Saturday, April 04, 2009

Hoover did it!

UCLA economist Lee Ohanian sends me a paper called "What - or Who - Started cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Great Depression?" with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 following conclusion:

The defining characteristic of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Great Depression is a substantial and chronic excess supply of labor, with employment well below normal, and real wages in key industrial sectors well above normal. A successful cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ory of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Depression must explain not only why cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 labor market failed to clear, but why monetary forces apparently had such large and protracted effects. This paper proposes such a cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ory, based on President Hoover’s program that offered industrial firms protection from unions in return for paying high wages. Firms deeply feared unions at this time, reflecting a growing union wage premium and a sea change in economic policy, including policies advanced and supported by Hoover, that significantly fostered unionization and enhanced cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir bargaining power. Consequently, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re was an incentive for firms to follow Hoover’s program of paying moderately higher real wages to avoid even higher wages and lower profits that would come from unionization.

I conclude that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Depression is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 consequence of government programs and policies, including those of Hoover, that increased labor’s ability to raise wages above cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir competitive levels. The Depression would have been much less severe in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 absence of Hoover’s program. Similarly, given Hoover’s program, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Depression would have been much less severe if monetary policy had responded to keep cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 price level from falling, which raised real wages. This analysis also provides a cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ory for why low nominal spending - what some economists refer to as deficient aggregate demand - generated such a large depression in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 1930s, but not in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 early 1920s, which was a period of comparable deflation and monetary contraction, but when firms cut nominal wages considerably.

Presidents Hoover and Roosevelt shared similar goals of fostering industrial collusion and increasing real wages and raising labor’s bargaining power. Hoover accomplished cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se goals during a period of deflation by inducing industry to maintain nominal wages, and by promoting and signing legislation that facilitated union organization and that increased wages above competitive levels, including cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Davis-Bacon Act and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Norris-Lagaurdia Act. Roosevelt accomplished cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se goals with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 NIRA and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Wagner Act, both of which raised wages well above competitive levels while increasing industrial collusion.

The 1930s would have been a better economic decade had government policy promoted competition in product and labor markets, racá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r than adopting policies that extended monopoly in product markets, and that set wages above competitive levels which prevented labor markets from clearing.

I do not have a link to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 current draft of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 paper, but here is Lee's webpage.

If this analysis makes you start thinking about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 macroeconomic effects of card check, you are not alone.