The end of one big deflation

This paper provides a new account of the recovery from the Great Depression in the second quarter of 1933. Our argument is that President Roosevelt established a new macroeconomic policy regime shortly after his inauguration in March 1933 that altered expectations and stimulated investment. The key to this change was Roosevelt's devaluation of the dollar and the resulting rise in farm prices and incomes. Hoover had been a financial conservative, adhering to the gold standard, a strong dollar, and fiscal orthodoxy. Roosevelt broke with this ideology, devaluing the dollar within 6 weeks of his inauguration, promoting the New Deal, and championing the virtues of inflation. The devaluation of the dollar was the single biggest signal that the iron grip of the gold standard had been broken. The New Deal emerged in the course of 1933 and reinforced the change in regime symbolized by devaluation.     

Sustainability economics, resource efficiency, and the Green New Deal

The paper addresses major sustainability issues within a simple general framework. It studies energy scarcity and endogenous capital formation in the long and medium run. It is shown that energy efficiency depends on the sectoral structure of the economy. Accordingly, structural change is an efficient way to promote both efficiency and sustainable development. The results for the medium run imply that the current crises offer a scope for the greening of the economy, provided that policy increases productivity through trust-building. However, there are major differences between economic recovery and sustainability so that the proposals of the Green New Deal have to be evaluated with care.     

The political economy of Reconstruction Finance Corporation assistance during the Great Depression

This paper analyzes the role of political rent-seeking in New Deal expenditures focusing on the Reconstruction Finance Corporation (RFC). Unlike other New Deal agencies, the RFC was not financed by government appropriations, it devolved assistance decisions, and primarily offered loans rather than grants. Although the RFC was subject to pressures for political favor during the Great Depression, the geographic distribution of RFC funds across states is not associated with standard political measures used to examine rent-seeking behavior in other studies of the New Deal.     

Historical Amnesia: The Humphrey-Hawkins Act, Full Employment and Employment as a Right*

Economist William A. Darity has proposed a federal job guarantee with decent wages for all job seekers, an idea with deep, but largely forgotten, roots in US history.The article briefly explores some New Deal job-creation efforts and President Franklin Roosevelt??s proposal for an Economic Bill of Rights. It then focuses on two major attempts to secure full employment through legislation. The Full Employment Bill of 1945 was defeated; the compromise, the Employment Act of 1946 did not have full employment as its goal. After years of struggle, a much-weakened Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978 passed, but then was violated and virtually ignored. Full employment shifts power from capital to labor, so major opposition can be expected from efforts to obtain it. Proponents need more power and a strong movement, including at the grassroots level, pushing for jobs for all--not just jobs for me or my group. Publicizing the benefits of past job programs and reintroducing the idea of a decent-paying job as a right are suggested, as well as making decent jobs for all the center of economic policy. This requires a fundamental break with neoliberalism and reallocating political power away from big business and Wall Street toward middle and working-class people and the working- and non-working poor.     

Does “skin in the game” reduce risk taking? Leverage,liability and the long-run consequences of new deal banking reforms

This essay examines how the Banking Acts of the 1933 and 1935 and related New Deal legislation influenced risk taking in the financial sector of the U.S. economy. The analysis focuses on contingent liability of bank owners for losses incurred by their firms and how the elimination of this liability influenced leverage and lending by commercial banks. Using a new panel data set, we find contingent liability reduced risk taking. In states with contingent liability, banks used less leverage and converted each dollar of capital into fewer loans, and thus could survive larger loan losses (as a fraction of their portfolio) than banks in limited liability states. In states with limited liability, banks took on more leverage and risk, particularly in states that required banks with limited liability to join the Federal Deposit Insurance Corporation. In the long run, the New Deal replaced a regime of contingent liability with deposit insurance, stricter balance sheet regulation, and increased capital requirements, shifting the onus of risk management from bankers to state and federal regulators.     

The New Deal at war: alphabet agencies’ expenditure patterns, 1940-1945

While a multitude of New Deal “relief, recovery, and reform” agencies were created in response to the 1930s economic shock, many of these same agencies were subsumed by the Federal Works Agency and played key national defense roles during the 1940s. We examine the wartime expenditure patterns of these agencies, as well as spending on war supply contracts and war-related industrial facilities, to determine whether Depression-era economic goals were addressed during the Second World War. We find that some specific aspects of the New Deal economic agenda were carried out during the war. Furthermore, wartime spending by the alphabet agencies was significantly correlated with the expenditure patterns of those agencies during the 1930s, suggesting that the transition from economic to military objectives may not have been as pointed as the Roosevelt Administration often asserted.     

The New Deal and Modern Memory

The “Great Recession,” which began at year‐end 2007, was precipitated by plunging real estate values, followed by borrower defaults and financial crisis for the public and private institutions that supplied loanable funds to the mortgage market. With economic growth not yet returned to trend, three years on more than 9% of the American labor force remains unemployed. Current macroeconomic events, perhaps inevitably, have been compared to those of the Great Depression of 1929–1933, both in terms of severity and of the efficacy of the public policies adopted ostensibly to restore prosperity. In this article, I review the literature on the New Deal, paying particular attention to modern scholarship emphasizing the role of presidential politics and antibusiness political rhetoric in deepening and prolonging the Great Depression. The parallels between then and now suggest that the two economic contractions had similar causes and elicited equally counterproductive policy responses.     

Electoral Incentives,Public Policy,and the New Deal Realignment

This paper develops a model of the effects of electoral incentives on policy, then applies the model to the New Deal realignment. In the model, policy is the outcome of an agenda-setter game between the president and legislators. Specifically, the president sets policy subject to legislative approval. The president's ability to concentrate benefits in states with high electoral payoffs depends in part on his or her power to influence legislators' prospects for reelection. Regression analysis shows that New Deal spending and roll call voting patterns in the House of Representatives support the model. Historical accounts of other aspects of New Deal policy, including labor and civil rights issues, are consistent with the model. Together, the theoretical results and the empirical evidence help to explain several striking features of the policy and politics of the 1930s, including (i) why a government dominated by the Democratic Party would provide high benefits to swing states and much lower benefits to the traditionally Democratic South, (ii) why favoritism of swing states increased from the 1933-1934 period to the 1937-1938 period, (iii) why favoritism of swing states decreased from 1938 to 1939, and (iv) why, with the rise of the conservative coalition in Congress in the late 1930s, it was the representatives from traditionally loyal Democratic districts that created the strongest Democratic opposition to Roosevelt and the New Deal.     

Effects of New Deal Spending and the downturns of the 1930s on private labor markets in 1939/1940

Gross Domestic Product recovered much more quickly than labor markets did during the 1930s. We provide new analysis of this issue by estimating a cross-sectional model for individuals in 1939–1940 as a function of the measures of the Great Contraction of 1929–1933, the recovery, and the Second Dip Recession and average information for three types of New Deal spending. The results show that the Great Contraction of 1929–1933 and the Second-Dip Recession still had powerful negative effects on county labor markets in 1939/1940 and these were only partially offset by public works grants. Relief grants had somewhat negative effects although this might have arisen because of a large layoff of workers by the WPA in 1939. The AAA payments to farmers to take land out of production were associated with lower earnings and private employment, but had mixed effects on skill mobility.     

Why did the electorate swing between parties during the Great Depression?

The Democratic Party's electoral success during the 1930s has long intrigued politicians and scholars. To gain new insight into that success, this paper examines the striking heterogeneity in county-level support for Roosevelt. Even though the Depression's effects and the New Deal's benefits were famously widespread, only some parts of the country responded with large and durable partisan shifts. One reason is that several factors, including pre-New Deal economic hardship, Dust Bowl conditions, and New Deal spending, appear to have had effects that were largely transitory (i.e., faded by 1940). A complementary reason is that swing electorates can, and did, swing both ways. By contrast, several other variables – notably economic and demographic factors discussed in the previous literature – are related to relatively durable shifts. Finally, heterogeneity in marginal responses may have mattered greatly to national-level Democratic success. By demonstrating which factors were transitory and which were more durable, this paper illuminates the New Deal Realignment and, more generally, the influence of economic conditions and distributive policy on voter behavior.     

Reformist programmes in the planning for post-war economic policy during world war ii

Abstract

Extract

The Great Depression of 1929–33 saw the beginnings of a revolution in the history of economic policy formation in the West. When at the outset of the depression, the ‘Old Economic Policy’ was still seen to be in operation, an ever-increasing resistance arose against the consequent unemployment and indeed against the very notion of the inevitability of depression. For the economic policy, this meant a support for an active fiscal policy, as against the almost complete dominance of monetary means. During the 1930s, however, support for the ‘New Economic Policy’ was not widespread, and most of the instances of its application remained incomplete. The most resolute use of the new economic policy was made in Sweden by the Social Democratic government from 1932. The new economics was also strongly advocated by the British Liberal Party, which, however, hardly had any influence. The best known example of all is that enshrined in the New Deal of the Roosevelt administration.     

“全球绿色新政”下的中国方略

2008年底以来,"绿色新政"兴起于全球。中国是"全球绿色新政"的重要实践者,应根据国内外形势进一步推进有中国特色的"绿色新政",实现经济社会的转型。     

Are Spatially Focused Initiatives in Current Economic Inclusion Policies Well Founded?

This study examines the appropriateness of the New Deal in targeting specific groups of unemployed job-seekers. This was achieved using a survey of unemployed job-seekers carried out prior to the implementation of the New Deal framework in April 1998. A sample of 169 unemployed job-seekers in two Travel to Work Areas in central Scotland is divided into those who were successful and those who were unsuccessful in finding employment and each group is analysed in terms of a set of labour market related attributes. The study generates a 'typical' profile for those who were successful in job search and a 'typical' profile for those who were less successful. These are compared and contrasted with the New Deal target groups. The findings support most of the target grouping basis of the policy but not all and we conclude that the generic aim of the New Deal, to reduce social exclusion, is unlikely to be achieved as effectively if spatial priorities, focused on the most deprived areas, are allowed to supersede the needs of the individual job-seeker.     

How new is the New Deal? A qualitative study of the New Deal for Young People on minority ethnic groups in Oldham

Despite a clear commitment to equality of opportunity under the New Deal, some have questioned whether the New Deal for Young People has served ethnic minority communities as well as the white population. This research is based primarily on a qualitative longitudinal study of ethnic minority New Deal participants (and non-participants) in Oldham in Greater Manchester, and also on analysis of the New Deal Evaluation Database. We find that objective outcomes, particularly employment, can be problematic, but that there is strong evidence of positive impacts on employability, especially through work experience. In these terms the NDYP clearly represents a departure from the YTS and has had a generally positive reception from participants. However, our research emphasizes the fact that participants are a self-selected section of young unemployed people, and that there are major differences between participants and 'avoiders'. Most notably, non-participants were much more disaffected with the labour market and more negative about the New Deal.     

Jobs and Freedom Now! Functional Finance, Full Employment, and the Freedom Budget

Forty-five years ago, the A. Philip Randolph Institute issued ??The Freedom Budget,?? in which a program for economic transformation was proposed that included a job guarantee for everyone ready and willing to work, a guaranteed income for those unable to work or those who should not be working, and a living wage to lift the working poor out of poverty. Such policies were supported by a host of scholars, civic leaders, and institutions, including the Rev. Dr. Martin Luther King, Jr.; indeed, they provided the cornerstones for King??s ??Poor Peoples?? Campaign?? and ??economic bill of rights.?? This paper proposes a ??New Freedom Budget?? for full employment based on the principles of functional finance. To counter a major obstacle to such a policy program, the paper includes a ??primer?? on three paradigms for understanding government budget deficits and the national debt: the deficit hawk, deficit dove, and functional finance perspectives. Finally, some of the benefits of the job guarantee are outlined, including the ways in which the program may serve as a vehicle for a variety of social policies.     

奥巴马中期经济“新政”与世界经济展望

奥巴马在美国国会中期选举之际推出经济新政。本文将奥巴马中期新政与奥巴马执政初期的经济刺激计划相比较,分析了奥巴马中期新政的历史背景。文章认为,奥巴马中期经济新政意味着美国原有的增长模式已经发生结构性的改变,奥巴马中期经济新政其目标是在关注短期周期性波动的同时,更多地关注美国中长期经济周期结构的改变,这是奥巴马中期新政与初期新政相比较的完全不同的历史意义。在此基础上,文章分析了美国经济发展模式转变的内涵及其对世界经济发展的影响。     

中美政府职能比较

经过30年的改革开放,我国已经基本建立社会主义市场经济体制,但政府职能在许多方面仍然不能适应市场经济体制要求。作为发达国家代表,美国政府职能体系已发展得较为完善。将我国和美国政府职能结构相比较,探讨我国政府与美国联邦政府在职能结构配置上的差距,以便提出改进建议。     

Did the New Deal solidify the 1932 Democratic realignment?

The critical election of 1932 represented a turning point in the future electoral successes of the Democrats and Republicans for over three decades. This paper seeks to measure the importance of the New Deal in facilitating the Democrats' control of the federal government well into the 1960s. We test whether long-differences in the county-level electoral support for Democratic presidential candidates after the 1930s can be attributed to New Deal interventions into local economies. We also investigate more narrowly whether voters rewarded Roosevelt from 1932 to 1936 and from 1936 to 1940 for his efforts to stimulate depressed local economies. Our instrumental variable estimates indicate that increasing a county's per capita New Deal relief and public works spending from nothing to the sample mean ($145) would have increased the long-run support for the Democratic party by 2 to 2.5 percentage points. We further find that the long-run shift toward the Democratic party after 1928 was not a function of the Roosevelt landslide victory in 1932. Roosevelt's ability to win over voters during the 1936 and 1940 elections with New Deal spending, however, did matter for the long-term.     

Interest Rates, Leverage, and Money

The current mainstream approach to monetary policy is based on the New Keynesian model and is expressed in terms of a short-term nominal interest, such as the federal funds rate in the United States. It ignores the role of leverage and also downplays the role of money in basic monetary theory and monetary policy analysis. But as the federal funds rate has reached the zero lower bound and the Federal Reserve is in a liquidity trap, the issue is whether there is a useful role of leverage and monetary aggregates in monetary policy and business cycle analysis. We address these issues and argue that there is a need for financial stability policies to manage the leverage cycle and reduce the procyclicality of the financial system. We also argue that in the aftermath of the global financial crisis and Great Contraction there is a need to get away from the New Keynesian thinking and back toward a quantity theory approach to monetary policy, based on properly measured monetary aggregates, such as the new Center for Financial Stability Divisia monetary aggregates.