-- At 12:04 PM 10/14/2000 -0700, Richard Fiero wrote:
With respect to equilibria, it's an unwarranted assumption that a market has just one stable point. Certainly the Great Depression was a stable but undesirable situation.
It was only stable thanks to massive government intervention. You will notice that the recent Asian crisis started with a market crisis of confidence in government financial instruments similar to that which occurred just before the beginning of the great depression. The Asian governments responded to this crisis by looking at what governments did back during the great depression, and proceeding to do the opposite of whatever governments did back then. While the crisis of confidence caused some initial hardship, this would have swiftly evaporated as it did in the Asian crisis. What really caused the great depression in the United states was Smoot Hawley and government intervention to maintain artificially high wages for some groups, and artificially high prices to pay those artificially high wages. Similar wage and price policies in France today are accompanied by similarly high permanent unemployment, with totalitarian parties receiving a larger vote in France than they ever received in America during the great depression. If those wage and price policies were accompanied by Smoot Hawley, we would probably soon enough get a totalitarian regime in France. In Spain during the great depression, they simultaneously employed artificial wage policies, Smoot Hawley like tariff policies, and also massive Keynsian stimulation. This had the interesting result that they suffered an inflationary depression, the first major occurrence of the infamous stagflation, and did wind up with a totalitarian regime. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG /Il4oyhjZLMpYwPkHNBPkbDOvCqdT3i6s2Idi6VJ 4sWymZlb3VNvWA2v0KrisTwsq0/5Ts0zVfqLM8ICX