| Avinash_Tyagi said:Yeah, but in 1937, Jackson, FDR unwisely tried to cut back on spending and balance the budget, now that was far worse than wage inflation and allowing price collusion, and that was when the economy went south again, for all your railing against flawed government intervention, our economy went up during that period, it was only when he stopped following that idea that the economy tanked.
Also Jackson FDR did pass the Agricultural Adjustment Act of 1938 and the Fair Labor Standards Act in 1938, but that was the last major legislation he got through because his political power was weakend by the 1937-38 recession, one piece of legislation wasn't enough to undo the damage of those right wing ideas Also Jackson, the only reason recovery was weak in 1939 was because 1939 was after the new deal had basically been snuffed out and FDR had unwisely reversed himself, you're blaming the new deal when the real culprit was not sticking to the new deal Also After 1939, the US starts gaering for war, and that takes deficit spending and government intervention and that brings us out of the Depression |
Again, different types of intervention have different effects. Were it not for the flawed government intervention that produced artificially inflated prices and wages, the economy would have increased at a faster rate.
The spending cuts/tax increase were coupled with the implementation of payroll taxes in 1937 and other increases in wages in 37 and 38 that markedly raised the cost of employing workers. We can see the negative effects of these policies when they were no longer mitigated by massive amounts of government spending.
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