Opinion of Franklin Roosevelt

[Associate Justice PiT]

Why does no-one ever pay attention to my posts?

I always make a point of reading them, though I don't always respond.

But you are, despite everything on this issue, on the light side of the force (I have to go wash now...); I want SPC or Duke or anyone at all to respond to my criticism I made earlier.

What criticism, specifically?

     His criticism of the Right's disposition towards economic monism (which is the last post on the previous page, actually).

[SPC]

We do?

You certainly do (what I mean by 'monism' in this case is that there is a simple set of solutions to all economic problems, however we define as problems... cut government spending, small government, increased spending, investment, etc, this is not science - because what empirical basis do we have for this? - this is ideology disguised as science: perhaps sometimes Keynesianism does work and capitalism does not and perhaps in certain situations vice versa, perhaps in various places 'modernization' (whatever that is) works and is desirable and in other it isn't, perhaps Austrian economics would only ever work in a society entirely consisting of Austrian economists or Americans or perhaps it might work in other societies... because simply put we don't understand the unpredictable and highly-situational nature of human behaviour and any attempt to model it mathematically is pseudo-scientific bunkum... so much for monetarism, austrianism, Keynesianism and yes, Marxism as well. Too many systems, too many systems.)

Yes, but there are ways of predicting what would happen in a certain situation based on human behavior, and the Austrians have the best record of accuracy. For example, when the Fed lowers interest rates below their market level, one would think that a business would take that as a false sign to invest money in a project, even though the market would tell it otherwise if it could. Since most businesses see this signal, that is the reason for many businesses to fail at once. Also, it doesn't take a genius to see that fractional reserve banking can't work in the long term.

Also, even if we do disregard any economic laws, FDR would still be a horrible president, since his policies go against the non-agression principle.

[Tetro Kornbluth]

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There is? History laughs at you.

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O RLY? Where is your evidence? Also for that matter as I'm a would-be anthropologist I would also like some non-western examples.

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For someone who puts alot of faith in the free market, your argument seems to be implying that businessmen don't understand the market very well.

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I am not a genius. Please explain.

Btw, PiT, that is not just a criticism of the right, but of the whole economic discourse in general. Just that conservatives annoy me more.

[opebo]

... For example, when the Fed lowers interest rates below their market level,

How can there be a 'market level' of interest rates, other than what the Fed sets?  The Fed controls the supply of money.

[SPC]

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There is? History laughs at you.

If you assume that people act in a manner that they believe will give them the greatest reward, you can construct situations based on that.

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O RLY? Where is your evidence? Also for that matter as I'm a would-be anthropologist I would also like some non-western examples.[/quote]

Well, being the only economists to predict both the Great Depression and the current Depression is one thing. Mises was also one of the first economists to predict the collapse of the Soviet Union, if you consider the Soviet Union to have been non-Western.

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For someone who puts alot of faith in the free market, your argument seems to be implying that businessmen don't understand the market very well.[/quote]

The most successful businessmen understand the market well. If they didn't, they would have gone out of business. However, when the Fed lowers interest rates bleow what they would be in a free market, it is impossible for businessmen to know whether it is an indication of increased saving or merely a ruse.

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I am not a genius. Please explain.[/quote]

Obviously a system in which the bank only keeps a fraction of the money it stores can only work if depositors don't show up frequently. Once something happens that makes the public want to withdraw their money, the bank will fail, just as the last few months have demonstrated.

... For example, when the Fed lowers interest rates below their market level,

How can there be a 'market level' of interest rates, other than what the Fed sets?  The Fed controls the supply of money.

I was speaking in the sense of what the market level would be if not for Fed intervention.

[12th Doctor]

In terms of foreign policy:

Build up to the war: Good
Shaping the post-war world: Bad

In terms of Domestic Affairs: Mediocre at best, on most the issue

On the whole, I would place him in the top-15, but no where near the exalted #2-3 spot that is usually afforded to him.

[12th Doctor]

I think the real accomplishment of FDR's domestic policy was preventing the United States from swinging to one of the far extremes, the way much of the rest of the world did.

[Filuwaúrdjan]

If you assume that people act in a manner that they believe will give them the greatest reward, you can construct situations based on that.

You can assume that, yes. But any "situations" you construct based on that will have only a tenuous link to reality. The truth is that most people do not act "in a manner that they believe will give them the greatest reward", or do so only some of the time, or have a (very) different conception of "reward" to you. We are men, not machines.

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

[dead0man]

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

Explain.

[Tetro Kornbluth]

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

Explain.

Homo Economicus does not exist, except in the libertarian/economistic imagination.

The simple fact is that when we choose any good or service from an economic perspective we do so for a kaideoscope of reasons, alot of which aren't in any way rational (however you define it). Unless you mean that the desire for stuff is rational in itself, in which case, what reality are you living on? (No wonder Libertarianism is stuff an American creed!)

[dead0man]

THAT is why you dislike libertarianism?  Wow.  That is just a smallish piece of a much bigger puzzle (and one shared by many of my Republican and Democratic friends).

[Beet]

For example, when the Fed lowers interest rates below their market level, one would think that a business would take that as a false sign to invest money in a project, even though the market would tell it otherwise if it could. Since most businesses see this signal, that is the reason for many businesses to fail at once.

Answer me this. The Fed only targets the short term overnight federal funds lending rate. It never meddled directly in the long term lending markets until the crisis started. If this hypothesis is correct, that the market interest rate was in fact higher than the interest rate set by the Fed, then when the Fed began to tighten in 2004-06, long term interest rates should have followed short term interest rates upward. Instead, the spread between the two rates gradually disappeared, and then became inverted in 2006. Thus, the cost of borrowing in the short term set by the Fed, was actually slightly higher than the cost of borrowing in the long term, set by the markets. Why? Normally this only happens when the markets are expecting either a recession or deflation-- but in 2006 and through October 2007, the stock market was booming, and commodities prices were booming. But regardless, if the level of savings was actually insufficient to meet the amount of investment, where did the money come from to drive down long term interest rates?

An alternative hypothesis is that the behavior of commodities prices and long term securities are the product of broader economic forces than simply central bank monetary policy. What we have learned in this current economic crisis is that monetary base growth is not the same as money supply growth. The Fed (or any other central bank) may 'create money' by selling securities into the market, but it cannot force the markets to lend that money. Real growth in the money supply is determined by credit growth. Fantastical rates of credit growth can explode the 'money supply' even when the Fed is not lowering interest rates.

So we had
1- Very low long term  interest rates as set by the market, even during 2004-06 when the Fed was tightening short term rates.
2- Spectacular credit growth in the 1980s and 2000s- much faster than GDP, even though the Fed never engaged in direct lending until August 2007
3- A great worldwide 'search for yield' across all countries
4- Lowering of deflationary pressures simultaneously worldwide in the 1990s and 2000s (which allowed central banks, who were fixated solely on 'inflation targeting- another legacy of monetarism, to keep short term interest rates low).

It doesn't take a genius to see that one very simple relationship explains all of these developments: the relationship between supply and demand. In particular, the relationship of supply of Labor compared to demand for Labor and supply of Capital compared to demand for Capital. I contend that all of the economic imbalances of the last decade can be explained by an Increase in the supply of labor and an increase in the supply of capital compared to the demand for labor and demand for capital.

In the early 1990s, communism fell in Eastern Europe and the USSR, Latin America embraced the Washington consensus, India dismantled the 'Permit Raj', and Deng Xiaoping pronounced 'to get rich is glorious'. Country after country dismantled import substitution industrialization strategies, imported Western-educated elites to implement neoliberal policies, and joined the 'global economy', as formalized in the Uruguay round of WTO talks. The net effect of these vast swaths of the world-- with their cheap labor, poverty, and often poor human rights -- joining the world economy, was a fantastical increase in the supply of cheap labor. Literally billions of people joined the global workforce.

Simulatenously, deregulation and capital account liberalization in the West opened up higher corporate profits and greater opportunities for capital.

By the early 2000s, the world was awash in cheap labor and abundant capital. The poor were about as poor as ever, but the rich were getting ever richer by exploiting the billions of 'new' poor. But there is a problem with this picture... what is all of this labor and capital going to do? The labor must produce something that can be sold, and the capital must be invested to garner a return over time. This can only happen if there is demand for labor's goods and profitable investment opportuntiies-- which in turn, again, require demand.

Enter the Western consumer and the great credit boom. Pretty much the only group of people earning significant income that could hope to mop up all of this labor and capital by the late 1990s was the Western consumer. But the Western consumer was already a profligate spender and his income had not increased substantially from the 1970s to the mid-1990s. One possible solution to this was to increase wages. But because of the global labor supply glut, there was really no reason to increase his wages- if anything, his job should be outsourced. The solution, of course, was credit. Credit is the way that the capitalists figured out how to eat their cake and have it too. Through credit, demand was created for all this supply dumped in the market by globalization. Through credit, the American consumer purchased the Chinese clothes or the Saudi oil or the Korean electronic. Through credit, also, income streams were generated that would (nominally) return a percentage return for capital investments.

Of course, the entire rotten structure was on a collision course with itself. Credit-induced demand is sustainable only so long as the borrower has the income to repay the credit extended. But wages in third world countries were too low and rising only slowly, while wages in rich countries weren't actually rising. Hence the imbalance exploded into the current crisis.

The only 'solution'- if of course, one accepts the questionable assumption that ever-increasing world GDP is the desired goal- is that demand must be brought into line with supply. The poor must be given higher wages, becuase the poor have a greater propensity to consume. The rich have a great propensity to save and they must take a haircut.

[Coburn In 2012]

Second worst president in history next to the messiah. 

He extended the depression almost a decade with his socialism.

He tried to pack the court with leftists.

He had many corrupt cabinet members.  Or was that Truman?

He put American japs in concentration camps.

And some people think FDR was well aware that the attack on pearl harbor was coming but he wanted us to be shocked into war. So the boys who were killed there were S-O-L.

[Nixon in '80]

Second worst president in history next to the messiah. 

He extended the depression almost a decade with his socialism.

He tried to pack the court with leftists.

He had many corrupt cabinet members.  Or was that Truman?

He put American japs in concentration camps.

And some people think FDR was well aware that the attack on pearl harbor was coming but he wanted us to be shocked into war. So the boys who were killed there were S-O-L.

And what the hell has Obama done that's worse than all of that?

[SPC]

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

Explain.

Homo Economicus does not exist, except in the libertarian/economistic imagination.

The simple fact is that when we choose any good or service from an economic perspective we do so for a kaideoscope of reasons, alot of which aren't in any way rational (however you define it). Unless you mean that the desire for stuff is rational in itself, in which case, what reality are you living on? (No wonder Libertarianism is stuff an American creed!)

Well, that is true, people do choose products for a variety of reasons. However, all of those reasons have to do with getting that person the greatest reward (not necessarily economic), and only that person can be the judge of how to measure that. One person might find it more rewarding to pay more for a higher quality product, while another person might find it more rewarding to pay less for a lower quality product. A third person might find it more rewarding to not buy the product at all. In all three scenarios, the people are acting in a manner to gain the greatest reward, even if they act in different ways to achieve that.

[Stranger in a strange land]

He had many corrupt cabinet members.  Or was that Truman?

name one of them without consulting wiki.

[jokerman]

Excellent post, by the way, Beet.

[opebo]

Excellent post, by the way, Beet.

Yes let me second that.  I have said all along that the problem here was not 'credit' or 'living beyond our means', but demand.  You have elucidated that position better than I could.

The answer was always simply redistribution ('socialism') - increasing worker incomes to increase demand, but obviously the usual thing got in the way of reasonable solution: the absolute political dominance by our owners.

[Tetro Kornbluth]

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

Explain.

Homo Economicus does not exist, except in the libertarian/economistic imagination.

The simple fact is that when we choose any good or service from an economic perspective we do so for a kaideoscope of reasons, alot of which aren't in any way rational (however you define it). Unless you mean that the desire for stuff is rational in itself, in which case, what reality are you living on? (No wonder Libertarianism is stuff an American creed!)

Well, that is true, people do choose products for a variety of reasons. However, all of those reasons have to do with getting that person the greatest reward (not necessarily economic), and only that person can be the judge of how to measure that. One person might find it more rewarding to pay more for a higher quality product, while another person might find it more rewarding to pay less for a lower quality product. A third person might find it more rewarding to not buy the product at all. In all three scenarios, the people are acting in a manner to gain the greatest reward, even if they act in different ways to achieve that.

Ah but there you are still assuming that there is a connection between consumption or the purchasing of goods and some abstract "reward". Perhaps in Modern America... but a society of Buddhist monks on the other hand...

[Filuwaúrdjan]

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

Explain.

The intellectual justification for what is called "libertarianism" these days is much as SPC posted above. And it denies people their individuality by assuming will always act based on crude economic self-interest or what they think their economic self-interest is (this is why I mentioned Vulgar Marxism; it does (or at least did) the same thing).

[Filuwaúrdjan]

Well, that is true, people do choose products for a variety of reasons.

There is more to life than choosing products.

[A18]

You know, one of the (many) ironies of so-called Libertarianism is that this ideological creed that places such emphasis on individualism is based on a way of looking at the World that denies people their individuality. In that respect it's as bad as Vulgar Marxism.

Explain.

Homo Economicus does not exist, except in the libertarian/economistic imagination.

The simple fact is that when we choose any good or service from an economic perspective we do so for a kaideoscope of reasons, alot of which aren't in any way rational (however you define it). Unless you mean that the desire for stuff is rational in itself, in which case, what reality are you living on? (No wonder Libertarianism is stuff an American creed!)

The general laws of economics presuppose, as a rough approximation of reality, that people generally act competently to attain their ends. But economic laws do not assume that people's ends are themselves "rational" (whatever that means).

[SPC]

Well, that is true, people do choose products for a variety of reasons.

There is more to life than choosing products.

I meant "products" in a broad definition, meaning anything that people exchange. Please explain what you mean.

[Filuwaúrdjan]

Well, that is true, people do choose products for a variety of reasons.

There is more to life than choosing products.

I meant "products" in a broad definition, meaning anything that people exchange. Please explain what you mean.

Is talking to someone a product?

[SPC]

Well, that is true, people do choose products for a variety of reasons.

There is more to life than choosing products.

I meant "products" in a broad definition, meaning anything that people exchange. Please explain what you mean.

Is talking to someone a product?

That's a different definition of "exchange". Please live your life for a few weeks without purchasing or selling anything and come back and tell me about the merits of free exchange.