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I don't particularly believe in Hayek or von Mises or anyone else.

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As I said early in the thread, "If you look even shallowly into analysis of the Great Depression, you'll find out that pretty much every economist has his pet theory for the causes and solutions, and that they differ in many ways. Which one would you base your reaction on?"

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Originally posted by kpo:
Very good article:

http://www.businessinsider.com/conservatives-have-no-idea-what-to-do-a
bout-recessions-2013-12#ixzz2ngv5fJ4P

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To be clear, conservatives absolutely do have an economic policy agenda. They favor lower taxes, less regulation, government spending cuts, more domestic energy production, school choice, free trade, and low inflation. They often cite these policies as ones that might alleviate recession and speed recovery. They favor these policies now, they favored them in 2008, and they favored them in 2004.

That is, conservatives favor the same set of economic policies when the economy is weak and when it is strong; when unemployment is high and when it is low; when few homeowners are facing foreclosure and when many are. The implication is that conservatives believe there is nothing in particular the government should do about economic cycles.

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Well conservatives, is it true?

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Originally posted by KANEMAN:
Now, take a look at the states run by conservatives and compare them to liberal run states in respect to getting out of recession and good fiscal standing. Notice anything? Man, you're still unsmart.

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Originally posted by kpo:

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Use the definitions stated in the article you posted

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You mean this one?

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For the last five years, liberals have promoted three main economic policies to shorten or ameliorate the Great Recession and speed the recovery from it.
Deficit-financed spending to compensate for demand gaps in the private sector.
Easy monetary policy to raise inflation and support demand.
Mortgage modifications to reduce foreclosures and support consumption.

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To be clear, conservatives absolutely do have an economic policy agenda. They favor lower taxes, less regulation, government spending cuts, more domestic energy production, school choice, free trade, and low inflation. They often cite these policies as ones that might alleviate recession and speed recovery. They favor these policies now, they favored them in 2008, and they favored them in 2004.

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Be aware that if you claim that conservatives used stimulus, that pretty much invalidates the claim of the article you cited, and the title of this thread.

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That's bad logic. It suggests that conservative policies can only be implemented by conservatives, and liberal policies implemented only by liberals. Obama is a liberal and his ARRA stimulus was approximately 1/3 tax cuts. So are tax cuts a liberal policy now?

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But per the article, conservatives have no policy to deal with recession.

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I mean the ones in the article.

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To be clear, conservatives absolutely do have an economic policy agenda...

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Interesting that your article didn't mention the tax cuts in the ARRA stimulus.

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Hey genius, "they believed those things in 2004 and 2008". Were they in a position of power on a federal level to act? No. Kaneman 1 KPO 0

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Now, take a look at the states run by conservatives and compare them to liberal run states in respect to getting out of recession and good fiscal standing.

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Originally posted by kpo:

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I mean the ones in the article.

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To be clear, conservatives absolutely do have an economic policy agenda...

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But you asked specifically about conservative responses to recession - not general conservative economic policy.

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Originally posted by SIGNYM:
Per you, conservatives have a "passive policy". We're taking your seriously. You should be grateful.

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Ready for a shocker?

A Washington Post-ABC poll from December 19, 2013 shows that – get this – a staggering 79% of people still believe we’re in a recession.

So either they didn’t get the memo from the NBER that the recession officially ended in June 2009, or they’re clueless, right?

Maybe not…

This chart of corporate profits versus median household incomes reveals two shockingly different economic realities.

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http://www.wallstreetdaily.com/2014/01/10/recession/


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Originally posted by Geezer:
Per the article, conservatives believe their general economic policy of "...lower taxes, less regulation, government spending cuts, more domestic energy production, school choice*, free trade, and low inflation." will work recession or no. It is 'passive' in that it does not prescribe and change in policy during a recession, expecting that existing policy will succeed in ending the recession.

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Originally posted by m52nickerson:
Which proves the whole point of the thread, conservatives have no idea what to do. Using the same policies you used before a recession started to get you out of one is like burning yourself and expecting the fire to heal your hand if you stick it back in.

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Originally posted by Geezer:
Conservatives believe that the market will self-correct and end recession with no intervention by the government, especially not the massive liberal intervention described in the article.

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I sense the beginnings of a bob and weave on your part, since you can obviously read both your article and the descriptions of liberal and conservative policy I listed above.

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They favor these policies now, they favored them in 2008, and they favored them in 2004.

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To be clear, conservatives absolutely do have an economic policy agenda. They favor...

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Originally posted by kpo:
You keep directing me to the article for my definition of conservative 'response to recession', seemingly missing the fact that the whole point of the article (and its title!) is that conservatives have no specific response to recession - their economic policy is the same, whatever the economy is doing. So your phrasing of the question is perverse.

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They favor these policies now, they favored them in 2008, and they favored them in 2004.

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There was no recession in 2004. Did you miss that point?

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1. Government spending cuts

I've already shown, and to anyone who's had their eyes open over the past few years it should be obvious, that spending cuts in a depressed economy HURTS growth.

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2. Less regulation

If we're talking about loosening of banking regulations, these might boost economic activity a little in the short term, but what about the medium, and long term? The biggest effect of this kind of policy is to speed along the NEXT recession. If we're talking about other regulations like environmental regulations, then we're moving out of purely economic considerations. The question is not 'will this policy create growth', it's 'is the growth that this policy will create worth raping the environment for?'

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3. More domestic energy production

See what I just answered to (2).

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4. school choice

I don't know much about the claimed economic merits of this, but it seems clear to me it will have little effect on the economy in the short term - so is not an answer to recession.

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5. Free trade

I support free trade, as do a lot of people on the left (including the president). Not really a uniquely 'conservative' policy, and its benefits are more in the medium to long term. Good economic policy in my view, but not a great answer to recession.

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6. Low inflation.

From what I've seen deflationary policies HURT economic growth in the short term, like Thatcher in the early 1980s: the UK economy tanked, unemployment soared, and industrial output was so devastated that large parts of Britain have never recovered. http://en.wikipedia.org/wiki/Premiership_of_Margaret_Thatcher#Deflatio
nary_strategy

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7. Lower taxes

I've saved this till last, as it's probably the best case conservative policy has for stimulating the economy in the short term. One of the key questions is how it is financed. By matching spending cuts? Because we've seen that this hurts the economy, and might outdo the stimulus effect of the tax cuts. The alternative is deficit-financed tax cuts.

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This is like a conservative answer to Keynesianism, and was done by Bush in 2002 and was also a significant part of the ARRA. The question is whether it's as effective as deficit spending. Here's an analysis:

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ETA: I'd note that all recessions end, so proving they all end because of the liberal cure will be interesting.

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Yep. Bob and weave.

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All you have to do is prove that the liberal cures for recession, as enumerated in the article you cited, actually work more effectively to end recessions than the conservative economic policy

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ETA: I'd note that all recessions end, so proving they all end because of the liberal cure will be interesting.

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Spending was cut pretty much every year in the 1920s, and the two small recessions in that decade ended pretty quickly.

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3. More domestic energy production

See what I just answered to (2).


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4. school choice

I don't know much about the claimed economic merits of this, but it seems clear to me it will have little effect on the economy in the short term - so is not an answer to recession.


I'm also curious as to why the author of your article threw this in. It does make me wonder about his economic knowledge chops.

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As noted in the wiki article, she also raised taxes in the middle of the recession, thereby lengthening it.

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Coolidge cut tax rates in the 1920's and government revenue increased.

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So the article is incorrect in stating tax cuts are only a conservative economic policy, since liberals will use them in times of recession?

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Originally posted by SIGNYM:

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ETA: I'd note that all recessions end, so proving they all end because of the liberal cure will be interesting.

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There WMD in Iraq! There were!

Geezer, channeling rappy much?

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The thing that frightened Keynes was that the Great Depression showed no signs of ending. That was the basis of Keynesian insight: That an economy can stabilize at a very much lower rate of activity, permanently. (The basic supply-demand curve assumes that the economy is functioning at 100%)

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Originally posted by kpo:
I've thoroughly discussed conservative policy ideas, and how they work (or don't) in recessions. And I've shown evidence that Keynesian spending works, and is superior to tax cuts in stimulating the economy. I could go further, and defend other liberal anti-recession policies, but what I've demonstrated so far doesn't seem to have been recognised. When you admit or refute the evidence for Keynesian spending working, and when you admit or refute the arguments that conservative policies don't work in the short term, then we can move onto discussing these other points.

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Spending was cut pretty much every year in the 1920s, and the two small recessions in that decade ended pretty quickly.

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Cites? And can I suggest that you show that spending was cut *during* the recessions, and not just 'in the the same decade'.

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3. More domestic energy production

4. school choice

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I can understand the economic aspect to both of those policies, just not their relevance to tackling recession.

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As noted in the wiki article, she also raised taxes in the middle of the recession, thereby lengthening it.

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No doubt that didn't help. And that was part of the anti-inflation strategy by the way - 'fiscal tightening'. The opposite of Keynesianism.

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Coolidge cut tax rates in the 1920's and government revenue increased.

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By more than it would have without the tax cuts?

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So the article is incorrect in stating tax cuts are only a conservative economic policy, since liberals will use them in times of recession?

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More bad logic. And misrepresentation - the author never claimed it was an exclusively conservative policy idea.

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For the last five years, liberals have promoted three main economic policies to shorten or ameliorate the Great Recession and speed the recovery from it.
Deficit-financed spending to compensate for demand gaps in the private sector.
Easy monetary policy to raise inflation and support demand.
Mortgage modifications to reduce foreclosures and support consumption.

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Of course you've done this from a Keynesian point of view

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If the Keynesian cure (or the version of Keynesian shown in the article) works better than conservative economic policy, you should be able to use this list to show where Keynesian-type principles were more successful in ending recessions.

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http://www.usgovernmentspending.com/spending_chart_1920_1930USb_15s1li
011mcn_F0f

The recessions were in 1923-24 and 1926-27.

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I have no idea why they would be cited.

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Coolidge's goal wasn't primarily to increase revenue, it was to reduce government spending. He didn't want more revenue, which he believed would only encourage Congress to spend it. Again, I got this from the Coolidge biography cited above.

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But Hoover started pretty much the Keynesian cure for depression right from the get-go.

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Originally posted by 1kiki:
"... and recessions end when any solution is applied ..."

Even the 'do-nothing' solution? I'm sure you have AMPLE historical examples. I'll wait. But I'm not going to hold my breath. I suspect you will never post even one example.

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Originally posted by Geezer:

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Originally posted by 1kiki:
"... and recessions end when any solution is applied ..."

Even the 'do-nothing' solution? I'm sure you have AMPLE historical examples. I'll wait. But I'm not going to hold my breath. I suspect you will never post even one example.

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The recessions of 1923-24 and 1926-27, as noted above, ended with no change in Coolidge's policies. He continued to reduce tax rates and spending through both of them, and they ended.

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Originally posted by kpo:
You still haven't shown that there were spending cuts in the middle of those recessions. For all I know spending cuts caused those two recessions, and spending increases alleviated them.

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Originally posted by kpo:

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Of course you've done this from a Keynesian point of view

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What the hell does that mean? The graphs I've been using have been 'Keynesian' graphs, with crafty, Keynesian data?

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It's notable that recessions are on average *much* shorter post WWII (Keynesianism biggest defining moment) than they were pre-1929, and much, *much* shorter than they were pre-1900, in libertarianism's laissez-faire heyday. And this is true worldwide, not just in the US; Governments have learned, and recessions have been shallower and shorter, as a result. "We're all Keynesians now", remember?

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The recessions were in 1923-24 and 1926-27.

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You still haven't shown that there were spending cuts in the middle of those recessions. For all I know spending cuts caused those two recessions, and spending increases alleviated them.

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I have no idea why they would be cited.

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Because they're "conservative economic policy".

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This is a nice tangent, but we still haven't answered the question of how stimulus tax cuts in a recession are financed. Let's say the recession is severe, and the tax cuts need to be big. Revenue has already cratered because the economy has tanked, and we're slashing it even more. So do we have huge deficits for a year, or two, or three, until the economy recovers? Or do we implement big spending cuts to finance the tax cuts?

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But Hoover started pretty much the Keynesian cure for depression right from the get-go.

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Would you show me this with graphs, and data, and not just claim it with words?

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Originally posted by M52NICKERSON:
Don't get ahead of yourself...

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You expect to see Keynes' cure work, so you interpret the data to support this point, while dismissing alternate explanations.

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Sort'a like me saying I went to the doctor with a headache, he diagnosed it as an excess of bile, then he bled me and the headache went away. If I believed in the "Four Humours" theory of medicine, that'd confirm it.

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The average recession 1900-1928 is 18 months, and the average 1929-present is 13.25 or so. Not that big a difference.

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the reduction in average length could be attributable to things other than Keynes - better communications and resulting business and market efficiencies

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Government spending went up.

http://www.usgovernmentspending.com/spending_chart_1920_1934USb_15s1li
011mcn_F0f

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The Deficit went up.

http://www.usgovernmentdebt.us/spending_chart_1928_1934USp_15s1li011mc
n_G0f_Annual_Federal_Deficit

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Rothbard discusses Hoover's push for increases in farm aid, public works, and wage support, which sounds pretty Keynesian to me.

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Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

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Originally posted by kpo:
[Unlike you, I expect (and require) that my pet theories and philosophies be backed up by data. If they're not visible in the data, they're not valid theories. As for my 'dismissing alternate explanations': I've pointed to several instances of government spending rising, and GDP rising in response, and government spending being cut, and GDP falling in response. I've provided this as evidence that the two seem to be linked. What 'alternate explanations' for this phenomenon have I dismissed? The only thing I've dismissed are alternate theories which are contradicted by the data.

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The average recession 1900-1928 is 18 months, and the average 1929-present is 13.25 or so. Not that big a difference.

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That's a very significant difference. And I notice that you include the 1929-33 depression in the 'Keynesian' camp, even though you haven't been able to back that up with data. So remove that 3 year depression and the average post-Keynesian recession is 11 months. Almost a 40% reduction in recession time.

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the reduction in average length could be attributable to things other than Keynes - better communications and resulting business and market efficiencies

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All I can show (and have shown) is that Keynesian policies correlate strongly with improved short term economic performance. And all you can say (and are saying) is that it's a lucky coincidence that Keynesian policy seems to have served us so well.

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Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the Anglo-American economies from the start of the decade, and partly because of critiques from Milton Friedman and other economists who were pessimistic about the ability of governments to regulate the business cycle with fiscal policy.

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Government spending went up.

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This is your evidence for Hoover carrying out 'the Keynesian cure from the get go'. Spending increased 3.8% in 1929.

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In 1930 spending increased 3.9%.

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So Hoover's response to financial meltdown and the Great Depression was... a small, un-extraordinary increase in government spending. Again, if you want a testbed for Keynesianism look at 1933 and 1941, and stop wasting everyone's time with your libertarian nonsense about Hoover's massive Keynesianism.

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The Deficit went up.

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This graph shows that the US didn't have a significant deficit until 1932 (and actually ran a surplus in 1929 and 1930). A Keynesian response from the get go. Right.

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Rothbard discusses Hoover's push for increases in farm aid, public works, and wage support, which sounds pretty Keynesian to me.

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It would appear that those quotes are only there to mislead the economically illiterate. A massive surge in spending is not visible in the data at all. It didn't happen. It's a libertarian fantasy.

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Originally posted by kpo:
It would appear that those quotes are only there to mislead the economically illiterate. A massive surge in spending is not visible in the data at all. It didn't happen. It's a libertarian fantasy.

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As Hoover recalls:

the primary question at once arose as to whether the President and the Federal government should undertake to investigate and remedy the evils. . . . No President before had ever believed that there was a governmental responsibility in such cases. No matter what the urging on previous occasions, Presidents steadfastly had maintained that the Federal government was apart from such eruptions . . . therefore, we had to pioneer a new field.

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As his admiring biographers, Myers and Newton, declared, "President Hoover was the first President in our history to offer Federal leadership in mobilizing the economic resources of the people." He was, of course, not the last. As Hoover later proudly proclaimed: It was a "program unparalleled in the history of depressions in any country and any time."

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Hoover acted quickly and decisively. His most important act was to call a series of White House conferences with the leading financiers and industrialists of the country, to induce them to maintain wage rates and expand their investments. Such artificially induced expansion could only bring losses to business and thereby aggravate the depression. Hoover phrased the general aim of these conferences as "the coordination of business and governmental agencies in concerted action." The first conference was on November 18, with the presidents of the nation's major railroads. Attending for the government were Hoover, Mellon, and Lamont, and also participating was William Butterworth, President of the United States Chamber of Commerce. The railroad presidents promised Hoover that they would expand their construction and maintenance programs, and publicly announced this promise on November 19. Later, the railroad executives met in Chicago to establish a formal organization to carry this program into effect.

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President Hoover was proud of his experiment in cheap money, and in his speech to the business conference on December 5, he hailed the nation's good fortune in possessing the splendid Federal Reserve System, which had succeeded in saving shaky banks, had restored confidence, and had made capital more abundant by reducing interest rates. Hoover had done his part to spur the expansion by personally urging the banks to rediscount more extensively at the Federal Reserve Banks. Secretary Mellon issued one of his by now traditionally optimistic pronouncements that there was "plenty of credit available." And William Green issued a series of optimistic statements, commending the Federal Reserve's success in ending the depression. On November 22, Green said:



All the factors which make for a quick and speedy industrial and economic recovery are present and evident. The Federal Reserve System is operating, serving as a barrier against financial demoralization. Within a few months industrial conditions will become normal, confidence and stabilization in industry and finance will be restored.

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With Hoover's views, we would not expect him to delay in sponsoring public works and unemployment relief as aids in curing depressions. On November 23, Hoover sent a telegram to all the governors, urging cooperative expansion of all state public works programs. The governors, including Franklin D. Roosevelt of New York, heartily pledged their cooperation, and on November 24 the Department of Commerce established a definite organization to join with the states in public works programs. Hoover and Mellon also proposed to Congress an increase in the Federal Buildings program of over $400 million, and on December 3 the Department of Commerce established a Division of Public Construction to spur public works planning. Hoover himself granted more subsidies to ship construction through the federal Shipping Board and asked for a further $175 million appropriation for public works. By the end of the year, Professor J.M. Clark of Columbia University was already hailing President Hoover's "great experiment in constructive industrial statesmanship of a promising and novel sort."

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As Secretary of Commerce, Herbert Hoover did a great deal to subsidize farmers, and especially farm coops. He aided the latter in many ways-solving their research and marketing problems, helping find export markets for their produce, and making many speeches on their behalf. He also supported tariffs for agricultural produce. Furthermore, he was the man chiefly responsible for the appointment of the strongly pro-cooperative Secretary Jardine. Hoover had been one of the earliest proponents of a Federal Farm Board to aid cooperative marketing associations, and he helped write the Capper-Williams Bill of 1924 to that effect. And so it is no surprise that, as Presidential candidate, Hoover advocated support for farm cooperatives and promised the farm bloc that he would soon institute a farm-price support program. As soon as he took office, he fulfilled both promises, In June 1929, the Agricultural Marketing Act was passed, establishing the Federal Farm Board (FFB).

The new scheme was, in essence, the old "Jardine Plan." The Federal Farm Board was furnished with $500 million by the Treasury and was authorized to make all-purpose loans, up to a 20-year period, to farm cooperatives at low interest rates. The Board could also establish stabilization corporations to control farm surpluses and bolster farm prices.

...

As the depression struck, the FFB went into action. Its first big operation was in wheat, prices of which had been falling sharply for over a year. When first established, in August, the FFB advised farmers not to send wheat forward to market too rapidly, but rather to hold wheat in order to wait for higher prices. In September, it made additional loans to cooperatives to withhold stocks and raise prices. Yet the wheat price continued to fall sharply. On October 26, shortly after the stock market crash, the FFB announced that it would lend $150 million to wheat coops, at up to 100 percent of the market price, to try to hold up prices by keeping wheat off the market. Soon after the stock market crash, the FFB established a Farmers' National Grain Corporation, with a capital of $10 million, to centralize cooperative marketing in wheat and other grains. The old dream of a wheat cartel had at last come true. The FFB was supposed to work largely through such "corporations," or favored farm marketing cooperatives; and the Farmers' National was selected to centralize all farmers' grain cooperatives, eliminate competition among them, and thus stabilize and raise the market price. At first, the FFB and Farmers' National loaned money to farm cooperatives to hold wheat off the market, then, after prices continued to fall, the Farmers' National itself began to buy wheat at the loan prices.

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In December, 1930, the Emergency Committee for Federal Public Works, headed by Harold S. Butenheim, editor of American City, appealed for large-scale borrowing of one billion dollars for public works, and the plea was endorsed by 93 leading economists. Among these were Thomas S. Adams, Thomas Nixon Carver, Edgar S. Furniss, Edwin R.A. Seligman, Leo Wolman, and many of the names on the Wagner Bill petitions.[17] Finally, in February, 1931, Congress passed the Employment Stabilization Act in original form and Hoover gladly signed the measure. He quickly designated the Secretary of Commerce as chairman of the Federal Employment Stabilization Board.[18] The Senate also did something in the same month destined to have far-reaching effects in the future: it passed the Wagner resolution to study the establishment of Federal unemployment insurance.

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As noted, government spending started to increase in 1927, and the Great depression followed soon after. See. I've proved that increased government spending causes depressions.

Or it could be possible that correspondence does not necessarily imply causality.

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http://en.wikipedia.org/wiki/John_Maynard_Keynes

So it hasn't been quite the Keynes-fest you claim, with sort of a 40 year gap.

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Hoover was president until March of 1933, so he and his legislature pretty much set the federal budgets for 1933 and 1934. Where spending went up around 30%.

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I could keep going, but this gives you the idea.

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I have to ask, then, how these quotes mislead anyone who doesn't want to hear them.

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Originally posted by kpo:
If I had pointed to only one example of GDP growth following on the back of Keynesian spending, instead of several, that would be a reasonable retort. As it is it's just an excuse to keep your head in the sand.

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So it hasn't been quite the Keynes-fest you claim, with sort of a 40 year gap.

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'His influence has waned' doesn't mean his ideas have been rejected completely. Basic Keynesian thought, the belief that government spending causes short term growth, is still conventional macroeconomic wisdom.

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Hoover was president until March of 1933, so he and his legislature pretty much set the federal budgets for 1933 and 1934. Where spending went up around 30%.

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My contention was that it's clear from the data that US spending did not ramp up in response to the GD 'from the get go', or anything like it. This is the important point. You yourself admit this. What the machinery of 1930s US government was like, and whether Hoover was a Keynesian champion or not, does NOT matter, all that matters is that US GOVERNMENT SPENDING UNDER HOOVER WAS NOT KEYNESIAN.

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Originally posted by Geezer:

ETA: And I have to ask, how much of Keynes is in this?

- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.

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Originally posted by kpo:

My contention was that it's clear from the data that US spending did not ramp up in response to the GD 'from the get go', or anything like it. This is the important point. You yourself admit this. What the machinery of 1930s US government was like, and whether Hoover was a Keynesian champion or not, does NOT matter, all that matters is that US GOVERNMENT SPENDING UNDER HOOVER WAS NOT KEYNESIAN.

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Originally posted by m52nickerson:
That is the the heart of Keynesian economics it to boost the economy when it start falter. That is what Hoover did and what FDR continued in different ways.

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GDP also went up in the Coolidge era (through two recessions) when Federal spending and taxes were reduced.

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Yep. Just ignore what you don't want to see. The Wiki article gives a long section on "Economics out of favour 1979–2007"

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And Hoover's action, even though the machinery of government slowed things down, DOES matter. It started things in motion, and put agencies in place that Roosevelt used later.

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Then again, I could note that per your analysis, Hoover did not follow Keynes, but the Great Depression officially ended in March of 1933, while he was still in office.Sort'a shoots down the Great Depression as a exemplar of the Keynesian cure.

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ETA: And I have to ask, how much of Keynes is in this?

- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.

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The problem is, once governments start spending, they don't stop.

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I think arguing the minute points with Geezer you missed the fact that he is basically proving Keyne's point.

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In other words show me no less than what I've shown for Keynesian spending. And we'll see who has the stronger case.

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Originally posted by kpo:

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GDP also went up in the Coolidge era (through two recessions) when Federal spending and taxes were reduced.

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Very minor recessions and very small (~1%) decreases in spending. Two very weak examples that go against the statistical evidence of spending cuts that I've shown. We've every reason to believe that the economy was set to recover on its own without the 'help' of those small spending cuts. It was a boom decade after all. Show me BIG spending cuts in a DEEP recession, and GDP responding STRONGLY. In other words show me no less than what I've shown for Keynesian spending. And we'll see who has the stronger case.

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They favor lower taxes, less regulation, government spending cuts, more domestic energy production, school choice, free trade, and low inflation. They often cite these policies as ones that might alleviate recession and speed recovery.

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80% of economists surveyed said that the ARRA lowered the US unemployment rate in 2010 - to 4% who disagreed. And this is in America, bastion of libertarianism and anti-Keynesian thought. Anywhere else in the world and these numbers would be even greater than the 20-1 in Keynes' favour. So, as I said, government spending is stimulative = economic consensus.

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And Hoover's action, even though the machinery of government slowed things down, DOES matter. It started things in motion, and put agencies in place that Roosevelt used later.

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Fine. Well done Hoover, for setting up the beginning of recovery in 1933

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Then again, I could note that per your analysis, Hoover did not follow Keynes, but the Great Depression officially ended in March of 1933, while he was still in office.Sort'a shoots down the Great Depression as a exemplar of the Keynesian cure.

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You judge the (implemented) US policy response to the Wall Street crash as a success if you want to. One thing we can safely say - it wasn't 'Keynesian'..

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ETA: And I have to ask, how much of Keynes is in this?

- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.

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This paper was posted at the bottom of the Wall Street Daily article you posted earlier. The article's writer didn't read it. I suggest you do.

http://www.aeaweb.org/aea/2014conference/program/retrieve.php?pdfid=71
3

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The problem is, once governments start spending, they don't stop.

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Your own example of the 1920s contradicts you.

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So the idea is to boost the economy by government spending during recessions and then throttle back when things get back on track.

The problem is, once governments start spending, they don't stop.

Federal spending has done nothing but increase since shortly after the de-militarization decrease following WWII.

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I might be gone from this thread for a while.

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Originally posted by SIGNYM:
There is more to the question whether or not conservatives have "an idea" what to do about recessions, and that is whether or not that idea actually works to end or shorten them.

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And so, while you have been demanding something that is actually impossible to provide, you yourself have brought nothing to the table in support of your own ideas.

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At some point, if we're going to have a productive discussion on such a complex topic, there have to be some ground rules. We have to agree on when is there "enough" evidence and when it is significant; and we have to agree that there has to be more than correlation tying the pieces together- one must propose an actual mechanism for HOW these things are tied together, in real terms.

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Care to engage? We both might learn something, but I expect you to bring as much to the table as I do, and not just sit back in a corner and cavil, as you've been doing.

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So what do you consider my ideas relating to ending recessions? As noted above, I wonder if any type of government activity actually has anything to do with ending recessions, or if it's even possible to substantiate it one way or another.

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Originally posted by SIGNYM:

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So what do you consider my ideas relating to ending recessions? As noted above, I wonder if any type of government activity actually has anything to do with ending recessions, or if it's even possible to substantiate it one way or another.

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If this is the case- that government policies don't end recessions/ depressions one way or another- then clearly they can't initiate them either. Because, if you can't improve something, you've got no levers to make it worse either. In effect, what you're saying is that government policy has NO effect on economic performance whatsoever.

Well, if that is the case, then it doesn't matter WHAT government does. Tax at 100%? Tax at 0%? Print money? Don't print money? Create jobs programs? Tariff imports? Hey, it's all good! Right?

But if we can show that government policies DO effect living standards for everyone, then let's have the government go whole-hog into "meddling with" the economy, because- in YOUR view- it's feckless anyway as far as economic activity, but it can make life better for everyone.

ETA: So, you will first have to establish the mechanisms by which government can only make things worse, but not make thing better.

Your turn.

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My position is that, given the complexities of all the elements included in the economic state of the U.S., or the world, it's not possible to provide convincing evidence that any one particular economic theory ends recessions faster, with less negative economic fallout (government debt, loss of jobs, etc.), and with less risk of failure than any other.

Anyone proposing that any particular theory does meet these criteria should first provide a generally agreed to definition of that theory, and then show how the application of the theory, and no other factors, accomplished the end of several specific recessions, and did so meeting the criteria above (faster, less impact, less risk of failure).

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given the complexities of all the elements included in the economic state of the U.S., or the world, it's not possible to provide convincing evidence that any one particular economic theory ends recessions faster, with less negative economic fallout (government debt, loss of jobs, etc.), and with less risk of failure than any other.

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