Thursday, October 07, 2004

The Great Depression

How exactly did Roosevelt's policies exacerbate the Great Depression:

Roosevelt’s cartelization of America firms produced high wages and high prices, primarily in manufacturing and in some energy and mining industries.

Due to high employment losses during the Depression, a relatively small number workers ended up in these high paying jobs (cartel jobs).

Initially, the high wages attracted more workers to these industries and such businesses expanded -- increasing national output and reducing unemployment.

But over time, the inefficiencies of these arrangements began to restrict employment growth (in part, because workers were being paid more than their productivity merited) and economic recovery stalled.

More here