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Re: New Jobless #s .. yikes. Inflation?
If you had actually read the Ritholtz article, then I cannot understand why you said
Again from Ritholtz article continuing from where I left off
TseTseFly, please get off your ideological high horse and look at facts as they were and are, and not as "you think they were/are through the filter of your ideology" If you do not accept the fact that the people who were on emergency work, who were doing work for and building things for the Government, and were being paid by the Government were in fact employed. Then if if I were to extend your line of thought, then today, the entire work force, including the US Military that is employed by the Government, is in fact an unemployed person.
Originally posted by tsetsefly
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Originally posted by tsetsefly
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This made the Roosevelt administration’s economic performance appear uncompetitive, but it is fairer to argue that the people employed in government public works and conservation programs were just as authentically (and much more usefully) employed as draftees in what became garrison states, while Roosevelt was rebuilding America at a historic bargain cost.
If these workfare Americans are considered to be unemployed, the Roosevelt administration reduced unemployment from 25 per cent in 1933 to 9 per cent in 1936, up to 13 per cent in 1938 (due largely to a reversal of the fiscal activism which had characterized FDR’s first term in office), back to less than 10 per cent at the end of 1940, to less than 1 per cent a year later when the U.S. was plunged into the Second World War at the end of 1941. The reasons for the discrepancies in the unemployment data that have historically arisen out of the New Deal are that the current sampling method of estimation for unemployment by the BLS was not developed until 1940, thus unemployment rates prior to this time have to be estimated and this leads to some judgment calls.
The primary judgment call is what do about people on work relief. The official series counts these people as unemployed, with the result that historians of a conservative bent are given ammunition with which to shoot at the entire New Deal. Christopher Wrestley, for example, argued: “By the midpoint of FDR’s second term, the failure of the New Deal policies was evident to all but the truly delusional. The unemployment rate again reached levels associated with the hated Hoover, while the public’s tolerance of the pretentious New Dealers and their endless attempts to control the economy waned.” (Wrestley, 2001).
However, this is an instance of an ideology fundamentally hostile to the role of government in our society using history to discredit activist economic policy. If one uses the unemployment series for the 1930s excluding workfare constituents, the figures appear as follows:
This is from a series constructed by the economist, Stanley Lebergott in 1964.2
Here, the recession of 1937-38 almost completely wipes out any gains of the previous few years. It is almost as if the New Deal didn’t do anything for anyone, much.
Many people looked at these numbers without reading the notes on how they were constructed and concluded just that.
Then in 1976, an economist named Michael R. Darby wrote an article with the delightfully self-explanatory title, “Three-and-a-Half Million U.S. Employees Have Been Mislaid.”3 What Darby did was read the notes. Here is what Lebergott had to say about counting unemployment in the 1930s:
These estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930’s this concept, however, does include one large group of persons who had both work and income from work—those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930’s when persons in the labor-force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment. (Darby, 1976).
We would normally not consider people who painted murals for the WPA to be deemed worse off than those who “worked” in Mauthausen or the Soviet gulag. And yet, until we adjust the “workfare” discrepancy, incredibly we count such individuals as unemployed, even though their position was considerably better than that of someone generating no income, or working in abysmal conditions in a slave labor camp.
A number of points may be made here:
(1) if one is using the data to answer the question, “did the New Deal help people?” then this data absent the workfare numbers set is going to give you the wrong answer, because they imply that workfare people were suffering from unemployment who in real life had a job;
(2) but what if people in emergency work acted like the unemployed—that is, what if they were looking for a “real” job, and
(3) what about the “real” economy—the private industrial economy—how did it do?
Now, as it happens it looks like the answer to (2) is, mainly they did not—people who had an emergency job acted as if they had a job, and did not look for another one. The reason, perhaps, is that they did in fact have a job, and should therefore probably not count as unemployed.4
If one includes the workfare employees, one gets a very different picture of unemployment in the 1930s. Below, a graph showing the same series as the above, then a new series—from Weir’s table D3, which also appears in Historical Statistics of the United States—which counts only people without jobs as unemployed.
Again, this illustrates the severity of the Great Depression, but it also illustrates the crucial role played by the New Deal in mitigating its worst excesses.
Indeed, rather than “distorting” the private market, the improvement in aggregate demand brought about by the provision of workfare programs created positive feedback loops in the private sector. One can illustrate this by isolating the government employees within the data and showing a third line which features the private sector alone:
So again, here, we see significant improvement under the New Deal. In the purely private sector, unemployment rates reached 33 percent in 1932; by 1937 they were less than half of that, not counting those on government payrolls.
If anything, even the relapse of 1938 validates the efficacy of fiscal policy activism. During Roosevelt’s first administration lots of things were tried– and the budget debt continued to “explode” until it got to 5.5% of GNP as employment (and profits) significantly improved over three and a half years — but unemployment rates were still very high.
If these workfare Americans are considered to be unemployed, the Roosevelt administration reduced unemployment from 25 per cent in 1933 to 9 per cent in 1936, up to 13 per cent in 1938 (due largely to a reversal of the fiscal activism which had characterized FDR’s first term in office), back to less than 10 per cent at the end of 1940, to less than 1 per cent a year later when the U.S. was plunged into the Second World War at the end of 1941. The reasons for the discrepancies in the unemployment data that have historically arisen out of the New Deal are that the current sampling method of estimation for unemployment by the BLS was not developed until 1940, thus unemployment rates prior to this time have to be estimated and this leads to some judgment calls.
The primary judgment call is what do about people on work relief. The official series counts these people as unemployed, with the result that historians of a conservative bent are given ammunition with which to shoot at the entire New Deal. Christopher Wrestley, for example, argued: “By the midpoint of FDR’s second term, the failure of the New Deal policies was evident to all but the truly delusional. The unemployment rate again reached levels associated with the hated Hoover, while the public’s tolerance of the pretentious New Dealers and their endless attempts to control the economy waned.” (Wrestley, 2001).
However, this is an instance of an ideology fundamentally hostile to the role of government in our society using history to discredit activist economic policy. If one uses the unemployment series for the 1930s excluding workfare constituents, the figures appear as follows:
This is from a series constructed by the economist, Stanley Lebergott in 1964.2
Here, the recession of 1937-38 almost completely wipes out any gains of the previous few years. It is almost as if the New Deal didn’t do anything for anyone, much.
Many people looked at these numbers without reading the notes on how they were constructed and concluded just that.
Then in 1976, an economist named Michael R. Darby wrote an article with the delightfully self-explanatory title, “Three-and-a-Half Million U.S. Employees Have Been Mislaid.”3 What Darby did was read the notes. Here is what Lebergott had to say about counting unemployment in the 1930s:
These estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930’s this concept, however, does include one large group of persons who had both work and income from work—those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930’s when persons in the labor-force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment. (Darby, 1976).
We would normally not consider people who painted murals for the WPA to be deemed worse off than those who “worked” in Mauthausen or the Soviet gulag. And yet, until we adjust the “workfare” discrepancy, incredibly we count such individuals as unemployed, even though their position was considerably better than that of someone generating no income, or working in abysmal conditions in a slave labor camp.
A number of points may be made here:
(1) if one is using the data to answer the question, “did the New Deal help people?” then this data absent the workfare numbers set is going to give you the wrong answer, because they imply that workfare people were suffering from unemployment who in real life had a job;
(2) but what if people in emergency work acted like the unemployed—that is, what if they were looking for a “real” job, and
(3) what about the “real” economy—the private industrial economy—how did it do?
Now, as it happens it looks like the answer to (2) is, mainly they did not—people who had an emergency job acted as if they had a job, and did not look for another one. The reason, perhaps, is that they did in fact have a job, and should therefore probably not count as unemployed.4
If one includes the workfare employees, one gets a very different picture of unemployment in the 1930s. Below, a graph showing the same series as the above, then a new series—from Weir’s table D3, which also appears in Historical Statistics of the United States—which counts only people without jobs as unemployed.
Again, this illustrates the severity of the Great Depression, but it also illustrates the crucial role played by the New Deal in mitigating its worst excesses.
Indeed, rather than “distorting” the private market, the improvement in aggregate demand brought about by the provision of workfare programs created positive feedback loops in the private sector. One can illustrate this by isolating the government employees within the data and showing a third line which features the private sector alone:
So again, here, we see significant improvement under the New Deal. In the purely private sector, unemployment rates reached 33 percent in 1932; by 1937 they were less than half of that, not counting those on government payrolls.
If anything, even the relapse of 1938 validates the efficacy of fiscal policy activism. During Roosevelt’s first administration lots of things were tried– and the budget debt continued to “explode” until it got to 5.5% of GNP as employment (and profits) significantly improved over three and a half years — but unemployment rates were still very high.
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