It’s Not the 1930s Again; It's Not Even Close, Part II
The chart above (click to enlarge) shows the growth rate in Industrial Production, based on the percent change from the same month in previous year (data here).
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Monday, February 01, 2010
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
Previous Posts
- Real Consumption Growth Rate: Highest Since 2007
- Another Huge V-Sign of Economic Recovery: ISM Hits...
- It’s Not the 1930s Again --- It's Not Even Close
- More on Cash-Only Medicine: Like Being Born Again
- Personal Savings Reaches 11-Year High in 2009
- No Corkscrew or Bottle Opener? No Problem
- Location, Location, Location
- Market-Based Health Care Reform: Cash Only Family ...
- Price Tags Are Merely Suggestions: Haggling's Back
- What's Up With That?
13 Comments:
Look at the difference between the 1990s and the 2000s.
A lost decade.
Sure hope the 10s outdo the Bush era.
benny:"Look at the difference between the 1990s and the 2000s.
A lost decade. "
wait, clinton raised taxes and bush cut taxes. how could the 1990s be better for business than the 2000s?
In the 1930s you actually produced stuff. Nowadays the economy is based on debt fuelled consumption.
Manufacturing is a much smaller part of the economy today than it was in the 1930's!!
Show us the same graph for construction, or retail, or banking.
It's not even close... no it's potentially a whole lot worse.
You're quite right that this recession is no where near as serious as the Great Depression. Politicians have inflated the crisis for political reasons.
But unfortunately, interventionist government policies are slowing the recovery down the same way FDR did in the 30s. I noticed three dips in your graph in the 20s-30s. We only have one dip so far for the current recession, but I think government policy could contribute to a second dip.
Is there some reason you're continually comparing today's economic situations to those of the 1930's? Why not compare the 1930's to the 14th century or the 5th century? Then we can say that all of the talk about the Great Depression was whiny belly aching because people didn't know how good they had it.
benny: "Look at the difference between the 1990s and the 2000s.
A lost decade."
It doesn't appear to be a lost decade to me, benny. That chart only shows year-over-year changes - not cumulative changes. It may appear to you that this recession destroyed the economic weakth created in 2001 through 2007. But that's only because you may be reading something into the chart that's not there.
"how could the 1990s be better for business than the 2000s?"...
This out to make bobble happy: Bring Back Clinton
boble: "wait, clinton raised taxes and bush cut taxes. how could the 1990s be better for business than the 2000s?"
I can't tell whether you are serious or not.
Congress did raise taxes at the start of the Clinton presidency - with a vote along almost straight party lines. After the Republicans gained control of Congress in 1994, Newt Gingrich engineered significant changes in the tax laws - including a capital gains tax cut.
Tax policy was hardly the only driver of economic change the past 20 years.
Oil prices were at historically low prices throughout the 1990's. Not so over the past decade.
After the collapse of the Soviet empire, defense spending plunged. The investment in defense industries was re-channeled into more efficient and higher potential industries, such as medical and consumer technologies. By contrast, defense and home security investmen of the past decade crowded out investment in more desirable industry,
Finally, the Boomer generation entered its peak productivity years during the 1990's. As those Boomers aged over the past decade, demographics prevented the nation from enjoying the productivity growth that generation had enabled through their numbers.
no, it's not the 30's. in the 30's the US was a net creditor.
in the 30's our households were not under a crushing debt load driven by repeated bubbles from wildly loose monetary policy and disastrous government programs like the CRA.
in the 30's, the US did not owe $500k+ per family in unfunded liabilities for the entitlement programs that resulted from FDR.
back then, all you had to do was get the government out of the way and recover. even that could well have failed had the second world war not left the US as the only major industrial power left giving us a massive tailwind for 15-20 years.
now, you have massive structural barriers from debt and tax/regulatry burden to recovery that will make it hard even for enlightened government (which we clearly lack) to promote growth even before you add in the more competitive global environment.
the 50's aren't coming back. low growth rates are going to be with us for some time.
morganovich,
I agree with most of what you just wrote. However, I would suggest that you change one word:
"in the 30's our households were not under a crushing debt load enabled by repeated bubbles from wildly loose monetary policy and disastrous government programs like the CRA."
Your version of that sentence seem to imply that households were at the mercy of those government programs. But no one put a gun to the heads of U.S. households and forced them to purchase larger homes than they could afford. No one used thumbscrews to force households to max out credit cards. Much of the debt burden to which you refer resulted from poor personal decisions.
"Your version of that sentence seem to imply that households were at the mercy of those government programs. But no one put a gun to the heads of U.S. households and forced them to purchase larger homes than they could afford"...
I think you missed morganovich's point...
I don't believe morganovich was alluding to personal debt but the debt put on each person by the socialist excesses of the federal government, the government the voters are ultimately responsible for...
Note the following two USAToday articles:
Taxpayers' bill leaps by trillions
For feds, more get 6-figure salaries
Average pay $30,000 over private sector
Juandos and Morganovich: More than 70 percent of federal spending financed by income taxes goes to the Dept's of Agriculture, Defense, Commerce, Interior, VA, Homeland Security and debt.
The huge entitlement programs are financed by payroll taxes.
You want an income tax cut. Then start cutting federal outlays financed by income taxes. I gave you a clue where to start.
Jet Beagle--The chart for the 2000-2010 period looks ill to me. And we piled more debt at the same time.
"More than 70 percent of federal spending financed by income taxes goes to the Dept's of Agriculture, Defense, Commerce, Interior, VA, Homeland Security and debt"...
Hmmm, pseudo benny do you take some sort of perverse pride in making silly and thoroughly factless comments?
Just asking...
According to Cato Social Security, Medicare, and Medicaid cost DOUBLE what is spent on Defense...
Try some of this Down Sizing Government material out...
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