QUOTE(clarkma5 @ Oct 8 2008, 11:01 PM)
I'm not a fan of the bail-out necessarily, if you're trying to construe that I am from my aforementioned liberal leanings. At this point I see action and inaction as pretty equally useless. But I don't think it's fair to say regulating vs. de-regulating...that's way too simplified. What is regulated, how it's regulated, etc. are all very important questions to ask. It seems to me that the short-sighted partial deregulation of a certain segment of the economy has caused massive trouble, which is the same thing that could be said of the California electrical deregulation back in the late '90s. At the risk of being way too simple again, it's the deregulation of certain niches in an otherwise regulated market that causes the problems here, not just "deregulation" or "over-regulation". Consistency in approach is more important in my (uneducated-on-this-topic) mind than the actual approach chosen. But I digress.
Regarding the California mess, I would purport that partial-deregulation led to that issue more than deregulation itself. When presented with a matter of deregulation, deregulating part of it (in this case, the retail end, whilst leaving the wholesalers caps on, if my memory serves me correctly) allowed for a bottleneck in the revenue stream, creating catastrophic failures that were passed on to the consumers. It is this sort of mess that turns people off to deregulation, when the regulations that were still in place on the industry caused a meltdown in the first place. I'm digressing as well, but being an accountant and having to study Enron in great detail has caused this very issue to be at the core of many a class discussion. If you're looking for a more in-depth take on the case presented here, I might suggest :
http://yalepress.yale.edu/yupbooks/excerpt...inablecosts.pdfIt's got a pretty good take on the whole deregulation issue. And when it comes to deregulation, there are very few circumstances where government run programs have ever outperformed completely private programs. And it becomes very dangerous when the two meet: e.g. Freddy Mac and Fannie Mae.
Again, I digress as well.
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Let's be fair, Warren G. Harding's decision to do nothing (which is a viable option, I'm not judging nothing as equivalent to bad) still prefaced the 1929 stock market crash, so it's not like his approach "worked" and FDR's didn't. There was still a major crash within a decade, which would indicate that the system is inherently unstable and, by choosing to do nothing, Harding avoided the problems of making it worse but also failed to make it any better. I'd say it's much harder to judge FDR's actions because, first of all, economic policies take more than a few years to implement themselves ('29 to '33, for instance) and make themselves known in the market. After '33, the US economy improved, but where it improved the most was when WW2 was picking up. Of course we all know the prosperity that went on for the next couple decades after that. So the question is, did FDR damage the system in the long term, improve the system in the long term, or what? Or did FDR's changes get largely overshadowed by a change in the US culture and the way of doing business in the world that makes the entire debate rather pointless?
You force my hand into a history lesson about the year 1929. If you remember your U.S. history correctly, Harding was no longer in office. It was our good friend Hoover, and his farmer friends were the ones that got him elected. The difficult part about a capitalist system is that specialization and trade means some businesses are no longer viable in parts of the country where it was previously. Farmers felt this effect, and, as a result, sought tariffs to help "level the playing field." Enter the Smoot-Hawley tariff act - an act that had a grave effect on our economy. Some economists, even a large contingent of those at the time, most certainly felt like this was one of the major contributing factors as to why the depression stuck around as long as it did because it heralded in a new age of government telling its people how the market should run. Hoover himself denounced laissez-faire in a book he wrote in 1922 and praised government interference. Over the next 4 years (he wasn't re-elected) the economy plunged down to a point where it hadn't been previously or we have seen since. So I can fairly say that government intervention caused a very healthy part of the depression whereas just one decade and one administration previously, the decision to keep the government out saved our country from serious suffering. And, with the "Roaring 20's" coming to such an abrupt end as government stepped in and said it knew how to do things better, I can also say that it wasn't instability in the free market system that acted as some sort of catalyst to the crisis.
I dislike FDR for many of his policies, including Social Security and his decision to go off of the gold standard. FDR's policies have created a society dependent on welfare for the elderly while punishing those who save through their lives. The gold standard deviation has led to this very point in time experiencing massive inflation of the dollar simply because the dollar's basis relies entirely on what the government's monetary needs are (keep in mind there are 3 ways for a government to raise money: tax, borrow, and print - and if you know your German history well, you can figure just how well that third one works out.) FDR's policies led us away from a system where we could rely on ourselves and our market, and now I see a society that is so different of that of my grandparent's and their contemporaries in terms of personal responsibility. So, without a doubt, at least through my worldview, I see FDR having caused some serious long term damage.
The benefits that came from WWII resulted from the confidence of the American people and their desire to be prosperous. Also, the fact that the known industrialized world had been bombed into damnation and we were the only one left untouched in the market really contributed to our success for the next couple of decades. Government and our going to war itself did not have a positive economic impact, as the money spent on going to war could have been spent elsewhere in the economy. Disclaimer: I'm a libertarian, and, as a point of economic policy, it is best to avoid war at all cost due to the fact that money being spent on war cannot be spent elsewhere.
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I know this is rambling, but this is my objective with it: avoid confirmation bias when reviewing history and also be aware that there have been major changes in the way business and money works here and now as opposed to even a couple generations ago. The lessons of the past may not be appropriate to apply to where we are right now.
P.S. I have no idea how best to begin approaching this entire situation.
The cause and effect of economic past are almost the exact same as the cause and effect of economic present, and may with a high confidence be projected into economic future. Economic interference by government has traditionally caused problems and will continue to do so as time progresses. The entire concept behind economic interference by ANY government entity is this: a small group of people possesses the knowledge to understand how an entire market works and how it could work better. In essence, a small group of people knows not only how to make the decisions of a much larger group of people, but what decisions they should make on a micro-economic scale to better themselves. This simply isn't the case.
I see that you're passionate about this, but I'm positive that my understanding of this situation was not caused by confirmation bias as I've had a chance over the course of my life to examine and re-examine these facts both through the Keynesian theory and again under the Austrian School theory. Hell, I lived for a good part of my life with the understanding that the government's involvement in the 1920's and 1930's and through WWII was what got us out. When presented with the full picture, and not one that I've been taught to believe at school, I come to a different understanding. I would encourage you to undertake the same process in your analysis.
