Australia’s recovery from the Great Depression compared with Roosevelt’s sorry unemployment record

I’ve had several emails regarding unemployment rates during the Roosevelt administration. These readers were confused by some Keynesian sites asserting that the unemployment figures were inflated. One reader wrote that “the unemployment figures must have been greatly exaggerated because they excluded people on relief. If these people had been included then unemployment in 1938 would have been 12.5 percent and not be 19 percent.” I immediately recognised the figures as coming from Michael R. Darby’s 1975 paper1.

There is a sound reason why it is Keynesian votaries that tend to use Darby’s figures while the vast majority of economists and historians stick with the conventional figures. Putting the unemployed on relief and giving them a pay check is called working for the dole. It is an attempt to hide unemployment, not eliminate it. The old statisticians and economists understood that and were scrupulously honest in their estimates. It was called relief because it was understood that this ‘employment’ was a government-funded substitute for real employment. Better to be paid for doing something rather than be paid for doing nothing. Therefore, if these had been real jobs they would not, by definition, have been called relief. Taken to its logical conclusion all a government would have to do to eliminate unemployment is assign the jobless to various activities, no matter how pointless, and classify their dole payments as wages.

It should be equally clear that America’s hidden unemployment had to be paid for out of taxes and borrowing. Let’s look at this process from street level. Through no fault of his own poor Fred is priced out of his $800 a week job. Let us now assume that the powers that be impose a job tax on every household in Fred’s street. Fred is now considered employed by his neighbours at his old wage rate as the street’s caretaker. This means helping to maintain properties, repairing fences, mowing the lawns and nature strips while keeping the street clean. Presto! The street has now returned to full employment.

The first thing to note is that though everyone is now working the street’s aggregate income has not changed. What has changed is the composition of its income. Fred’s neighbours have had their total weekly purchasing power reduced by $800 in order to compensate Fred for the loss of his job. Those on whom that money was spent must now do without. You don’t need a doctorate in economics to see that there has been no increase in aggregate demand, just a redirection of purchasing power.

This is what happened with Roosevelt’s make-work schemes, the most well-known of which was the WPA2 (Works Progress Administration). Although billions of dollars went into these schemes the economy remained mired in depression while vast amounts of fixed capital remained in forced idleness. Now where did these dollars come from? Virtually every one came from the public either through taxes or borrowing. These schemes did not increase purchasing power, they absorbed it. The investments that would have been made and the goods and services that would have been bought with those dollars were permanently lost. The economists call this opportunity cost. John Stuart Milled expressed the classical wisdom on this nonsense about 184 years ago when he observed that

[t]he utility of a large government expenditure, for the purpose of encouraging industry, is no longer maintained. Taxes are not now esteemed to be ‘like the dews of heaven, which return in prolific showers’. It is no longer supposed that you benefit the producer by taking his money, provided that you give it to him again in exchange for his goods. There is nothing which impresses a person of reflection with a stronger sense of the shallowness of the political reasoning of the last two centuries, than the general reception so long given to a doctrine which, if it proves anything, proves that the more you take from the pockets of the people to spend on your own pleasures, the richer they grow; that the man who steals money out of a shop, provided that he expends it all again at the same shop, is a public benefactor to the tradesman whom he robs, and that the same operation, repeated sufficiently often, would make the tradesman a fortune3

It should be blindingly obvious to even the densest voter that increasing B’s purchasing power by reducing A’s purchasing power by the same amount does nothing for total purchasing power. Of course the really vulgar Keynesian would argue that this is not so if A is a big saver and B spends everything on consumption because B’s newly expanded buying power will promote growth by increasing the demand for consumer goods, whereas A’s saving retarded growth. This is where a classical economist would start tearing his hair out because he knew that it is savings that fuels economic growth and not consumption.

With respect to consumption versus saving Mill observed that

I apprehend, that if by demand for labour be meant the demand by which wages are raised, or the number of labourers in employment increased, demand for commodities [consumer goods] does not constitute demand for labour. I conceive that a person who buys commodities and consumes them himself, does no good to the labouring classes; and that it is only by what he abstains from consuming, and expends in direct payments to labourers in exchange for labour, that he benefits the labouring classes…4

From this it follows that demanding consumption goods directly, whether they be in the form of holidays, entertainments, medicine or education, does nothing to raise real wage rates and hence the standard of living because it does nothing to raise the marginal value of the labourer’s product. Mill was stressing the fact that demanding consumption goods directly does not, as the Austrian school of economics would put it, extend the capital structure. On the contrary, promoting consumption at the expense of savings reduces the level of investment5. In plain English, it’s savings that fuel investment and it is investment that raises real wage rates, not tax-funded boondoggles.

While Roosevelt’s disciples hail his make-work schemes as a roaring success they deliberately ignore the huge mass of capital goods that had been forced into idleness by his policy of maintaining wage rates above their market clearing levels. The massive extent of the economic slack that these policies created can be gauged by the fact that from 1939 to 1944 America was able to increase industrial production by 145 per cent6. By contrast, from 1914 to 1917 she was only able to expand industrial production by about 24.57, despite the economy being on a total war footing. Therefore the massive WWII increase in production revealed the existence of tremendous amount of industrial slack in the economy that Roosevelt’s policies had prevented from being eliminated.

These facts make a mockery of claims that the real unemployment rate in 1938 was “12.5 percent”. Moreover, one would expect that forcing a mass of capital into idleness would lead to capital consumption, which is precisely what happened with one estimate putting the drop in net capital formation at minus 15.2 per cent8.

Compare Roosevelt’s sorry record with that of Australia. By 1938 Australian unemployment had fallen from its peak of 30 per cent in 1932 to 8.7 per cent while in the same year American unemployment stood at 20 per cent against its peak of 25 per cent in 1933.

In 1938 the average working week for US manufacturing was 35.5 hours against 44.82 hours in Australia. (In fact, during the depression hours of work in Australian manufacturing never fell below 44). Not only did short-time working in American manufacturing reveal a significant degree of hidden unemployment it also signalled the existence of a huge amount of idle capital. This is in stark contrast with Australia. During the recovery her manufacturing base expanded to the extent that manufacturing employment was 26 per cent greater in 1938 than in 1928. This clearly indicates that, unlike America, Australia experienced net capital formation. In addition, from 1930 to 1939 America’s gross debt increased by 150 per cent while from 1928 to 1939 Commonwealth debt rose by 4.4 per cent, with nearly all of it taking place from 1928 to 19319

Australia’s recovery from the depression saw unemployment steadily fall and manufacturing expand in absolute terms. Not only that but she cut spending and then ran surpluses right up to WWII. She in fact did what Keynesianism declares to be impossible.

It beggars belief that anyone can seriously assert, after examining these facts, that Roosevelt’s economic record is superior to Australia’s.

* * * * *

Note: I am not the only one who finds it weird that Australia’s self-professed anti-Keynesians never really bothered to use the Australian experience in the Great Depression to effectively discredit Keynesianism. Professor Sinclair Davidson and Julie Novak’s essay Five and a half big things Kevin Rudd doesn’t understand about the Australian Economy failed completely to dent the Keynesian orthodoxy. Since then they and their colleagues have ceased to use the Australian experience in their attacks on Keynesian. By doing so they virtually snuffed out the possibility of genuine debate. One can only wonder at their reasoning.

1Three-and-a-Half Million U.S. Employees. Have Been Mislaid: Or, an Explanation of Unemployment, 1934-1941, Michael R. Darby, Working Paper No. 88, 1975, National Bureau of Economic Research, Inc.

2The degree of political corruption in Roosevelt’s New Deal policies was incredible. The historian Burton Folsom Jr. exposed some of the corruption in his book New Deal or Raw Deal? How FDR’s Legacy Has Damaged America, New York: Threshold Editions, 2008, pp. 86-92, 181-91, 200-2.

3Essays on Economics and Society, Collected Works of John Stuart Mill, University of Toronto Press 1967, pp. 262-63.

4Principles of Political Economy, Vol. I, University of Toronto Press, pp. 78-80. This is Mill’s fourth proposition on capital which, unfortunately, has been greatly misunderstood. Stanley Jevons and Edward Cannan were particularly hard on it.

What I found is that none of the critics appear to have been aware of John Rae’s pathbreaking work on capital theory. This is odd because Mill admitted in his Principles of Political Economy that his thinking on capital had been influenced by Rae. (Nassau Senior also admitted to being influenced by Rae’s work). Perhaps if Jevons and Cannan had read Rae their attitude to the fourth proposition would have been very different.

What Mill understood, perhaps not fully, and his critics failed to grasp is that it is a grave error to assume that because producer goods ultimately derive their value from the final products any increase in demand for consumer goods must therefore increase the demand for capital goods and hence expand the capital stock. This is the origin of the accelerator and I think it is a very dangerous fallacy.

I intend to eventually do a post on Mill’s proposition.

5Classical economists noted that increased government spending could promote consumption at the expense of capital accumulation.

6Historical Statistics of the United States 1789-1945, p. 330

7Frederick Cecil Mills, Economic tendencies in the United States: Aspects of Pre-war and Post-War Changes, National bureau of economic research, 1932, pp. 188-9. Incidentally, 1914 was also a recession year. If the American economy had been operating at its usual capacity the war-time increase in production would have been much lower.

8W. Arthur Lewis, Economic Survey 1919-1939, Unwin University Books, 1970, p. 205. It was also noted that by 1936 the real amount of capital per wage earner employed in terms of dollars was 18 per cent below the 1929 level (National Industrial Conference Board: Studies in Enterprise and Social Progress, National Industrial Conference Board Inc.,1939, pp. 224-25). I shall be returning to the question of capital consumption in another post.

9The debt actually fell in 1933 and continued to fall until 1937 after which it began to rise, Nevertheless, the debt in 1939 only exceeded the debt in 1928 by 4.4 per cent.

80 thoughts on “Australia’s recovery from the Great Depression compared with Roosevelt’s sorry unemployment record”

  1. I think this is a telling response to Keynesians who think having men bury bottles and then having other men dig them up again is a cure for mass unemployment

  2. Gerry’s logic is spot on. How can it be real growth if it just consists of transferring income from one group to another group?

  3. I didnt know about Australia in the great depression until today. I was taught that the new deal was what saved America and that we led the world. This post is a complete shock to me.

  4. This post is putting this part of the great depression in perspective. I remember from one of Gerry’s old articles where he said that raising wages above the market rate does not just cause unemployment but actually distributes income from the people who lost their jobs to those who kept their jobs. I never forgot that.

  5. Another great post. I never cease to learn from Gerry’s posts. What particularly got my attention was all that idle capital and the capital consumption. If Roosevelt’s economic recovery was so great why was there capital consumption and a great masses of idle machinery?

  6. Good points, Sherlock. What gets my goat is that Steve Kates, Sinclair Davidson and the rest of the fake scholars on the right are deliberately trying to bury this material. I know that sounds a bit schizo but its got to be true. If it wasn’t true that mob would be beating Keynesians to death with this stuff.

  7. A few months ago I would not have agreed with Sarah. Now I cannot disagree with her. Their actions speak louder than words.

  8. I think this blog is the only real anti-Keynesian blog in Australia. Its the only one that gives us real arguments to use and a bunch of historical facts to go with them. You dont get this anywhere else.

  9. Gerry,
    no Keynesian would support Roosevelt’s policies. You obviously are unaware Keynes was quite critical of some of Roosevelt’s policies!

    Firstly the CCC was not work for the dole in the 30s.
    A good book to start with is Klaus Patel’s excellent book Soldiers of Labour which looks mainly at the program in Germany but also compare/contrasts with the CCC in the USA. About 13 countries did these sort of programs if my memory serves me well however I haven’t looked at this for possibly five years.

    If one took into account these programs unemployment would have been a touch over 9% in 1936. We do this today quite rightly indeed EVERY statistics body counts it as work and they did it in Germany at that time. If real wages were cut then the USA like Germany would have easily reached full employment.

    In the USA consumption, Investment and government purchases all rose in real terms from 1933. Investment only got to 1939 levels in 1937 and then it went backwards again because of poor fiscal policy amongst other things..

    In Australia the Commonwealth’s tight policy in 1931 which stopped the nascent recovery ( GDP went negative in 1932) was obviated somewhat by the States who could not immediately cut their expenditure given they major expenditure was on railways, roads, harbour bridges etc.

    Yes the 1931 budget was restrictive but few were after that. Gerry and other here still do not understand either the importance of the Structural/Cyclically adjusted part of the budget and how it cannot be restrictive all the time. You cannot keep on making it larger!
    Brad De Long’s paper I though would have made that clear.

    indeed by around 1936 even the commonwealth was into infrastructure spending.

    As I have said A budget in surplus can be expansionary as Peter Costello has shown us and a budget in deficit can be highly restrictive as Wayne Swan has shown . What about Europe?

    comparing Unemployment in 1938 for Australia and the USA is terribly misleading. Roosevelt followed his advisers who believed in classical economics and hey presto we got a recession in the USA. It was far worse in the USA in 1937 than in Australia in 1932 because
    1) fiscal policy was much more restrictive in the USA. As I showed previously Roosevelt’s largest change in fiscal policy occurred in 1937
    2) monetary policy had gone tighter by then
    3) as Gerry has shown wages policy was mad

    you compare apples with apples not with oranges.

    Gerry you should also look at the Kiwis!

  10. Gerry is spot on. Not you. Australia’s record beat America’s hands down. Putting people on the public payroll because they cannot get jobs is not creating unemployment and Gerry explained why. Putting these people on the public payroll was an admission of failure and it was crooked to boot.

    Gerry proved that Australia achieved what Keynesianism said was impossible. You don’t even try to prove otherwise.

  11. I wrote too quickly.

    “Putting people on the public payroll because they cannot get jobs is not creating unemployment” should read “Putting people on the public payroll because they cannot get jobs is not creating employment”

  12. Nottrampis is a true believer. He just cannot admit that Gerry has convincingly proved that Australia’s record in the great depression refutes Keynesianism and shames Roosevelt.

    Australia ran surpluses. America ran deficits and raised debt by 150%. But notrampis argues that Roosevelt’s “fiscal policy was much more restrictive”!!! He says that real investment increased but Gerry showed that capital consumption was the real case.

    Gerry provides facts and argument. Nottrampis just gives quotes and assertions. He never proves anything.

    BTW. Gerry once said that if the problem was real wages then what happens to Keynesian demand deficiency that Keynesians are always yapping about?

  13. This is ridiculous. Gerry provided evidence proving that America suffered capital consumption in the Great Depression and Nottrampis replies with the assertion that real investment rose. If it did why did “capita per wage earner” fall?

    And where does he get this Australian GDP figure hes always throwing around?

  14. I’ve been googling the net for an example of an expansionary budget surplus and I cant find a thing. Instead of telling us that there was one, nottrampis, prove it. Show us how it was expansionary. Provide a source. Another thing, stop making baseless claims. If Gerry is wrong about investment prove that one as well. Gerry gives us plenty of sources, including page numbers, you give nothing.

  15. It’s useless, Sahara. No matter how much evidence Gerry produces Notrampis will keep on parroting the same stuff. For God’s sake, you cannot argue with someone who believes putting people on a government payroll cures unemployment? He had absolutely no answer to Gerry’s logic. This is the bloke who thinks bombing cities promotes growth.

  16. What gives with this guy? I never did any economics but i still got the message. This Nottrampis guy is a loser.

  17. Everyone should look on the funny side. This is the only Australian blog debating Keynesianism. While the bullets fly down here Steve Kates is telling everyone to read his book because it has all the answers to Keynesianism. This is a bloke who doesn’t have the backbone to take on someone like Notrampis. This is what I meant by the funny side.

  18. You are wrong and Nottrampis is correct. During the depression state and local governments in America raised taxes and ran surpluses. this drained spending power. When Roosevelt cut spending the total result was the crash the 1937 crash.

  19. Ref: Nottrampis

    All your points are either wrong or irrelevant. Nevertheless, I shall answer them in the near future.

    PS Sorry about the tardy reply but I’ve been a little under the weather lately.

  20. People if you do not understand fiscal policy as Gerry clearly doesn’t do not display your ignorance.
    If you do not like the way the ABS and EVERY other Statistical agency defines unemployment complain to then do not display your ignorance.

    I do not know why Gerry continues to put up Roosevelt as a Keynesian par excellence when clearly he was no such thing. However despite his appalling labour market policies he had a recovery much better than Australia until he thought classical economics was the answer in 1937. It wasn’t!

    Australia best unemployment rate was over 8% which means Australia was still in recession.
    The only time the Commonwealth budget was restrictive was in 1931 . It was Never after that. It went from neutral to mildly expansionary.

    Nick Gerry and I are talking about two different concepts!
    I am talking about the normal capital investment in the national accounts in real terms!

  21. Forgive me Gerry but get well soon my friend. Whilst I doubt I will ever agree with you you articles are always a must read!

  22. John Humpheys the psycho is back again and off his meds.

    Question time again, Mr Psycho.

    When are you going to call out Steve Kates for lying about reading the classical economists?

    When are you going to call Kates out for lying about the trade cycle and the classical economists?

    We know he lied about these things because Gerry proved it.

    When are you going to call out Sinclair Davidson for trying to con people into thinking he studied the great depression?

    When are going to demand that davidson correct his stupid mistake about the gold standard and Australia?

    And when did the doctors say they would be able to declare you sane and fully cured?

    Finally, I cannot wait till Gerry gets back into gear. Australia needs him.

  23. John Humpheys the psycho is back again with another stupid and cowardly comment. Gerry explained everything in detail and Psycho Humphreys snarls that Gerry is only quoting!!! Gerry proved that Steve Kates is lying about the classical economists. He proved that Sinclair Davidson stuffed up on Australia and the Great Depression. Its this pair who quote without any understanding and it is Wacko Humphreys who’s running cover for them becausce they don’t have the guts to tackle Gerry.

    Question time again, Mr Psycho.

    When are you going to call out Steve Kates for lying about reading the classical economists?

    When are you going to call Kates out for lying about the trade cycle and the classical economists?

    When are you going to call out Sinclair Davidson for trying to con people into thinking he studied the great depression?

    When are going to demand that davidson correct his stupid mistake about the gold standard and Australia? (Talk about someone quoting without understanding or doing simple research!!)

    And why do the doctors allow you out of your padded cell?

  24. Psycho Humpheys back with schoolyard abuse. He knows kates is lying and Davidson is flakey. He knows they don’t really care about the facts or the truth. He knows Gerry made mincemeat out of them. This is why hes trying to cover for them.

    Question time, Mr Psycho.

    When are you going to call out Steve Kates for lying about reading the classical economists?

    When are you going to call Kates out for lying about the trade cycle and the classical economists?

    When are you going to call out Sinclair Davidson for trying to con people into thinking he studied the great depression?

    When are you going to demand that davidson correct his stupid mistake about the gold standard and Australia?

    And when is Davison going to learn some real history instead of making it up?

    And why does the staff in the asylum let you use a computer?

  25. ESS,
    Gerry allows full comment here and I have yet to see you provide any comment that suggests you understand the subject let alone comment on any subject.

    A person who comes to this blog and then makes comments like you have simply provides evidence to Sarah’s assertion that you are a psycho.

    If you understand the subject then show it otherwise sod off. your comments towards Gerry are of the lowest taste imaginable!

  26. Oh dear, Psycho Humphreys is loose again. Better call the guys with the butterfly nets.

    Please tell us Mr. Psycho, before they take you away again.

    When are you going to call out Wacko Kates for lying about reading the classical economists?

    When are you going to call Wacko Kates out for lying about the trade cycle and the classical economists?

    When are you going to call out Wacko Davidson for conning people into thinking he studied Australia in the great depression?

    When are you going to demand that Wacko Davidson correct his stupid mistake about when Australia left the gold standard?

    And when will Wacko Davison learn some real history instead of inventing it?

    And are you on day release from the asylum or did you escape?

  27. Psycho Humpheys returns. Well Mr. Sicko, time for the $64,000 questions again.

    When is Steve Kates going to stop lying about having read the classical economists?

    When is Steve Kates going to stop lying about his trade cycle theory?

    When is that pompous prick Sinclair Davidson going to stop lying about studying Australia in the great depression?

    When is Sinclair Davidson going to stop lying about Australia and the gold standard. Then maybe you are too stupid to understand that refusing to correct his mistake on the gold standard is the same as lying.

    Time now to congratulate Mr. John Humphries for being the only man on the planet able to type while strapped into a straitjacket. How does Johnnie Boy do it?

  28. I must admit to being amused by these exchanges. I was also going to stay out of it until I read John Humphreys last comment. I really believe that only a very disturbed personality could have written it. Going back over some of John Humphreys posts convinced me that his obsession with Gerry and his obvious hatred of the man reveals a dangerous pathological state of mind. Humphreys is a man in genuine need of psychological help.

  29. Now that he has escaped from the asylum Psycho Humphreys is trying to cover his tracks. It’s a waste of time, Humphreys. We all know it’s you.

    BTW, Mr. Psycho, nobody here mentioned Chris Berg.

  30. I agree with Sarah. If ESS is not John Humphreys then he would have done the decent thing from the start and saved Humphreys any embarrassment by revealing his own identity, or at least stopped commenting. That he did not do this is evidence enough for me that he really is Humphreys.

    Sarah is right about Chris Berg. I do not even think Gerry mentioned the guy. I think Humphreys is just using berg as a red herring. It really is a silly thing to do and smacks of desperation.

    To repeat what I said before. John Humphreys is a very disturbed person and is in need of psychological counselling.

  31. Oh dear me, the psychopathic John Humpheys has got his knickers in a twist. I guess it’s time to ask Mr. Psycho the $64,000 questions again.

    When are you going to call out Wacko Kates for lying about reading the classical economists?

    When are you going to call Wacko Kates out for lying about the trade cycle and the classical economists?

    When are you going to demand that Wacko Davidson correct his stupid mistake about when Australia left the gold standard?

    And when will Wacko Davison learn some real history instead of inventing it?

    And why does the asylum allow you access to a computer?

  32. It is obvious that John Humphreys latest post confirms my observations about the man’s state of mind. Any layman can see that his obsessive hatred of Gerry is pathological. I can only shudder at what might be the cause of Humphreys mental disorder.

    It just occurred to me that Sinclair Davidson also has a problem with Gerry. Why else would he tell Catallaxy readers to ignore anything Gerry writes and then make the ludicrous accusation that his blog is a hate site. I don’t think for a moment that Davidson is disturbed, just terribly thin-skinned and mean-spirited with it.

  33. I forgot about Davidson’s nasty comments. Now if I was as schizo like John Humphreys I might start thinking that someone was pulling his strings.

  34. John Humphreys the Psyco returns. What about the list of people who despise and laugh at Steve kates and Sinclair Davidson? It must be getting longer by the day. And there is so much to despise about these wackos.

    1. Steve Kates lying about reading classical economists.

    2. kates continued lying about classical trade cycle after Gerry had corrected him.

    3. Sinclair Davidson pretending ot have studied Australia in the great depression.

    4. davidson’s nasty claim that this site preaches hatred just because it corrected his mistakes.

    5. Sinclair Davidsons stupid mistake about australia and the gold standard that he refuses to correct.

    6. Davidson’s other stupid mistake, the one in which he said rent was based on the labor theory of value (http://gerardjackson.com/category/sinclair-davidson/). This is another mistake he refuses to correct.

    Humphreys the loony is amazing. The only person who can type while bouncing abourd in a padded cell.

  35. John Humphreys obsessive behaviour should have convinced everyone by now that he is a very disturbed person. I can not imagine how or why Gerry became the focus of his hatred but it is not the product of a healthy mind.

    Sometime ago it became clear that Humphreys crossed the line from being a troll to being a stalker. Regardless of the reason for his vendetta the fact that it is apparently having no effect on Gerry, who is wisely ignoring him, makes me wonder if Humphreys growing anger at the man might result in him taking other measures in an attempt to satisfy his hatred of Gerry.

  36. Don’t sweat it Sherlock, we all know humphreys is as nutty as a fruitcake. but Gerry has nothing to fear from this twit. The loon probably runs around the bedroom with his girlfriend’s panties on his head pretending to be 007.

  37. Psycho Humphreys comes limping back again. Lets look at some of the ways his mates Steve Kates and Sinclair davidson damaged economic thinking in Australia

    1. Steve Kates stuffed up so badly on the classical economists he has resorted to lying to cover his backside.

    2. kates lying about the classical trade cycle theory has misled tons of students, executives and politicians and aided the enemies of free enterprise.

    3. Sinclair davidson pretending to have studied Australia in the great depression misled thousands of Herald Sun readers, thanks to that idiot Andrew bolt. Davidson also misled IPA donors and its readers.

    4. Davidsons stupid mistake about australia and the gold standard has totally misled stacks of people who now go around repeating his mistake, the one he wont correct.

    6. Davidson’s mistake about rent has misled a pile of people and it still does. This is because he won’t correct it. Anyone who looks up the meaning of rent on the net, as I did, can see that he got it totally wrong.

    “The state of economic knowledge will improve” greatly once this pair of wankers are gone and we get some real economists.

    Humphreys is an amazing talent. No matter how many antipsychotic pills the doctors give him he always manages to palm them.

  38. With every comment John Humphreys makes he reveals his increasingly obsessive hatred of Gerry. In number of comments Sarah has stressed the dishonesty and even incompetence of Steve Kates and Sinclair Davidson. Rather than deal with these points Humphreys carries on in a perfect state of denial. To a man in his mental condition there is absolutely nothing to criticise or defend with this pair. All is perfect with his heroes.

    I don’t know what I find more disturbing, Humphreys mental state or the fact that he is considered a member in good standing of the right-wing’s closeted society.

  39. What’s really amazing, Sarah, is that a great article on Australia and the Great Depression has been sidetracked by that moron John Humphreys. Am I wrong in considering the possibility that Davidson and a couple of his mates have been encouraging humphreys to mau-mau this site. It was davidson’s malicious attempt to tag this blog as a hate site that got me thinking this way.

  40. I’ve had similar thoughts, Mandrake. Calling this site a hate site was not the first time Davidson showed he had it in for gerry. Way before that he accused Gerry of stabbing the right in the back all because gerry wrote articles criticising their economics. Talk about thin-skinned!

  41. The uncontrollable the psychopathic John Humpheys returns. Time to ask Mr. Psycho the $64,000 questions again.

    When are you going to call steve Kates a dick for lying about reading the classical economists?

    When are you going to call out Steve Kates for lying about the trade cycle and the classical economists?

    When are you going to call Sinclair Davidson a dick for refusing to correct his stupid mistake about Australia and the gold standard?

    When are you going call Sinclair Davidson a dick for refusing to correct his other stupid mistake on economic rent?

    And when is that dick Sinclair Davison going to write real history instead of inventing it?

    And why have the doctors delayed your lobotomy operation again?

  42. I now think there is a strong rationale behind Humphreys abuse of Gerry and his attempts to smear him as both ignorant of economics and a liar. During the weekend I went over the stuff gerry did on the Great Depression and the classical economists. I then Googled what Davidson and Kates did. Gerry is destroying them.

    It is clear to me that Humphreys knows this. Steve Kates mangled response to Gerry is also proof that Kates knows he has been exposed as incompetent. Davidson’s attitude is more proof that this pair knows they have been cornered. I believe this explains Humphreys desperate rants.

    He doesnt know it but Humphreys is telling us that the right do not give two figs about genuine scholarship and care only about their egos. This has strengthened my suspicion that Humphreys is being encouraged to smear Gerry.

  43. Its not a suspicion with me, Sherlock. I believe Davdison stands right behind Humphreys slurs. Gerry’s accusation that the right have shut down any debate on Australia and the great depression is spot on.

    I read Davdson and Novak on the great depression and unemployment. Gerry is right again. They never tried to explain why unemployment fell. They just babble about spending cuts. I remember that Gerry said that Schedvin answered this in 1970 something.

    I think its obvious that Gerry is using the great depression to successfully attack keynesianism. Davidson and his mates cant tolerate this.

  44. I think Psycho Humphreys is getting very, very nervous. It must also be really hard for him trying to change his underwear while strapped into a straitjacket.

    Whatever Gerry ailment is I’m pretty sure he’ll be back and going by the stuff he has published I bet Steve Kates and sinclair Davidson will be in for another going over.

  45. I hope Sarah’s right about Gerry coming back. I think this stuff about trade cycles and Australia in the Great Depression needs a thoroughgoing debate and he seems to be the only one on the free market side capable of providing one. We already know how badly kates and Davidson stuffed it up and how much they and their friends now want to stop a real debate on these topics from taking place.

  46. Its a very bad state of affairs when the right start doing what the left does and that is try to crush any kind of reasonable criticism.

  47. The idea that you could successfully mock gerry is ludicrous. Gerry presented a powerfully reasoned economic case complete with statistical evidence and all you could do is launch spiteful ad hominem attacks against the man. I don’t know about Steve Kates but if Gerry had got anything wrong on the classical economists or the devaluation Sinclair Davidson would have been all over him and you would be repeating the attacks ad nauseam. That both kates and Davidson stayed silent is proof that Gerry hit the target.

    Not every person with mental issues is pathetic but you certainly are.

  48. Roll up! Roll up! Roll up ladies and gentlemen!

    See the Amazing John Humphreys! See how he palms his medication. See how he types “I hate Gerry Jackson” while strapped in a straitjacket! See how he peels bananas with his feet while catching peanuts in his mouth! See how he hides his laptop up his backside!

  49. Psycho Humphreys is back with his thumb in his mouth. Tell us Mr. Thumbsucker, when is Steve kates going to come out and play with Gerry? They can play “who really read the classical economists.” It’ a thousand-to-one on gerry. I could make a fortune punting against kates.

    They could also play at “who really knows the classical trade cycle theory”. Guess who I would bet on? Its not Kates!

    Ive got a great game for Davidson. It’s called “make-believe history”. What you do is make up something and then pretend it really happened. I’ve got another one, it’s called “I’m so smart I never make mistakes”.

    Tell us Humphreys, how do you manage to get your laptop out of your bum while strapped in a straitjacket or does Davidson get it out for you?

  50. Humpheys the psycho is off his meds and back again. Well, Psycho Humphreys, time for more questions:

    when are Sinclair Davidson and Steve Kates going to give up the subsidised perks that RMIT provide, care of the Aussie taxpayer?

    When will Davidson stop lying to his students about Australia and the great depression and the gold standard?

    When will Davidson the boneless get a spine implant and come out to play with gerry?

    Talking about boneless blowhards who need spine implants, when will steve Kates stop lying to his students about the classical economists and the classical theory of the trade cycle?

    When this pair kept repeating stuff that was shown to be false they became liars. Being a liar yourself is one of the reasons you support them. I bet the other one is that you hope theyll recommend you for a job. I suggest bum boy.

    Right now I can see three monkeys lined up. One covering his eyes so he doesnt have to look at a someone proving he wrote lies. another monkey covering his ears so he doesn’t have to listen to someone proving him wrong. The third monkey has his head up his bum. That one is you.

  51. Reading John Humphreys last comment made me realise why a lot of psychologists find the absence of self-awareness in some people such an interesting phenomenon. He accuses Gerry of having no integrity. This is rich coming from someone who defends Steve Kates and Sinclair Davidson.

    Gerry conclusively proved that Kates had got the classical theory of the trade cycle completely wrong, Therefore Kates must not have read the relevant material on the subject despite claiming otherwise. His rambling response to Gerry shows this to be a fact. But Steve Kates refuses to admit his error and continues to repeat it knowing he is wrong. This shows a shameless disregard for professional integrity, a disregard that John Humphreys defends.

    Sinclair Davidson made a simple mistake regarding Australia and the gold standard. Gerry also drew attention to the mistake he made on “economic rent” and the labor theory of value. but Davidson refuses to correct them. He is showing the same contempt for professional integrity as is Kates. His attempt to smear this blog as a hate site is another example of his lack of integrity.

    I said before that Humphreys moved from being a troll to being an obsessed stalker. His latest comment confirms that observation.

  52. ESS is a person who needs help.

    Gerry does his homework as opposed to Davidson who is inherently lazy.

    Some people may disagree with Gerry but he does have our respect.

    Davidson doesn’t.

  53. What gets me is that Davidson and kates don’t have the backbone to confront Gerry directly but professor davdison has the nerve to label this blog a hate site. So wheres his integrity?

  54. nottrampis hit the nail on the head. I think the main reason Davidson and his pals have got it in for Gerry is that he does do his homework. That makes me think thats one of the reasons Psycho Humphreys keeps commenting. Psycho cannot point to any errors by Gerry so he abuses him. Davudson is the same. He cannot fault Gerry on the devaluation or the classical economists so he calls the blog a hate site instead.

  55. As expected, John Humphreys, the right’s favourite psycho, has come sneaking back again.

    This lying nasty piece of work is still stewing with hatred for Gerry because Gerry exposed him as an incompetent economic hack by demolishing his stupid carbon tax proposal. even the right-wing are still attacking Humphreys stupid views.

    According to John Humphreys the carbon tax would have benefitted Australia and brought forth a mass of new technologies that would have given us a super economy. Gerry completely destroyed this insanity and showed everyone that humphrys is a moron. Moran even attacked this stupidity again – yesterday.
    http://catallaxyfiles.com/2015/04/15/garnaut-re-advocates-his-failed-policy-approach/

    It’s sad for Australia that Humphreys mates are a gang of losers.

    They lost the carbon tax fight. It took an election to repeal it.
    They lost the fight on labour markets.
    Kates lost the fight with Gerry on classical trade cycle theory.
    Davidson and Novak lost to Gerry on the great depression
    they lost the fight on spending.
    They lost the fight on taxes.
    They lost the fight on renewable energy that the very stupid John Humphreys wants to subsidise.

    When Gerry comes back, and I’m sure he will, then we’ll get some real history and some real economics instead of the rubbish our right keep spewing out.

  56. So Psycho Humphreys, aka the loser, wants some more.

    When Gerry comes back I have no doubt he will once again expose Davidson, Kates and the rest of the losers as incompetents. That they need a POS like you to try and put gerry down shows how gutless they are.

    Gerry destroyed Sinclair Davidson and novak on Australia in the great depression. He showed they didn’t know what they were talking about. He showed that they never even did any real research. As soon as Gerry done them over they stopped writing about the subject. Now the right has decided that the subject is not mentioned again.

    None them of had the backbone to challenge gerry’s work. This proves he is right. If he got it wrong that bunch would have been all over him and so would you.

    Steve Kates is the same. Gerry exposed him as a fraud and a liar. Instead of tackling Gerry he now pretends it never happened. Another lying coward.

    Graham Young, another POS, called Gerry a liar over the classical economists by saying Gerry had never read them. Now the liar has also gone silent. Is that because he found out that Gerry really did read those economists?

    What a bloody bunch of dishonest blowhards.

    Then we have you. Another lying POS that Gerry shredded. He showed everyone what a moron you are. OMG! You have to be really, really stupid to argue that a carbon tax will create masses of new technologies. Even the gang at catallaxy are laughing at the stupidity of it. That means, Mr. John Humphreys, that they are laughing at you.

    Tell us, Mr. Psycho, when are your lying mates going to try and refute Gerry?

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