A short (yet long enough to be plenty depressing) history of the New Deal and why government policies extended the Great Depression

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

Hunger sculpture at FDR Memorial in Washington DC. A monument to the man whose intentional policies added extra years to the Depression yet who rarely gets credit for the unnecessary suffering. Photo courtesy of DollarPhotoClub.com

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, on August 18.)

At a mere 47 pages, about 40 pages without the voluminous footnotes, you can get a survey of the destruction caused by FDR and the self-defined wizards who thought they could control all the details of the economy.

Here is a very short summary of the government-extended disaster. In sharp contrast to his reputation as a laid-back, do-nothing, free-marketeer, President Herbert Hoover was quite the activist. He tried all the same tricks FDR tried, although FDR was even more aggressive.

Both Hoover and FDR took a bad situation and made it far worse.

Compressing much of the story into one paragraph, here is a key explanation of the fiasco from the book:

The genesis of the Great Depression lay in the irresponsible monetary and fiscal policies of the U.S. government in the late 1920s and early 1930s. These policies included a litany of political missteps: central bank mismanagement, trade-crushing tariffs, incentive-sapping taxes, mind-numbing controls on production and competition, senseless destruction of crops and cattle, and coercive labor laws, to recount just a few. It was not the free-market that produced 12 years of agony; rather, it was political bungling on a grand scale.

Like I said, a short primer on the disaster which extended the Great Depression through the end of WWII.

Advertisements

Intentional federal policies extended Great Depression by seven years

Hunger sculpture at FRR Memorial in Washington DC. How much earlier could hunger have ended with different policies? Photo courtesy of DollarPhotoClub.com.

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.

(more…)

More on who owns the fruit of your labors – raisin edition

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.

(more…)

About those raisins – one part of New Deal destruction reversed by Supreme Court after about eight decades

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)

(more…)

More on stealing raisins. Oops. I meant to say, more on implementing the New Deal.

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.

(more…)

Supreme Court to hear arguments whether feds can continue to take raisins without compensation

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.)

(more…)

What ended the Great Depression? #2

It is common belief that the massive federal spending and even more massive federal rules and regulations during the New Deal ended the Great Depression.

There are many books and articles refuting that falsehood.

For a brief explanation, check out Stephen Moore’s article, The enduring myth of FDR and the New Deal / Rather than end the Great Depression, his policies prolonged it.

(more…)

What ended the Great Depression? #1

It was neither massive federal spending during the Depression nor even more massive federal spending during World War II that ended the Great Depression.

That’s what I was taught in school and what most people believe today.

Stephen Moore explains the WWII part of the falsehood in his article How did the Gret Depression actually run its course?

FDR and his whiz kids were totally convinced that the economy would completely collapse after the end of the war. They planned but fortunately did not implement a New Deal II. Doing so would have strangled the economy, perhaps for yet another decade.

Here is the conclusion to the article: (more…)

Quick recap of damage from the New Deal

Lack of jobs for a decade and a half in the Great Depression. What could have slowed the economic recovery that started to appear a few times?

Amity Schlaes provides a quick summary in her Forbes column, Roosevelts versus Plutocrats, in which she also describes the slant and bias in the new PBS series on the Roosevelts.

After the turn of the century, Teddy Roosevelt started his war on big business by going after railroads and coal. The railroad industry was already weak and the litigation toppled a tottering industry. The far less regulated trucking industry made sure rails never recovered.

(more…)

Appeals court says devastation from New Deal is still okay; We lost a hero who also suffered at the hands of the New Deal

Did you know the enlightened wizards of the New Deal worked out a plan that raisin producers had to turn over a percentage of their crop to the government and not get paid for the raisins?

Yes, that was actually a plan developed back in the ‘30s.

Did you know that plan is still in place? Eighty years later?

(Cross posted from my other blog, Outrun Change.)

I discussed that a year ago – Economic destruction from the New Deal just keeps rolling on.

The lawsuit I mentioned back then involved farmers who were told to give 47% of their ’02 crop and 30% of their ’03 crop to the government without compensation.  The case went to the Supreme Court, which ruled the farmers did actually have standing to sue the government. The case went to the 9th Circuit Court for consideration of their claims.

Guess what?

(more…)

Q: Did the New Deal end or extend the Great Depression?

A:  Extend.

That’s the conclusion of Dr. Lee Ohanian, Professor of Economics at UCLA, as explained in his video Did FRD End or Extend the Depression?

 

The primary reason cited by the Professor is artificial increases in prices and wages driven by federal policy, specifically the National Industrial Recovery Act. (more…)

Economic destruction from the New Deal just keeps rolling on

Did you know that in the 1930s raisin producers had to give a portion of their harvest to the government with the feds deciding what portion of the crop every producer had to turn over and what price they would get?

Neither did I.

Did you know that program is still in place today, 80 some odd years later?

Neither did I.

Did you know that in the 2002-2003 season (more…)