If you want more detail that can be covered in this blog explaining how the New Deal made the Great Depression worse, increasing suffering, and extending the pain by years, check out Great Myths of the Great Depression By Lawrence W. Reed. (Cross post from my other blog, Outrun Change, Read more…
Hunger sculpture at FDR Memorial in Washington DC. A monument to the man whose policies added extra years to the Depression yet who rarely gets credit for the unnecessary suffering. Photo courtesy of DollarPhotoClub.com.
An extra seven years.
That is the conclusion two economists published back in 2004: intentional policies from FDR added seven years of suffering for the country.
Yes, that analysis was published back in 2004. Sometimes it takes me a while to catch up on the news.
On 8/10/04 the UCLA Newsroom published FDR’s policies prolonged Depression by seven years, UCLA economists calculate. Update: The analysis is from Professors Harold L. Cole and Lee E. Ohanian
Cause
The cause of extending the Great Depression, according to the economists, was the National Industrial Recovery Act (NIRA) which protected industries from antitrust prosecution in return for adopting collective bargaining agreements. The result was unions drove up wages beyond where the market would have set them, companies were intentionally not prosecuted for collusion, thus companies cooperated in setting prices, which in turn drove up prices to consumers. As a result consumers had much more difficulty affording stuff and therefore actually bought less stuff, which further contracted the economy.
Hunger sculpture at FDR Memorial in Washington DC. How much longer did wide-spread hunger last due to unintended consequences of federal policies? Photo courtesy of DollarPhotoClub.com.
Do we want to hurt poor people or help them?
It is always worth explaining yet again that specific federal policies played a massive role in helping cause the Great Depression, deepening the collapse, and extending the pain.
For a brief explanation, check out Arthur Laffer at Investors Business Daily on July 17: Tax And Tariffs Hikes Crushed 1930s America –
Trade restrictions
I’ve read that President Hoover was just as much an activist, interventionist president as FDR. Popular legend holds that it was FDR that opened up federal spending and started the activism.
Haven’t done my own research until today. Check out page 21 of the 2013 federal budget, found here, to see the info for yourself. That is the 25th page of the PDF. Table 1.1 lists federal receipts, outlays and surplus/deficit by year from 1901 through the 2017 estimate.
Hoover dramatically increased federal spending and started the big deficit splurge well before FDR has a chance to get his New Deal spending plans in front of Congress.
Check out the following data, which is for fiscal years ending June 30. That means the 1929 budget went into effect on 7/1/28, well before the election. Thus, the 1930 budget is the first that we can attribute to Hoover. The 1931 budget is essentially the first that was drafted and approved in light of the developing depression. The 1934 budget is the first that belongs to FDR.
Amounts in millions of dollars:
The Wall Street Journal editorial page has a few more comments on the Supreme Court ruling that when the Department of Agriculture ‘takes’ a portion of the crop from raisin farmers, the farmers have to be paid for the ‘taking’: Raisin Owners in the Sun. Previous discussion of the ruling is here.
Editorial points out the law authorizing the feds to take whatever amount of agricultural crops they want and pay whatever little amount they want was passed in 1937, which is 78 years ago. This case centers on crops that were seized in 2003 and 2004. The later of those two attempted seizures was 11 years ago.
That makes eight decades for the Supreme Court to get around to reading the Constitution and just over a decade for this case to work its way through the legal system.
Did you know raisin growers have to turn over a huge portion of their crop to the federal government? Growers get paid whatever is left over after the feds sell at a discount, giveaway or throw in the trash the reasons they collected.
In one year, a particular farmer got back less than what cost him to raise the raisins. In the following year he got zero. Zip.
Well, the good news is that as of today, that one specific New Deal program comes to an end. At least for raisins.
(cross-post from my other blog)
The New Deal policy of confiscating a portion of raisins from farmers every year in order to drive up prices to consumers has been previously discussed here, here, and here.
The Wall Street Journal provides more background on this foolishness that is being considered in the Supreme Court today: The Incredible Raisin Heist / A property-rights challenge to federal marketing orders hits the Supreme Court.
(Cross-post from my other blog, Outrun Change.)
I’ve been wondering what the Raisin Administrative Committee does with all those raisins after they are surrendered by the farmers. Editorial points out the government may sell the raisins on the open market, ship them overseas, or just give them away.
I have to find someone far brighter than me to explain how selling the raisins or giving them away stabilizes prices. Seems that would drop prices to what would otherwise be equilibrium or even lower.
The WSJ editorial outlines the progress of the case through the federal courts. I promise you this is a paraphrase of the editorial and not the outline of a dystopian political novel I’ve been mulling over.
For reasons that defy logic, common sense, and basic morality, the federal government still has in place a New Deal era policy that raisin farmers must turn over some percentage of their crop to the federal government without compensation.
The purpose of the program is to increase prices to consumers.
No, this isn’t an April Fool’s Day post.
No, I’m not making this up.
George Will points out in his April 17 article, Shriveled grapes, shriveled liberty, the Supreme Court will finally hear oral arguments next Wednesday (4/22) on a case that has been in court for years.
(Cross-post from my other blog, Outrun Change.)