Hoover and FDR believed the nonsense you're spewing right now, too. Bolstering wages only served to create unemployment.
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Why would they produce lots of stuff and sell it for less than what it costs them to make it? They'll just lay off workers, stop hiring, and produce less. Which is... exactly what's happening right now.
Once again, a failure to understand economics. What you are advocating is the constant depressions of the 19th century. Not the far superior performance of the post WWII era.
Then they go out of business or are forced to change their methods. Good companies make a profit by satisfying consumer desires, and these same companies stick around.
... after inflation from WWII spending returned frozen wages to market-clearing levels.
But the point was that wages and spending power had to go up. And this happened through full employment, even stressed employment markets. Neither Hoover or FDR were willing to push that hard until the war started. So really a WWII analogy is you proving you wrong on all particulars.
Nope. Pushing up wages created the unemployment prior to WWII, and unemployment during WWII was eradicated for all the obvious reasons. Wages were frozen during WWII and during the monetary inflation of war spending. Real wages were, accordingly, driven down during WWII (exactly the opposite of what you're suggesting), and unemployment was back to normal after the war.
No. The point was that the GD persisted for a number of reasons. One was a failure of monetary policy that kept unemployment too high and wages too low. Another was a lack of purchasing power to consumers that discouraged business investment. After the war there was tons of effectual purchasing power and pent up demand. Everyone had money to spend. And inflation had wiped out their debts. In real terms labor/consumers were in far better condition. And because of that, businesses had far more incentive to invest, hire, and produce.
Then, as now, damage to the credit markets that was allowed by laissez faire principles and the resulting recklessness made them excessively restrictive on lending for some years. Then, as now, excessive debts, business and personal, kept spending down when it needed to go up to restore business confidence. Then, as now, high unemployment and low wages kept consumer spending too low to get the economy back to full employment. Then, as now, excessive conservatism of government policy did not go far enough to address and solve the problems.
Yeah, they ARE satisfying consumer desires, as much as consumers can buy. That's why businesses are setting record profits right now. Do you expect them to lower prices so that unemployed, indebted americans can afford to buy stuff? Some sort of public service where they throw away their profits for the good of the nation?
What is your objection to what I said? You asked, and I quote, "[w]hy would they [businesses] produce lots of stuff and sell it for less than what it costs them to make it?" This was a response to my claim that if something doesn't sell, prices will be cut until it does; my claim is logically true since unsold inventory doesn't do producers any good. Of course producers want to make a profit, but that's not really up to them, is it? If I make shoddy kids' toys at a cost of $900 a unit, does that entitle me to sell them for at least $900? No, because no one will buy them. I'd like to make $1000 a unit, but since that's not a possibility, I'll bite the relatively lesser loss.
Just to be clear: are you denying that Hoover and FDR raised wages during the decade prior to WWII? You often revise history when it is convenient, so I'm just checking.
Another fact check here: you realize that there was inflation during WWII, but are you denying that wages were frozen during WWII? Factually, your claim that "n real terms labor/consumers were in far better condition" is wrong, but more to the point, if inflation had "wiped out their debts," then it must have wiped out any saving (which was really all that could be done due to a lack of consumer goods) during the war. So, no, everyone did not have money to spend.
Hmm I think I see the misunderstanding now. I'm not talking about inventory that's already produced. I'm talking about what they have the capacity to produce.
You're right, of course, if something is already produced, they'd lower the price as much as necessary to sell it. But the important issue is how much new stuff (either goods or services) do they want to produce? The reason US businesses don't hire more workers is because the existing workers already produce enough to satisfy the current demand. They might sell a little more if they lowered prices, but they'd make less profit that way. Consumers CAN'T buy more, because almost everyone is broke or unemployed or in debt. Only the government is free to spend more right now, and that's what's necessary to create more jobs. More spending, more income, more people buying stuff, more jobs. Not this nonsense about "business leaders don't have confidence in Obama".
I don't recall if they raised wages or not. But with 20-25% unemployment and high debts raising wages just isn't enough to solve the problem. So while trying to raise wages would be a step in the right direction, it would not be sufficient. And there was a lot of downward pressure on wages with the deflation caused by the depression. That made the depression worse. Certainly there was no way to push up wages enough to compensate for the lost purchasing power of having that many people unemployed. After the war, everyone had a job, so everyone had money to spend. And far fewer debts. These people didn't have savings before the war. The GD wiped out the savings. Just as most people have little to no savings now.
Trying to purge labor until the "markets clear" (which never quite happens in the first place) just causes deflation. And that can only have the effect of making everyone worse off in the long run. In fact it was the deflation of the GD that contributed to it persisting so long. Just as deflation was such a destructive force in American history prior to the GD.
In fact, a bit of looking around shows that real wages in fact went up in WWII, not down as you contend.
So you have to go further to contend that people were worse off after the war.
Your contentions seem in line with discredited neo-classical views that consider slower growth and extreme rollercoaster business cycles somehow better than higher growth and dampened business cycles.
Ajidica
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For anyone paying attention, the shutdown is over. The budget was resolved by delaying payments to schools (again) and utilizing expected revenue from a tobacco settlement (that, because we don't have it yet, we are borrowing for).
So yeah. The entire issue was kicked down the road for someone else to deal with.
So yeah. The entire issue was kicked down the road for someone else to deal with.
Archbob
Ancient CFC Guardian
Post WWII era was a special set of circumstances in that we were the only country in the world able to produce much of anything and everyone else had be devastated by war while the USA(except Pearl Harbor), basically remained untouched. In other words, we had zero competition from the rest of the world. Everyone had to buy from us.
Times have changed, there is plenty of competition from other countries now. Many of the policies then would probably not work today.
That explanation just doesn't fly. In fact, doesn't seem to matter at all. The main difference is that the US government was actively working to keep the economy stable, and actively working to make labor and consumers better off. When that ended, the economy became less stable again.
Basically every other country with significant manufactories had them blow to bits
FriendlyFire
Codex WMDicanious
Strange I thought that people whom worked in industry made good wages, including women whom even with less wages then men.
For a war time economy that is pretty amazing
OF course there was nothing to spend the money on
While that is true, it is also not at all relevant to the discussion at hand. It doesn't at all explain why there was not another Great Depression in the 60s. It doesn't at all explain why the US economy behaved in a qualitatively different, and not just quantitatively different, manner.
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