Obama might be the dumbest president we have ever had.

[Jackson50]

Avinash_Tyagi said:

Problem with arguing that is the assumption that increases in productivity will result in increases in employment at uniform levels, as we saw in the early part of this decade, we had productivity growth yet employment did not rise uniformly, so yeah it is speculatio that unemployment was 25% higher than it should have been purely on producutivity gains.

While it is true, that labor costs did increase in 1937, you're trying to foist all the blame on that, while ignoring the contractionary fiscal policies and moneyary policies which were of a greater burden than labor costs, the contractionary government policies were a greater cause of unemployment and declining economic growth than the labor costs, labor costs were 11% you argue, well contractions in governemt  policies were much larger

As you can see in this graph the government expenditures were contracted heavily in 37 from their peak in 36 around a 10% decline, this was much bigger cuase in the downtrun than any increases in labor costs, also don't forget the higher reerve requirements, doubling of the requirements, wihcih contracted the money supply. It wasn't that the government actions were mitigating the effect, the government actions were the cause of the upturn and without them the economy collapsed again.

They did not argue that increases in productivity will increase employment. They used productivity to figure out what wages would have been. If wages are higher than productivity, labor will be shed. If wages are artificially increased to the degree that they were by Hoover and then by Roosevelt, then this will markedly decrease employment. 

I am not attempting to foist all the blame on that. I am foisting the majority of the blame on it. The convergence of all of these policies at approximately the same time led to the downturn. We simply disagree on which deserves the greater share of the blame. There really is no way to change each other's opinion.