In November of 1929, in reaction to the breakdown of the stock market, Herbert Hoover immediately called for a raft of economy-supporting programs including substantial spending on public works projects. This round of public spending resulted in San Francisco’s Bay Bridge, the Los Angeles Aqueduct, Hoover Dam on the Colorado River, and many other such projects.
Hoover Dam is perhaps the most iconic of all of these efforts. Although environmentalists might argue, in terms of its benefits such as electricity generation and water supply for agriculture and eventually urban use, it is about as useful and worthwhile a public work as anyone could ever hope for. When it was completed, it was the world’s largest electric-power generation facility and the world’s largest concrete structure.
Planning for Hoover Dam began in 1922, and was overseen by Herbert Hoover himself. Construction on the project was approved by Congress in December 1928 — long before the economic problems emerged. It was, in contemporary terms, as close to a “shovel-ready” project as you’d find. The initial appropriation for construction was made in July 1930.
The project officially began in September 1930. The contract for construction was awarded to a joint venture of six private companies in March, 1931. The first thing they had to do was to make a small city for the workers who would be working on the project. Boulder City was occupied in the spring of 1932. Roughly 16,000 workers were part of the construction, and many brought their families to live in Boulder City.
Initial construction on the dam project itself began with the upper cofferdam in September 1932. Construction was completed in March 1936. It was considered a great accomplishment to complete such an ambitious project so quickly.
As a result of these spending programs, the Federal budget ballooned enormously. In 1929, the government had $3.862 billion of tax revenue, and spent $3.127 billion, enjoying a surplus of $734 million. In 1932, the government spent $4.659 billion, a 49% increase despite the “deflationary” environment.
In 1931, the government had its first deficit in eleven years, of $462 million. Perhaps this, and the spending commitments upcoming, is why Hoover pushed through an enormous tax hike in April 1932, which was enacted in June of that year. The top income tax rate in the U.S. rose to 63%, from 25% previously. Inheritance taxes were doubled, corporate tax rates rose, and a long list of excise taxes were imposed. It was predicted to raise $1.1 billion in new revenue, in an effort to close the budget deficit.
The tax didn’t help the economy much, however, and revenues remained weak. In 1932, revenue had collapsed to $1.924 billion, and were only $1.997 billion in 1933. The budget deficit exploded to $2.735 billion in 1932 and $2.602 billion in 1933.
John Maynard Keynes once argued that, in a depression, it would be worthwhile to pay workers to dig holes, and to pay other workers to fill them up. But how is this different than paying workers to do absolutely nothing? The main advantages appear to be psychological. “Workers” maintain a better morality and work ethic, and are less likely to revolt, than “welfare recipients.” And, they can be counted as “employed,” while a welfare recipient might remain “unemployed” until they actually found something productive to do in the economy.
We can see that it is not so easy to just “push money into an economy” via public works projects. The more useful they are, the more likely it is that they will take years of planning and construction. If the goal is to supposedly avoid some sort of downward spiral over the next six months, it is more likely that the funds will end up directed into something more like Keynes’ hole-digging exercise.
Thus, we can see that, when short-term “stimulus” becomes the focus, the effect is more likely to be short-term welfare. There is nothing particularly wrong with welfare in a depression. Better than having people dying in the streets. But, increased welfare spending isn’t much of an economic program in itself.
In retrospect, Hoover Dam was probably a worthwhile project. It produced something of value, and kept 16,000 workers busy over the 1931-1935 period, the worst part of the Depression. However, one effect of this aggressive deficit spending was an eventual rise in tax rates, which did additional economic harm. Roosevelt continued along the same path: spending soared up to $9.468 billion in 1940, and tax rates soared higher as well, with the top rate hitting 81% in 1940 (and 94% in 1945).
Politicians always like to spend other peoples’ money, so it is no surprise that they — always and everywhere — flock around those economic advisors that tell them that enormous spending projects are the key to resolving economic difficulties. Nor is it a surprise that economists are quick to tell people what they want to hear. If you’re going to be wrong all the time, you might as well be popular, well-paid, and wrong. Economics being what it is, you can always argue later that you were wrong because “people didn’t do enough.”
These ideas were solidified in a book written by John Maynard Keynes and published in 1936. Since governments had already been hard at work at “stimulus” for a half-decade or more already by that point, you could say that the book was a how-to guide for economists to justify policies that were already popular.
When you get past the cloud of nonsense surrounding “stimulus spending,” with its output gaps, multipliers and so forth, it seems to me that government spending during a recession accomplishes roughly what it does during any other time. Mostly, it is a big waste of money, but it might keep some people employed and maybe you’ll even be left with something useful afterwards. I would suggest a decent rail system, at least as good as that of France. Since we’re spending trillions anyway, how about as good as the U.S. had in 1910? That would be, I argue, the least bad of all possible boondoggles.
Nathan Lewis was formerly the chief international economist of a leading economic forecasting firm. He now works for an asset management company based in New York. Lewis has written for the Financial Times, the Wall Street Journal Asia, the Japan Times, Pravda, and authored Gold: The Once and Future Money.
public works — rail system, sewage system upgrades, renewable energy projects with electric car coupling, all good. note on politicians raising taxes eventually to top graduated rate of 95%; politicians are not at the pinaccle of power in the US — so the de facto ruling elites must have approved the 95% policy; wonder how many of them actually arranged their taxable income to fall into the 95 or even the 60% category. So for history students ….how much revenue was actually collected at the top rate of 94% in 1945? not much i would suspect maybe $100? Have to laugh at those who believe politiciansd are in charge….!
are politicians in charge…. ?
Pingback: jalia parsnip
Pingback: mark mania
Pingback: Chase Online Login
Pingback: chase online banking
Pingback: click here
Pingback: da Vinci prostatectomy
Pingback: universal remote
Pingback: Louis Leason
Pingback: Renato Aragon
Pingback: Julissa Jefferds
Pingback: Filiberto Kinzer
Pingback: charlottesville real estate listings
Pingback: deezer gratuit
Pingback: youtube partner
Pingback: vigrx plus coupon code
Pingback: natural garcinia cambogia
Pingback: tablet pillow holder
Pingback: KM DP106 Black
Pingback: barbour ladies
Pingback: can you learn social media online
Pingback: Payday Loans
Pingback: Canada Goose Outlet Cheap
Pingback: big trucks
Pingback: lon rosen net worth
Pingback: mp3 volume booster
Pingback: earring jackets
Pingback: lon rosen
Pingback: hair extensions clip in
Pingback: pre bonded hair extensions
Pingback: escorts vegas
Pingback: great ipad accessories
Pingback: ham radio3k
Pingback: search engine optimisation companies
Pingback: samsung laptops
Pingback: web affiliate programs
Pingback: seo services in india
Pingback: Neverwinter Astral Elmas
Pingback: Unlock iPhone Saudi Arabia
Pingback: FIFA 14 coins Android
Pingback: PSO2 ãƒ¡ã‚»ã‚¿
Pingback: FF11 è‚²æˆä»£è¡Œ
Pingback: FF14 è‚²æˆä»£è¡Œ
Pingback: FFXIV è‚²æˆä»£è¡Œ
Pingback: The Elder Scrolls Online Power Leveling
Pingback: body modification
Pingback: Pure Garcinia Cambogia
Pingback: halifax print
Pingback: rs power leveling
Pingback: female enhancement pills
Pingback: POE Items
Pingback: austin personal injury lawyers
Pingback: Neverwinter Astral Diamonds
Pingback: Elder Scrolls Online Power Leveling
Pingback: how to become a photographer
Pingback: How to make wine at home
Pingback: pirater un compte facebook
Pingback: salt free water system los angeles
Pingback: visit homepage
Pingback: RuneScape Fire Cape
Pingback: ã‚¨ãƒãƒ¼ãƒ—ãƒ©ãƒãƒƒãƒˆ RMT
Pingback: ArcheAge Power Leveling
Pingback: house available Talis Park
Pingback: View This Video On Youtube
Pingback: play barbie games
Pingback: ArcheAge Gold
Pingback: FIFA 14 coins XBOX 360
Pingback: diablo 3 gold
Pingback: buffalo web design
Pingback: ãƒ‰ãƒ©ã‚´ãƒ³ã‚¯ã‚¨ã‚¹ãƒˆX ã‚´ãƒ¼ãƒ«ãƒ‰
Pingback: Free Xbox Live Gold Membership Codes
Pingback: World Map
Pingback: WOT Power Leveling
Pingback: PSO2 RMT
Pingback: FIFA 14 coins PC
Pingback: èˆžç¿”ä¼ RMT
Pingback: Guild Wars 2 Gold
Pingback: runescape 3 gold
Pingback: Unlock iPhone Brazil
Pingback: path of exile power leveling
Pingback: megasesso italy
Pingback: Unlock iPhone Poland
Pingback: iherb coupons
Pingback: niacinamide review
Pingback: temperature data loggers
Pingback: Bernie Fredline
Pingback: digital slr camera
Pingback: Jessica Alba images
Pingback: MHF Zeny
Pingback: Neverwinter Astral Elmas(Neverwinter Astral Diamonds)
Pingback: Saloons in Dehradun
Pingback: How beat cellulite 100% scientifically-proven way ignored by most doctors
Pingback: Bing ad
Pingback: air conditioning repair stafford tx
Pingback: visit our website
Pingback: parking lot striping company
Pingback: Cladding Toowoomba
Pingback: criminal attorneys wv
Pingback: FIFA 14 RMT
Pingback: FF11 RMT
Pingback: gender predictor
Pingback: Bucks divorce lawyer
Pingback: two way signs
Pingback: Bella Labs Teeth Whitening
Pingback: water damage kansas city
Pingback: pabrik panel lantai termurah di Indonesia
Pingback: dapatkan jasa desain grafis
Pingback: party rentals burbank
Pingback: garments buyer
Pingback: AION RMT
Pingback: Horror music video
Pingback: diablo 3 power leveling eu
Pingback: la habra
Pingback: orange county
Pingback: ny home healthcare services
Pingback: Buying Wholesale
Pingback: Shim Sung
Pingback: buy twitter followers
Pingback: Justin Ligeri
Pingback: Cygen Labs
Pingback: Wizardry RMT
Pingback: bathroom remodeling Los Angeles
Pingback: Browse Around These Guys
Pingback: Check This Site Out
Pingback: MHF RMT
Pingback: Rapidgator Downloader
Pingback: the six figure mentors membership
Pingback: in home pet sitting in naples
Pingback: erfolgreich schnell abnehmen
Pingback: Diablo 3 Gold
Pingback: æˆ¦å›½ãƒ†ãƒ³ã‚«ãƒˆãƒªã‚¬ãƒ¼ è‚²æˆä»£è¡Œ
Pingback: Honda Pilot Memphis Mendenhall Auto Nation
Pingback: Mmr boost
Pingback: marketing the web
Pingback: home improvement
Pingback: xbox live codes
Pingback: lovett's lovin pet & home care in naples (239)465-6295
Pingback: ã‚¢ãƒˆãƒ©ãƒ³ãƒ†ã‚£ã‚« RMT
Pingback: correo electronico gmail
Pingback: The Elder Scrolls Online Gold
Pingback: purificadoras de agua
Pingback: iherb promo code
Pingback: iherb code
Pingback: Unit Link Terbaik di Indonesia Commonwealth Life Investra Link
Pingback: iherb coupon
Pingback: Divorce Attorney in Austin
Pingback: photography training
Pingback: pharmacy listing
Pingback: iherb coupon code
Pingback: Learn More
Pingback: grosir tas jakarta
Pingback: online income source
Pingback: builder square
Pingback: efectos glutamina
Pingback: for local ac repair in houston visit airbourne
Pingback: ac repair in brookshire
Pingback: Dr. Scott Steckler
Pingback: tam air conditioning
Pingback: apex appliance repair
Pingback: Big Data
Pingback: protecting your identity
Big government doesn't come cheap. And right now the U.S. government is one of the biggest in history. So far the budget writers have been able to move money around to keep the machine moving. But as Byron King points out, that will soon become much more difficult. Read on for the full story...
In the late '90s, financial TV personalities like Jim Cramer became mega stars - often drawing more ratings the ESPN. But that was over 15 years ago... That couldn't happen again, could it? Today, Wayne Mulligan details the new flock of personalities that are set to cash-in on a different kind of investment boom. Read on...
Being a "whistleblower" is no easy task. Regardless of whom you're blowing the whistle on, there's bound to be a fair amount of risk involved... and that's especially true if you're going after the "powers that be." But there's more to it than that... And as Chris Campbell explains, none of it matters if you can't protect yourself. Read on...
Last week was a rough one for most of the world's markets. Investors saw red almost everywhere they looked. And that's got a few media outlets ready to declare a top in stocks. Greg Guenthner explains why this line of thinking could be dangerous... and why, if you follow it, you could be doing your portfolio a disservice. Read on...
As conflict with ISIS looms, the Pentagon appears to be in a pickle... They've got all kinds of things on their "wish list", and they're not likely to get all of them. But they may have found a loophole, and that could mean big bucks for a handful of investors who know where to look. Peter Coyne explains...