that time, wages have never approached the severely distorted levels that prevailed under the New Deal, nor has the country suffered from such abysmally low employment.

The main lesson we have learned from the New Deal is that wholesale government intervention can -- and does -- deliver the most unintended of consequences. This was true in the 1930s, when artificially high wages and prices kept us depressed for more than a decade, it was true in the 1970s when price controls were used to combat inflation but just produced shortages. It is true today, when poorly designed regulation produced a banking system that took on too much risk.

President Barack Obama and Congress have a great opportunity to produce reforms that do return Americans to work, and that provide a foundation for sustained long-run economic growth and the opportunity for all Americans to succeed. These reforms should include very specific plans that update banking regulations and address a manufacturing sector in which several large industries -- including autos and steel -- are no longer internationally competitive. Tax reform that broadens rather than narrows the tax base and that increases incentives to work, save and invest is also needed. We must also confront an educational system that fails many of its constituents. A large fiscal stimulus plan that doesn't directly address the specific impediments that our economy faces is unlikely to achieve either the country's short-term or long-term goals.

Mr. Cole is professor of economics at the University of Pennsylvania. Mr. Ohanian is professor of economics and director of the Ettinger Family Program in Macroeconomic Research at UCLA.

Victor David Hanson

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Dateline: New Jersey 2/04/09   3:00 PM

The Obama Implosion

The Obama media meltdown ....

Some of us have been warning that it was not healthy for the  U.S. media to have deified rather than questioned Obama, especially given that they tore apart Bush, ridiculed Palin, and caricatured Hillary. And now we can see the results of their two years of advocacy rather than scrutiny.

We are quite literally after two weeks teetering on an Obama implosion—and with no Dick Morris to bail him out—brought on by messianic delusions of grandeur, hubris, and a strange naivete that soaring rhetoric and a multiracial profile can add requisite cover to good old-fashioned Chicago politicking.

First, there were the sermons on ethics, belied by the appointments of tax dodgers, crass lobbyists, and wheeler-dealers like Richardson  —with the relish of the Blago tapes still to come. (And why does Richardson/Daschle go, but not Geithner?). 

Second, was the "stimulus" (the euphemism for "borrow/print money") that was simply a way to go into debt for a generation to shower Democratic constituencies with cash. 

Then third, there were the inflated lectures on historic foreign policy to be made by the clumsy political novice who trashed his own country and his predecessor in the most ungracious manner overseas to a censored Saudi-run press organ (e.g., Bush is dictatorial, the Saudi king is courageous; Obama can mend bridges that America broke to aggrieved Muslims—apparently Tehran hostages, Rushdie, serial attacks in the 1990s, 9/11, Madrid, London never apparently occurred; and neither did feeding Somalis, saving Kuwait, protesting Chechnya, Bosnia/Kosovo, billions to Egypt, Jordan, the Palestinians, help in two Afghan wars, and on and on).

Fourth, there was the campaign rhetoric of Bush shredding the Constitution—FISA, Guantánamo, the Patriot Act, Iraq, renditions, etc.—followed by "all that for now stays the same" inasmuch as we haven't ben hit in over seven years and can't risk another attack. 

Fifth, Gibbs as press secretary is a Scott McClellan nightmare that won't go away, given his long McClellan-like relationship with Obama (McClellan should have been fired on day hour one on the job). Blaming Fox News for Obama's calamities is McClellan to the core and doesn't work. He already reminds me of Reverend Wright's undoing at the National Press Club—and he will get worse. 

Six, Biden is being Biden. Already, he's ridiculed the chief justice, trashed the former VP, bragged on himself ad nauseam in Bidenesque weird ways, and it's only been two weeks. 

And the result of all this?

At home, Obama is becoming laughable and laying the groundwork for the greatest conservative populist reaction since the Reagan Revolution. 

Abroad, some really creepy people are lining up to test Obama's world view of "Bush did it/but I am the world": The North Koreans are readying their missiles; the Iranians are calling us passive, bragging on nukes and satellites; Russia is declaring missile defense is over... Can you see why the rest of the world wanted him in?

This guy was a nobody outside of South Chicago poiltics until Oprah had him on her couch every week. Then the Democratic press made him and the idiots of our country elected him.

Now, those who voted for him are stuck with him but unfortunately, so are the rest of us.

Hoepfully, it will be proved that he is ineligible to be President since he was born in Mombassa, Kenya and removed from office.

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  Dateline: New Jersey 2/05/09 2:44PM

Hmnnn...the Stimulus Plan

Okay, everyone get ready for the great Obama stimulus plan.

And he thought this up on his own without the help of Jesse Jackass or Al Sharptongue.

Now, unless you are a bank or in the movie industry (which backed The Kenyan to the max), you will be receiving back, your own tax dollars to the tune of a whopping (drumroll, please) $500...ta da!

So, where do you wisely spend this money to jump start our economy?

Wal-Mart? No, all the money will go to China .

Gas? Nope, the Arabs will just get richer.

A computer? They may just as well give us rupees to spend

Get healthy, fruit and vegetables? No, that all comes from Mexico, Honduras and Guatemala

Car? No, the Land of the Rising Sun, Japan will get that, for sure.

And anything that you can buy at a Dollar Store, that breaks before you get to the parking lot, will just go to Taiwan.

Wait...I got it! A tattoo. That is as American as you can get.

Yes, a big bold tattoo that reads:

Obama: America's Mistake!!! February, 2009

Well, after all. The tattoo will last longer than the $500 and the tattoo will prove that you were one of the first to call this guy out, since the press does not have the balls to do it.

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Dateline: New Jersey February 9. 2009 1:38PM

What you will read below is normally not what we post but then again, I get to post whatever I want and this is important medical information but MORE IMPORTANTLY it is afriend of mine who sent this to me.

 

 

PLEASE FORWARD THIS TO EVERYONE IN YOUR E-MAIL LIST. It could save your life or someone you love. 
 
My husband Ernie was in several hospitals 8 months before he passed away. Because I spent 4-5 hours a day in the hospital each day I became aware of many problems that occur during a long hospital stay that the patient and family have little or no control over One of the most serious and deadly is called C-Diff. If you go to the hospital and see a sign on the wall outside the room of a patient and everyone going into the room has a gown on.....there's a good chance that person has C-Diff. Even though  you may not have heard of it....it is very   common, very contagious and very dangerous.  
 
C-Diff is actually caused by the patient getting too much antibiotics. I understand it is an infection in the bowels.  It causes diarrhea like something you probably have never seen.  It is terrible and depletes your body of everything including every ounce of energy. Once you are that weak, it effects all parts of your body, and the patient just gets worse and worse.I was told by the infectious disease doctor that the only cure was more antibiotics. Unbelievable, but that's what he said and did. 
 
So often you see people go into a hospital and the get weaker and weaker, my uneducated guess would be that C-Diff is the culprit even though the family may not be told that.   
 
NOW THIS IS THE REASON FOR THE LETTER......... 
Yesterday I talked to a woman and she told me that her father had C-Diff last July at the age of 87. He was very weak and unable to even sit up. He was treated at Weil Cornell in New York City and is well and active. Their treatment included antibiotic enemas. If you know anyone who has it, I'm sure if you call them they will put you in contact with the correct doctor who would inform your doctor of the complete treatment that he uses.   Obviously not many hospitals are aware of this of this successful treatment. 
   
This information could save someones life. I know it would have been a blessing if I was aware of this when Ernie was suffering with the condition.  Again, please pass it on to everyone in your e-mail list. 
 
Joan Benson  
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Dateline: New Jersey February 10, 2009  9:57PM

Ouch, that is what a stimulus feels like!!!

  The Magic Kenyan's non-tax paying Treasury guy rolled out the stimulus plan today and the market tanked 385 points.

    People are surprised. Why so? Everybody he appoints to a position has a tax problem, so the only thing they know about taxes is how NOT to pay them.

    And the guy running the show is not even eligible to be the Presidemt.

    Oh, that is right he is the guy who is going to change everything.

    Well, he appointed all Washington Clinton insiders, closed Guantanamo, as his first order but did not attend the ball for our Medal of Honor recipients and the market is plummetting.

    Change? Yeah, it is getting worse.

    The only positive is that so far he has shut out Jesse Jackass and Al Sharpton. They have taken a back seat to the Big O.

  She may even have her own room at the White House. Maybe the Lewinsky suite.

     She better be careful because 'ol Arkansas Billy boy may not have turned all his keys in 8 years ago.

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 Dateline: New Jersey 2/13/09  1:34 AM

Received this from a dear friend of nearly 45 years who happens to work for a local government. So, I will not divulge her identity but 45 years! She must have been very young.

 T his is an insult and a kick in the butt to all of us...  


  

Get mad and pass it on - I don't know how, but maybe some good  

will come of this travesty.  

  

If the immigrant is over 65, they can apply for SSI and Medicaid and get    more than a woman on Social Security, who worked from 1944 until 2004.  

She is only getting $791 per month because she was born in 1924 and  

there's a 'catch 22'.  

  

It is interesting that the federal government provides a single refugee  

with a monthly allowance of $1,890.  Each can also obtain an  

additional $580 in social assistance, for a total of $2,470 a month.  

  

This compares to a single pensioner, who after contributing to  

the growth and development of  America for 40 to 50 years, can only  

receive a monthly maximum of $1,012 in old age pension and  

Guaranteed Income Supplement  

  

Maybe our pensioners should apply as refugees!  

  

Consider sending this to all your American friends, so we can all be  

ticked off and maybe get the refugees cut back to $1,012 and the  

pensioners up to $2,470.  Then we can enjoy some of the money we were    forced to submit to the Government over the last 40 or 50 or 60 years.  

  

Please forward to every American to expose what our elected politicians    have been doing over the past 11 years - to the over-taxed American.  

  

    SEND THIS TO EVERY AMERICAN TAXPAYER YOU KNOW  

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Dateline: New Jersey 2/13/09 2:07 PM 

The Middlle Class Bandaid

 The stimulouse bill is signed , The Kenyan went on TV and used the word defining about 88 times in 35 minutes and people are cheering, a temporary fix.

  Well, not everyone bought into it as Wall Street is stilli running in red numbers.

  4.1 millons homes have been foreclosed on already and another 4.84 million will be foreclosed on between today and the end of 2011.

  But bank execs have bonus pay.

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 DATELINE: New Jersey 2/18/09 4:30 PM



What did they know and when did they know it? 

   For those of us old enough, just recall, for a moment, the televised Watergate hearings that led to the resignation of Richard Nixon as President.

   More than likely, this matter would have been presen  ted on TV, some minor findings released and the President slightly embarassed, but continuing in office.

   Except, for one man, Howard Baker of Tennessee, who no matter what was offered by the defense, still finished every presentation, every day (when referring to Nixon):

" What did he know and when did he know it? "

Now, Baker was flat out annoying because that is ALL he ever lent to the hearings and, more annoying to me, because I thought Nixon was terrific.

  But, it was Baker and Baker alone that kept the heat and he is to be roundly applauded for his tenacity of effort.

  Let's fast forward 25 years later and in May 1999, a man reprorted to the Boston office of the Securities and Exchange Commission that Madoff Securities is a fraud.

The matter is " filed ".

  On November 7, 2005 he reports directly to the top SEC people that Bernard Madoff's hedge fund is, in fact, the largest Ponzi scheme in the world and will cause world banks and markets to tumble.

The matter is " re-fiied ".

If you want to read the report to the SEC, here it is:

http://www.usviews.org/MadoffAlarm.pdf

 

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  Dateline: New Jersey 21/9/09 $:13PM

  And...Mr. Obama???

CitiGroup stock fell 13.8% today while Bank of America dropped 14% and the Dow closed at the LOWEST level in 6 years. And we are not done.

 

I don't seem to hear as many people talking about how they voted for him.....hmnnnnn.

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Dateline: New Jersey 2/20/09 7:00 AM

And whether you agree with him or not, he calls it as he sees it and that is more  courage than most people will ever show.

 

Who the "f" is this piece of flotsam, Holder? Cowards?

What army, what war,  what conflict did this pant load

participate in?  Holder should resign and find a  more suitable

career, he is incapable of representing this nation as an

attorney g  eneral.  How dare this hack insult me, my father, my

Uncle.....who all served to  preserve his right to be a moron! 

He's concerned about racial separatism on the weekends

outside of work?

What does this puke bag think I want to  do......listen to rap

musi  c, wear pants off my ass and drink  Colt 45 like his

bretheren?

What is it about  racist blacks who not only have complete

equality, jobs, schooling, housing  and even the white house

expect.........me to just unlock my doors so some

ghetto trash can hang out in my living room and trash the

place?

This pig  Holder thinks that working with his ghetto brothers

isnt enough, but we  should "socialize" with them on our

off time. This is the worst administration in my life time......

and it's only been there about a month.

What a collection of  tax c  heats, bigots, racists, neo marxists

and lying scumbags.

This takes some  effort to beat the Jimmy Carter nightmare and

the Bubba Clinton circus in  being the most inept collection of

hacks, incompetent bullshit artists making  believe they have 

clue about banking, economics, jobs, foreign affairs.

Obama and his crew of Chicago hoodlums keep babbling some

crap about  making jobs?  Where would that be...in China?

The fool can't figure out  the factories and industries that could

possibly hire Americans are gone.

Unless this fool is going to rebuild consumer product

manufacturing first in this nation, remove the illegals who are

bleeding the health and education funds......its  just more crap

talk.

What the "F" jobs is this "activist" going to make.....he

never ran a business, never managed a business, never created

a product.......nothing. You must start with base jobs,

which will hire displaced Americans, who may not  be qualified

to be aero space engineers tomorrow, into consumer level 

production  to bring back the basic manufacturing skills. 

You have to slow down the  overwhelming Chinese imports,

starting with food products, toys, electronics,  consumer

products with incentives to return those productions to the US,

either b  y quality requirements or taxing the crap from China. 

Since they buy little from  us, and need the heavy industrial

products they do buy from us, more than we  need their junk

products, they would hardly mount an effective retaliation.

Illegals  must be deported, they cost us billions in medical and 

education funds, not to  mention the 40 billion they send

"home" tax free.

But I won't hold my breath  for this messiah to wake up and

start working for Americans, maybe I should  start that 1950's

bunker now since he really has a love for the Muslims who

told him over and over.....they want to kill us.

This basically is a stupid man  regardless of his time sitting in

Columbia and Harvard, now in a position way over his ability

to study American history, its context in world affairs

that face the U.S.

This insipid approach to world affairs is downright frightening,

yet a result of over 30 yrs of creating an electorate of idiots

based on urban  public education that blatantly created a 

generation of pacifists, fools and  dolts who lost the analytical

ability to make rational decisions.

Most of the  under 40 white voters who follow this liberal

cunard are fools and lemmings.

These children of hippy parents are genetically challenged to

overcome their  drug infected DNA, and we all must suffer.

Okay, did he leave anything unsaid???

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