FDR vs JFK

stonebeard wrote: There's a Newsweek special edition out now (went into Barnes and Noble because I had time to kill) about the greatest presidents. I don't know If I can remember them all, but there were ten. Among them: FDR Teddy JFK Lyndon Johnson Ronald Reagan Barack Obama Bill Clinton Woodrow Wilson Maybe it was about "modern" presidents, because hey lopsided. Anyway, I thought of all you guys.

There's a tendency to equate "great" with "accomplished." Those presidents all certainly accomplished a lot (except for Bill Clinton) but are all accomplishments necessarily good? My favorite presidents were all good stewards who didn't do too much to screw things up.


Edited by thellama73 - November 14 2012 at 11:00

HarbouringTheSoul wrote: thellama73 wrote: No not really. Hoover started efforts to "fix" the economy pretty much right from the get go, and FDR expanded them. The recession of 1920, which was extremely deep, snapped back without intervention in a year and a half. I guess I have some reading up to do on that matter. But I'm skeptical about the idea that because one recession snapped back quickly, another would have done the same. If there's anything I've learned about economics, it's that it's a complex and fairly unpredictable field. One recession isn't necessarily like the other.

And I'm skeptical that it wouldn't have done the same. You're operating from the null hypothesis that it is both necessary and possible for government's to correct economic fluctuations. To me, this is a positive statement that needs proof. I have never seen anything to indicate that this is in fact the case.

We have had deep recessions that have snapped back quickly with no government intervention. We have never had a deep recession that snapped back quickly with lots of government intervention. Why do I have to prove my viewpoint? Shouldn't you have to prove yours?

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thellama73 wrote: No one disputes that market failures such as externalities exist. Not even the most die hard Austrian school economist disputes that. We just think that the solution is worse than the original problem.

Why? I understand if you're skeptical about its effectiveness, but the idea that it makes things worse seems to be quite odd to me. The principle seems quite plausible: The government identifies a market failure and allocates it own spending to help fix it. Unless the government fails to do that the correctly, I see no reason why this should make the situation worse.

thellama73 wrote: No not really. Hoover started efforts to "fix" the economy pretty much right from the get go, and FDR expanded them. The recession of 1920, which was extremely deep, snapped back without intervention in a year and a half.

I guess I have some reading up to do on that matter. But I'm skeptical about the idea that because one recession snapped back quickly, another would have done the same. If there's anything I've learned about economics, it's that it's a complex and fairly unpredictable field. One recession isn't necessarily like the other.

thellama73 wrote: The point is that the people who make the decisions about how the money is spent do not get to personally keep what is left over, as you do with your own paycheck, so there is no incentive for them to be careful with it.

Politicians are paid for making these decisions, and the effects that their decisions have on the economy strongly influence whether or not they get re-elected. Isn't that incentive enough to be careful? I find it absurd that a politician would think "Oh well, nothing's at stake for me here so I might as well just do as I please".

thellama73 wrote: Anyway, I am not arguing that every dime taxed or borrowed would be spent wisely elsewhere. I am arguing that, since taxation reduces how much money people have to spend, they will on average spend less than they would in the absence of taxation. And I am arguing that some of the money that goes towards government bonds would go towards other useful things, not all of it. I don't see how anyone could disagree with those points.

I don't. That should be obvious. The question is: What about the money that otherwise wouldn't be efficiently spend? If I'm not mistaken, Keynesian economics argue that in certain situations decisions that make sense on an individual level can hurt the overall economy. The idea then is that the government, because it operates at a macro-economic level, can identify these problems and correct them through purposeful spending. I don't believe that Keynesians would advocate increased government spending in just about any situation. Only when the free market is unable to reach equilibrium on its own. And again, if I'm not mistaken, critics of Keynesian economics disagree that such a situation exists.

thellama73 wrote: This means that an increase in government spending will have a smaller affect on GDP than that equation would lead you to believe, but they never tell you that in economics classes, which I think is terrible.

Well, let's blame awful economics classes then. I vaguely remember reading critical thoughts on both FDR and Keynesian economics in school, but our teacher was utterly unable to comprehend anything about economics beyond the most basic ideas, so this kind of fell by the wayside. As did many other things. Economics was the only class I ever had where I had a better understanding of the subject than my teacher despite knowing virtually nothing.

thellama73 wrote: I just think it's a very meddlesome and inefficient solution to a problem that will correct itself more quickly if left alone.

Wasn't the whole idea of Keynesian economics born out of a situation where the Great Depression stubbornly refused to fix itself, despite what all economists at the time believed?

Epignosis wrote: Let's not forget the underlying assumption that government spending is somehow more effectual or efficient than any other spending.  Briefly, it is not, mainly because it is easy to be a poor steward of other people's money.

Wait a minute. If the government collects a person's money through taxes, it stops being his money and becomes the government's money. The government isn't a steward of anybody else's money. The idea is that sometimes macro-economic decisions can be more effective than micro-economic ones. Thus, the government should collect money that would otherwise be misallocated and spend it where it makes sense. Whether or not that works is up for debate.

thellama73 wrote: Anyway, I am not arguing that every dime taxed or borrowed would be spent wisely elsewhere. I am arguing that, since taxation reduces how much money people have to spend, they will on average spend less than they would in the absence of taxation. And I am arguing that some of the money that goes towards government bonds would go towards other useful things, not all of it. I don't see how anyone could disagree with those points.

Let's not forget the underlying assumption that government spending is somehow more effectual or efficient than any other spending. 

Briefly, it is not, mainly because it is easy to be a poor steward of other people's money.

thellama73 wrote: no president has ever been worse than FDR.

Bush jr?


Edited by Triceratopsoil - November 13 2012 at 03:03

Oh my God, what did I start?

The Doctor wrote:   As for the Constitution, sometimes the needs of the many outweigh the needs of the few to cling to a 150 year old piece of paper (it was only 150 years old in 1939 before anyone says it's older than 150).

thellama73 wrote: Having known quite a few teachers and having been one, I think it is a mistake to assume they know more than the average person simply because they have been given that role (no offense, Rob)

That's not what I'm assuming. That teacher in particular didn't know anything about, well, anything. I dropped the class after a year and have been an uninformed idiot on economic issues ever since. Otherwise I would have been a misinformed idiot.

thellama73 wrote: He made it illegal for private citizens to own gold.

I have no idea why that would be either bad or good. (See how uninformed I am?)

thellama73 wrote: He put price caps on wages, which forced companies to offer perks(like health insurance) to compete for workers, which is part of why the health care market is so screwed up right now and why you lose your insurance when you quit your job.

So you're saying it's a bad thing that companies offered their employees health insurance? I consider that a great improvement. Ultimately it's problematic to tie health insurance to employment (what if you're unemployed?), but it's better than the alternative at that point, which would have been no insurance at all for many people.

thellama73 wrote: He implemented many social welfare programs that I believe are bad for the economy, the culture and people's standards of living.

We have explored our differences on that topic at length elsewhere. Whatever the effects of welfare programs on the economy may be, I consider them necessary because they're the only way of guaranteeing certain things.

thellama73 wrote: He adopted economic policies that I believe extended the Great Depression.

Like?

thellama73 wrote: Let me briefly explain the main problem with Keynesian economics. GDP is defined as equal to consumption, plus investment, plus government spending, plus net exports. GDP = C + I + G + NX Looking at that equation, it is clear that increasing government spending will increase GDP, right? Only if we hold all the other variables constant. The economy is not a laboratory where you can control one variable at a time, though. If you raise G, the money has to come from somewhere. Where does it come from? It can come from three places. 1. The government can simply print money. This just causes prices to rise, however, so in real terms you have not increased GDP, plus you have inflicted the costs of inflation on the country, which is bad.

Sure.

thellama73 wrote: 2. You can get the money from taxpayers. Well then, that is less money they have for consumption or investment, so those variables will go down and, at the very least, you'll get a smaller increase than you anticipated, and at worst administrative costs will actually cause a reduction in GDP.

Not all money in existence is being spent or invested. Especially in the group of high-income individuals there is a lot of money that wouldn't be going anywhere if it weren't for taxes.

thellama73 wrote: 3. You can borrow it by selling government bonds. But the people you sell the bonds to already think America is a good investment, or they wouldn't buy them. If there were no government bonds for sale, they would invest in something else, so in this case the rise in G is met by a fall in either NX or I.

There's a difference between investing in the American government and investing in the American economy. Government bonds are usually considered extremely safe, so I'm sure there are people who wouldn't be investing their money at all if not for government bonds.