Comments on DeLong

J. Bradford DeLong (1996), “Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946,” Journal of Economic Perspectives, 1996, vol. 10, issue 3, pages 41-53 http://www.j-bradford-delong.net/pdf_files/Keynesianism_Pennsylvania.pdf
J. Bradford DeLong, "America's Only Peacetime Inflation: The 1970s," published in Reducing Inflation: Motivation and Strategy, Christina Romer and David Romer, eds., (Chicago: University of Chicago Press) 1997

Comments

[Niki Chen]

This is the first time I have ever heard of the 1946 Employment Act so I wasn't sure what it was or what it did. According to the article, laws are effective when they create institutions but do not have effects when they merely mention goals. As an example of a law with no effect, the Humphrey Hawkins Act was mentioned.

The 1946 Employment Act was a signal of the commitment of the federal government to macroeconomic management. The article mentions that it was a signal to allow fiscal automatic stabilizers to function. Apparently, these automatic stabilizers produce cyclical fiscal deficits but this shift in attitude is different from the viewpoint pre-World War II. The article focuses on the belief that automatic stabilizers are an important part of the post-World War II economy.

The author believes that the 1946 Employment Act was a signal that opinions and perceptions had changed about the responsibility of the federal government towards fiscal and monetary policy in the macroeconomy. He also believes that if the Employment Act had not set up it's particular institutions then there would be "fewer" and "less powerful" economists in the government.

I am hoping the professor will explain the importance of this Act a bit more in lecture, preferably by drawing some graphs and charts. I understand the basic gist of it, though perhaps not all the details.

[Chandresh Patel]

Delong’s paper analyzes the creation and effect of the Employment Act of 1946. Coupled with the Humphrey-Hawkins Act, both issues charge the government to take a larger macroeconomic role in order to help the United States economy. It asked for a number of policies, such as lowering of inflation and lower unemployment. However, each role in the Act was too much for the government to handle. For instance, it is very difficult to obtain low unemployment and low inflation during the same time period. However, Delong does mention that the Acts were meant to pass on a message from the people to take a greater stance on economic issues in the country. Although many bills are passed in the government, few are effectively follow-up on and enforced, and thus it is important to just get a simple message across to the government and to the people. Therefore, the Act was necessary to pass, although it did not have a large effect on governmental policy.

[Evan Caso]

The 1946 Employment Act represented the government's commitment to stabilizing the macroeconomy. The act has had obvious positive effects. Economists now have much more influence, which is obviously desirable when formulating economic policy. Although automatic stabilizers can play an important role in correcting recessions, there is still a clear inflationary bias in fiscal policy. I think it is more desirable to use monetary policy to fine tune the economy, because it works faster and takes much less time to implement. Also, members of the Federal Reserve are technocrats who are probably much more competent than politicians who routinely engage in wasteful spending. Overall, the Employment Act set up a system of institutions that have had a largely positive effect on stabilizing the macroeconomy. However, with the excessive growth of the national debt and annual budget deficits in recent years, fiscal priorities have to be re-evaluated by Congress. Unfortunately, irresponsible and non forward looking fiscal policy has put the entire system in danger of collapse. Constraints should be placed on discretionary spending, and the entitlement system needs to be revamped. Perhaps a new act of Congress is needed to limit the size of the deficit and service the growing national debt.

[Chris Schoeneborn]

It is evident that the Great Depression brought about a great deal of governmental and economic reform, as seen by the numerous laws and acts passed in the following decades. According to DeLong, 1946 Employment Act should be seen as a "signal" that previous presidential administrations had failed to achieve "acceptable macroeconomic performance." DeLong is likely talking about the Hoover Administration, in office during the Great Depression. The Full Employment Act solidified a more concrete system to evaluate the current economic state of the nation. It established the Joint Economic Committee, comprised of both House and Senate representatives, a Council of Economic Advisers, and called on the president to forecast the level of economic activity and promote maximum employment, production, and purchasing power. With automatic stabilizers put in function to adjust to cyclical variability and achieve a balance-of-payments equilibrium, reponse times to external shocks and internal business fluctuations were greatly reduced. The Fed and other governing economic institutions were somewhat relieved of the pressure to act immediately in reponse to a fluctuation in GDP. The reason automatic stabilizers were so necessary is that government spending increased dramatically, which has a great effect on deficits during times of recession. If economic reports show that further monetary policy is needed to prevent a decline in activity, the Fed has the power to pursue expansionary action. Furthermore, the Employment Act added additional performance evaluation, in order to prevent any decrease in economic activity as large as during the Great Depression.

[Lauren Tombari]

Delong says that laws can “serve as markers of changes in opinions, perceptions, and aims” (2). What struck me most while reading about the 1946 Employment Act was how much public opinion had changed, in such a relatively short time. Government officials and economists went from very limited government involvement in the economy’s performance, believing that recessions were part of the normal “breathing” of the economy, to direct government involvement with the goal of “maximum employment, production, and purchasing power” (1). It seems as though government actions in the Great Depression and later World War II had already established maximum employment and production as policy goals, so this law wasn’t very revolutionary in itself. It just made the government responsible for something it cannot possibly control, given that its directed macroeconomic stabilization policies take about a year and a half to come into effect. Even so, “an administration that failed to achieve acceptable macroeconomic performance was a failed administration” (22). So, in times of economic downturn, instead of being viewed as helpful like in the Great Depression, the government is considered a failure. Also, the Council of Economic Advisors that was created sounds like it is ineffective because no one really listens to them. It is really the automatic stabilizers and the Federal Reserve that work to reduce business cycle variability. So, I don’t think that the Employment Act has had that much effect on the economy, beyond reinforcing public opinion that the government should be involved.

[Chuong Quach]

The Employment Act of 1946, the CEA, and most other government institutions/policies seem to be, for the most part, ineffective on a macroeconomic scale. In most cases, government intervention could be seen as counterproductive. Most government spending programs costs usually outweigh the social benefit programs that it tries to implore. Another important point is that due to the government's inability to "predict" the economy's future, fiscal policies can take months to years in order for them to take affect. Conversely, automatic stabilizers immediately take into effect. Monetary policies also have adverse affects. When the Federal Reserve tries to keep unemployment from rising "too much" above its natural rate, inflation usually arises in the future. On the other hand, automatic stabilizers naturally allow the economy to go back to equilibrium without the recourse of a high inflation. It seems as though the CEA has a more effective role as microeconomic advisors. As Bard Delong points out, the CEA spends most of their time “injecting a sense of public interest” which gives the president an idea of what the consequences would be for certain policies.

[Tiffany Tam]

The Employment Act of 1946 tried to stabilize the U.S. economy by creating institutions. The article made it sound like it was more of a proposition and didn't really take action. It did make the people more aware of the economic situation which did have its perks. The act tried to emphasize the importance of lower inflation and unemployment but because both are easier said than done the act failed at achieving its goal. The act serves as a "signal" that failed but nonetheless served as a signal. The act was bound to happen according to the article because "Fiscal and monetary policy would still have been shaped with both eyes on macroeconomic performance".

[Breana Pennington]

The 1946 Employment Act was an important signal in the change in attitudes and goals of the government, especially after having been through the Great Depression and WWII. The Act was successful in creating a policy and norm of having economists directly involved in government, regardless of how effective Congress’s Joint Economic Committee, Council of Economic Advisors, or required estimates and forecasts were. The Humphrey-Hawkins Act of 1978 was also important for its requirement of the Federal Reserve Chairman to testify before congress about the state of the economy twice a year, although the other measures the act called for were just goals that were not enforced through institutions. One very important point mentioned by Delong was how recessions are not expected, develop quickly and are thus unlikely to be accurately forecasted in time to make economic adjustments. Thus there is a great need for “automatic stabilizers” even post-WWII, although such fast-acting prescriptions for economic downturns have not been put into place. There still seems to exist a tension between economists and politicians, with politicians more worried about power, influence, and favors. Hopefully there will be more acts passed in the future which not only set the goal of influencing macroeconomic policy, but also establish tools and institutions that will enforce the acts and quickly stabilize our economy once it is in need.

[Breann Gala]

While DeLong says the Employment Act of 1946, and its descendant Humphrey Hawkins Act, should be understood as being a signal that the administration has failed to achieve successful economic performance, the Employment Act is also very interesting in that it sheds light on role of state. The state has moved from being minimal during the prewar period, to being greatly enlarged during the Great Depression, and now to this act which promotes market led growth and establishes a heavy link between the state and private enterprises. While it is interesting to note that without the Employment Act of 1946 fiscal and monetary policy would have still been shaped based on macroeconomic grounds, the Employment Act still seems influential in that it embodied and solidified a generations worth of society's experiences with the Great Depression, New Deal, and their concerns for the future.

[Richard Park]

Delong’s article discusses the Employment Act of 1946, which basically stated that it was the Federal government’s responsibility to promote maximum employment, production, and purchasing power. The act also committed the Federal government to maintain a low unemployment rate, reduce inflation, and attempt to reduce federal spending. Delong argues that at the time of the act’s inception, it went against the flow of public opinion and sentiment, and it was partly passed for short term political advantages. Further, he argues that the Employment Act did nothing to create institution and signaled no shift in the hearts and minds of the American people. His basic argument is that the act had no effects whatsoever. The creation of the Council of Economic Advisors was only begun by accident, which only signals that the act was a failed administration. However, Delong also argues the act would have been enacted eventually if not in 1946 because of the sentiment and opinion of the time.

[Sean Salas]

Delong’s article highlights the macroeconomic impact of the Employment Act of 1946 in signaling the commitment of the government in managing the United States economy. Furthermore, the article highlights the Act’s influence in increasing the implementation fiscal and monetary policies, controlled by government agencies, in stabilizing the economy. Considering the positive and negative aspects of these policies, Delong argues the “automatic stabilizers” are more prominent factors in stabilizing the US economy post-WWII. Nevertheless, Delong concludes we would be in a much darker present without the enactment of an act equivalent to the revolutionary stature of the Employment Act of 1946. The Employment Act reminds us that we have a lot to learn from the Great Depression, and it is imperative that we use this experience to take precautions in preventing a similar event. I think it is fair to argue that at least part of our answer relies in the involvement of the government.

[Wei Li]

Essentially, regardless of whether any of these acts had any true effect on the macroeconomy of the United States, they stated a fundamental change in the operation of the Federal Reserve and the role of the United States Governments in directing the macroeconomy. As a statement of intent, the Employment act assured the public that the U.S. would be in charge of maintaining certain levels of unemployment and maintaining economic growth. Unfortunately for the act, it had no actual effect and was more of a placebo effect for the economic stability of the United States. Because there are no lingering changes and no real institutions established because of the act, there are no long term gains from its creation. Thus as a whole, this set of acts was a major failure.

[Tiffany G T Tam]

Professor De Long’s article “Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946” does a good job at analyzing the effect of the Employment Act of 1946. I had no clue what this act entailed, but the introduction did a good job of providing an overview of what this act consisted of. This article was intriguing because it included all these acts and laws that I have never heard of such as the Humphrey-Hawkins Act. Although I have never heard of the Employment Act of 1946, it seems to have been a big deal because it required that everyone be employed with the help of federal government. This shows the commitment of the government to increase production and growth for the economy. This also shows the commitment the government has to its people. Overall, I think this article provides readers a better sense of the macroeconomic point of view of government actions.

[Chris Guarini]

Automatic stabilizers in the economy were supposed to stabilize the economy through the government. In peacetime, post-WWII, the government taxes and spends a much higher percentage of the national product than during the depression and pre-depression era. “Automatic stabilizers are an important element of the post-WWII economy” because the economy in a laissez-faire set-up needs to be able to automatically stabilize itself to reduce recessionary periods. When the government runs a deficit, this is very dangerous to the economy and effects presidential elections as well because voters are shortsighted. This is because when spending is raised, taxes must be raised to fund the extra government spending and voters feel the pain of the higher taxes and the benefit of the programs that government spent on. However, when spending if financed through borrowing, the voters do not feel the immediate effects of higher future taxes that will occur to finance the programs that are going on now. This can affect the way voters vote in future elections because if one president spends a lot and finances the spending through borrowing, the next president will undoubtedly need to raise taxes to fund the previous president’s spending and will be seen as the bad guy.

[Erin Trimble]

In his article on the economic consequences of the Employment Act of 1946, DeLong comes to the conclusion that laws that serve to establish goals rather than build institutions are, for the most part, ineffective. The Humphey-Hawkins Act was one such law. Though the intent was to make lasting changes in the federal government’s role in the American economy, the end result was nothing more than requiring the Federal Reserve chairman to testify before Congress twice a year. The institutional impact of the 1946 Employment Act is debatable, and it is certainly not quite what its original authors intended. However, the act does serve as a convenient marker of the shift in sentiments that led to its passage—the changes in the attitudes toward a laissez-faire economy, toward government responsibility for the economy and toward the likely effectiveness of government macroeconomic intervention. The Employment Act’s direct consequences are uncertain, but its importance as a signal of the changes in the hearts and minds of the people is apparent.

[Tanya Malik]

This article does a good job of analyzing the Employment Act of 1946. A interesting point that Delong brings up in the paper is that public policies that are supposed to carry out goals and that do not establish actual economic institutions are usually not very effective and do not have lasting effect on the economy. According to Delong, the act was passed for short term political goals, and I think that because of this fact, the act was not effective. The only reason it was passed was because of the common sentiments of the public at the time; the desire for increased government regulation in the macro economy to keep it in check. In my opinion, the goals that are attempted by the act are unrealistic because they seem to be very "in a perfect world" type goals, and we all know that the United States government is anything but.

[Richard Schimbor]

One of the more interesting points made in this article is the time lag between economic conditions and legislative action and its effect on fiscal policy. Because economists can only work with data that has already been compiled, attempting to combat recessions with fiscal policy is inherently difficult because the information available is outdated. On top of this, once it is determined that fiscal action is necessary, there is substantial wrangling even in a single member district democracy about the appropriate action to take. This results in Congress legislating action to resolve a problem that may have already worked itslef out, and the actions taken by the legislature may actually hinder the forward steps the economy has taken on its own. The Act discussed in this article was originally titled the Full Employment Act of 1946, which shows the belief righyt after World War II that the government was responsible to ensure full employment. However, this objective is not easily attainable because of the time lag issue and a variety of other reasons discussed in the article.

[Matthew Cohen]

In his discussion of the Humphrey-Hawkins Act, Delong observes that laws that are passed which do not create governmental entities are largely pointless. It is nice to have a record of the goals and the mindset of the country at the time, but all it did was create more work for the already-busy treasury department. Without a dedicated department to accomplish the goals of a law, it seems more like a way to get re-elected rather than a way to actually improve the economy. The Employment Act of 1946 followed a similar trend where it was a great idea, but it lacked the follow-though of laws with governing bodies behind them. However, it did mark an the changing belief structures of the American economy at that time.

[Angela Vullo]

The 1946 Employment Act aka "the Full employment Act" is a representation of how the United States implemented many of the same ideals that were held by John Maynard Keynes. Keynes believed that the market forces would not take care of society and that it was the responsibility of the government to intervien in the market to provide full employment to avoid or stop cyclical downward growth patterns such as the Great Depression or a major recession. I too believe that Keynes' theories on the importance of full employment are a neccessary component to a full functioning successful economy such as the United States.

[Dragana Ognenovska]

While reading this paper what struck me and I completely agree with is when Delong mentions that the federal government has enough knowledge about the economy to only allow for “fiscal automatic stabilizers to function” during cyclical budget deficits. What has been learned through the Employment Act of 1946 is that the “US Congress and budget aren’t good at discretionary fiscal policy.” It is interesting how up to the Great Depression there was laissez-faire economic policies and after the GD government began to intervened to a greater extend through means such as the Employment Act of 1946. Keynes argued that the laissez-faire economic policies fostered the GD so I guess intervention with the Employment Act would have come about at a different yearf if not 1946.

[Ian Ebert]

Delong’s paper discusses two acts, the Employment Act of 1946 and the Humphrey-Hawkins Act of 1978 both of which according to Delong were not directly followed up on which resulted in acts that were only mere messages to congress, rather than being acted on. The Employment Act of 1946 tried to stabilize the macroeconomy through the fiscal side of things, while the Humphrey-Hawkins Act mixed both fiscal and monetary policy. The Employment Act states that it is government’s job to keep unemployment as low as possible, and keep inflation down. I would argue that if everyone had a job, everyone would have money to spend, which would result in a demand-pull inflation, as there is not enough goods to meet the demands. The way of reducing inflation is for the fed to take money out of the economy, which results in the economy slowing down, and some people will eventually lose their jobs. I feel like reducing unemployment and inflation at the same time are virtually impossible, even though that is what the Employment Act of 1946 calls for. Personally, I feel like macroeconmics is important because it can quickly turn things around by adjusting interest rates; however, at the same time I feel there is no long run effect of macroeconmics on the economy.

[Ed Lam]

As noticed by previous posts, the Employment Act of 1946 was not so much known for its independent, direct effects on regulating macroeconomic, but more so for creating a signal that acknowledges the past failure of government to achieve acceptable macroeconomic performance. By signaling change, the 1946 Employment Act established institutions and emphasized the shift in sentiments leading to the commitment of the federal government to manage macroeconomics. The Great Depression created the demand and pressure to establish this act to structure a strengthened institution. By enabling the expansion of economists and their power in government, the 1946 Employment Act sets precedent to prevent the occurrence of the next Great Depression.

[Jessica Li]

In his analysis, Delong pointed to the emergence of the federal government's role in the macroeconomy. The Employment Act of 1946 had officially declared the responsibility of stabilizing and maintaining the economy, to be a priority of the governing agencies. Though the established institutions and their effectiveness in carrying out and implementing economic policies can be argued, nevertheless, the Act was of great significance in marking the official role of the federal government in the years following World War II. Additionally, American economic history had taught a harsh lesson through the Great Depression, and the need and effects of government involvement in stimulating and stabilizing the economy in times of economic crises and sustaining it during peacetimes, were made apparent well into the post World War II era. Therefore, as the performance of the macroeconomy became an important priority in the minds of the public, and oftentimes associated with assessing the performance of the presidential administration, the government's role to act as automatic stabilizer cannot be disputed.

[Alexis Geno]

Delong’s analysis of the Unemployment act of 1946 gives a detail background of how the act effected the rest of the country. It seems from Delong’s analysis is that this act did not product long lasting results except for the bi-annual testimony of the Federal Reserve chair. But all the things that were part of the act do seem logical at the time right after a great depression. One would want some sort of insurance from the government that a tragedy such as the great depression will not occur and that the government will do as much as it can to prevent it from happening. The problem was that the components of the act sometimes contradicted each other in terms that having one makes it harder to get another thing to occur. But I agree with Delong when he said that the creation of an unemployment act was inevitable to provide people with some comfort that the government is taking care of the problem. But at the same time, it fulfilled the politicians’ need of showing that they are actively doing something to for the betterment of all.

[Alice Lin:19078943]

Delong analyzed that the purpose of the Employment Act of 1946 was to give the government the responsibility to lower the unemployment rate, and raise production and purchasing power. Although this is going against laissez-faire economics, there was a need for government macroeconomic intervention to keep the market on check. However, the Employment Act did not create institutions and its goals were ineffective. He argues that automatic stabilizers are suppose to help stabilize the economy after WWII in order reduce recessionary periods. However, it is better to finance through taxes than borrowing so the voters feel the immediate effect of the policy.

[Vinit Sukhija]

DeLong's article focuses on the Employment Act of 1946 and the Humphrey-Hawkins Act of 1978, two acts which merely acted as warning signs to the goverment. Both acts relied on the federal government for the future maintenance and stabilization of the macroeconomy through government intervention, a purely "Keynesian" maxim. However, the Humphrey-Hawkins Act of 1978 somewhad advocated the use of monetary policy as well, as it warranted the testification of the chairman of the Federal Reserve biannually, to inform Congress about the current state of the macroeconomy.

The Acts did not have significant repercussions on the macroeconomy, as they did not DIRECTLY affect macroeconomic policy, but they served as a symbol for the government's increased role in maintaining and stabilizing the macroeconomy. Admittedly, it is quite difficult to maintain low unemployment and low inflation at the same time (Phillips curve anyone?), so the goals of the two Acts were inherently a little bit chimerical.

As a Keynesian myself, I believe the government should do anything and everything in its power to revive an economy when it is in a deep recession. Monetary policy is obviously critical as well, but monetary policy doesn't seem to gather as much controversy as does Keynesian fiscal policy. So it isn't really any surprise that I would have supported the legislation of these two bills, despite their ultimate efficacy.

[Christina Chander]

What I find most interesting about this topic are the sentiments that caused the employment act to come about. A lasting after-effect of the Great Depression was an increased reliance of people on the government to control the economy. People began to rely on the government to keep them employed, keep prices low, keep them out of poverty etc. This article questions whether this new reliance which led to the 1946 employment act was a good thing. He concludes that the employment act and the Humphrey-hawkins act were ineffective and that automatic stabilizilers do a better job of controlling the economy. I would tend to agree with this however in this day and age the government gets blamed for all the economy’s problems so it is best that they appear to be trying to control the beast.

[Andrew Fong]

DeLong’s article addresses the various macroeconomic policies the U.S. deployed after the Great Depression and WWII. With the disaster of the Great Depression still fresh in the minds of all its citizens, the U.S. government found itself faced with a domestic issue which needed a quick answer. With the Employment Act of 1946 and the Humphrey-Hawkins Act which followed it, U.S. economic recessions seemed to have been smoother and less volatile. I agree with DeLong’s statement that the passage of the Employment Act of 1946 was a signal; that basically bad economic performance was the result of a bad administration. Nowadays I believe the majority of the public feels the same. Uncertainty can surface really quickly and can be fixed quickly as well.

[Andrea Roland]

It both surprised me and stuck me as an obvious “of course” when Delong noted that federal government doesn’t have the economic knowledge nor the speed to make any long term fiscal changes. The structure of the government and the power to make fiscal policy, seems to mean that changes wind their slow and steady pace through the system. Thus only when crises are long term (great depression, WWII) does the federal government able to make long standing fiscal policy. Except, I would argue, when it comes to expenses in the name of patriotism, terrorism fighting and xenophobia. Then the decisions and votes come swiftly.
I believe that there are many boondoggles in government spending that are overlooked as they mean losing jobs or even elections. Perhaps change needs to come from changing a political system rather than enacting laws with goals and no teeth.

[Kristin Rose]

In this article, DeLong examines both the intent and effects of the Employment Act of 1946. I found the portion of the article that described the importance of institutions in policy making to be of particular interest, since, as DeLong argues, "laws have effects when they create institutions and processes, but laws that merely establish goals have no independent effects."
DeLong then goes on to analyze the role of automatic stabilizers in the American economy. More specifically, DeLong states that the "largest change of which the 1946 Employment Act serves as a signal or a marker is the post-World War II policy of allowing the government’s automatic stabilizers to function," meaning that after the Great Depression, the American government was much more willing to accept the cyclical deficits that came with automatic stabilizers after the Great Depression and World War II. To provide support for this view is the statistic that the post-WWII federal government taxes and spends more than one sixth of the national product in peacetime. Before the Great Depression, this level of government involvment in the national economy would have been very hard to justify.
To conclude, DeLong poses the question as to what would have happened had there been no Employment Act of 1946. His first possibility is that there would have been little different, since the pressures that led to the Employment Act would have still shaped macroeconomic policy. His second possibility is that there could have been no Employment Act only if the shift in sentiments that led to its passage had not occured. Of these two possibilites, I agree with the first, since the Great Depression and WWII were powerful shapers of fiscal and monetary policy in the 1940s, and would have likely led to the passage of a similar act in 1947, 1948, or 1949.

[Krista Seiden]

As a result of the Great Depression, the US government took managing the US economy much more seriously, and began to enact many different pieces of legislation to ensure protection for the economy from downfalls as large or harmful as the Great Depression. The 1946 Employment Act was a similar effort which sought to regulate the fiscal side of policy on the macroeconomic level. It established the Joint Economic Committee, the Council of Economic Advisers, placed more responsibility on the President to watch and control economic activity, and had an overall goal of “maximum employment, production, and purchasing power.”
Delong notes that the 1946 Employment Act "should be taken as a signal: a signal that henceforth an administration that failed to achieve acceptable macroeconomic performance was a failed administration." More significant than the institutions the act put in place was this signal, to government officials, the international community, and the people of the US, that the government would thus be stepping up and taking an active role in macroeconomic policies.

[Sarah Lim]

I thought that this article gave a very thorough overview of the Employment Act of 1946. Reading it, I found that this main point that Delong was trying to get to was what many people have said already before with the implementation of institutions being much more important to accomplish something rather than just having a list of goals. I agree with this point because it is always important to have institutions set in place in order to keep in line with the list of goals and to make sure that the organizations and people are on track with working toward that goal. Also with just a list of goals, it is harder to envision the path and steps needed to accomplish that goal. With the Employment Act of 1946, the government was able to put into place these institutions for macroeconomic management.

[Raymond Kei]

The main purpose of the 1946 Employment Act was to lay the responsibility of economic stability onto the federal government. The largest change that the Employment Act has made is to allow government's automatic stabilizers to function. However, there is an important argument that the belief in fiscal policy as a tool of economic stabilization has had harmful consequences for the economy as a whole. The artcile raised the question of the efficiency of the 1946 Employment Act and concluded that Humphrey-Hawkins Act was ineffective in boosting employement because of its lack of institutions establishment. I agree with the argument.

[Andrew Grosshans]

In the introduction to his article exploring the economic consequences of the Employment Act of 1946, De Long draws a distinction between laws that create institutions and processes and laws that merely establish goals, arguing that those from the latter group, although less effective, “can and do serve as markers of changes in opinions, perceptions, and aims” (2). Subsequently, then, De Long explains that the passage of the Employment Act signaled the government’s commitment to macroeconomic management which represented a sharp break from earlier conceptions of the government’s role in regulating the economy. Departing from the “liquidationist” views of those like Andrew Mellon who believed that the government should avoid intervention in the economy during recessions, the Employment Act made the government responsible for promoting “maximum employment, production, and purchasing power” (De Long 1). In effect, the passage of the Employment Act signaled the acceptance of the cyclical deficits generated by automatic stabilizers during recessions; this acceptance represented a sharp break from the past as even FDR, who would “prime the pumps,” had criticized Hoover’s failure to balance the federal budget in 1932 while campaigning for the presidency (De Long 7). The effects of the Employment Act of 1946 may have been limited and may be debatable, but, without question, the Act offers great insight into the shifting perceptions of the government’s role in guiding the economy, a shift that De Long interestingly explores in the article.

[Jenny Kwon]

I can agree with the statement regarding the implementation of new laws and its effect on society. Laws can be seen as successful if they have a true outcome that effects society as a whole and to its entirety by creating institutions and processes to abide by; whereas, ineffective laws only establish goals that are not achieved. Therefore, it is crucial to be able to see the difference between Acts that are just passed by Congress and Acts that are essential for economic recovery. In this article, Delong mentions the 1946 Employment Act that triggered the US to see the importance for a base for the economic state of the economy. This act was enacted to stabilize the macroeconomy by automatic stabilizers. The Feds started to take action in monetary supply instead of waiting around for the economy to recover on its own. This act may have seemed as successful at a certain point; however, it only warned the U.S not to overlook its administration and it also didn’t create any everlasting changes and institutions to better the economy.

[Sheena Mathew]

After reading Delong’s article regarding the Employment Act of 1946, I sympathized more with the government about enacting laws that respond to economic problems. From the article, it was evident that laws like the Employment Act of 1946 and the Humphrey-Hawkins Act of 1978 did not have much of an effect economically as they signaled a change in public opinion regarding the economy. Thus, the government needed to enact these measures to at least try to solve the pressing problems, since the public wanted to see some sort of government action. In general, I found Delong’s views on the effectiveness of laws to be quite interesting. I liked his general rule about how laws aren’t really effective if they don’t establish institutions; otherwise, the laws just express the public opinion.

[Min Ru Jiang]

Author analyzes the roles of government on stabilizing economy through fiscal and monetary policy. He uses data and figures to show the degrees of how federal budget balance is correlated with unemployment rate during the pre-world war 1, interwar, and post-world war 2. He points out that Humphrey-Hawkins has no significant effect on macroeconomy performances through monetary policy. Also, author states that both the employment act of 1946 and Humphrey-Hawkins Act were important signals to the needs of stronger government interventions to economy by lowering the unemployment rate, increasing production and purchasing power. The employment act of 1946 was a sign “an administration that failed to achieve acceptable macroeconomic performance was a failed administration”.

[Aseem Padukone]

The important point that I took out of this piece is the fact the ineffectiveness of the government in dealing with economic policies. Often times they lack the knowledge to effectively deal with economic downturns; even if they do, they may not be able to act in time to actually correct the problems that we are facing. Yet Delong asserts that this doesn’t mean that The Employment Act of 1946 was completely useless; it still served as a signal the importance of responsible macroeconomic policies to the Federal government, and also led to the inclusion of many more economists within the government in the long run.

This underscores the tension between a laissez-faire approach and a more interventionist stance. Paradoxically, it seems as if a laissez-faire approach may be just as effective, if not more effective, than a government actively involved in managing the macroeconomy. However, there remains a pressure on the administration to maintain economic policies that are seen as being responsible. This demonstrates the political side of economics; leaders often make their decisions with the fear of political repercussions, which is why having a central bank without direct political pressure is probably beneficial for the wellbeing of the economy.

[Lara Palanjian]

At first look, it appears as though the 1946 Employment Act accomplished a lot, as it established Congress’s Joint Economic Committee, Council of Economic Advisors, and required yearly presidential estimates of economic conditions. It is clear that the act expanded presidential power in fiscal policy in unprecedented ways. The estimates he must provide allow the president some baseline ideas on how to deal with deficits and thus impact economic growth of the country. One of Delong’s arguments in his piece is that laws have effects when they create institutions but not if they merely establish goals. I agree, for laws can still influence opinions and attitudes and set precedents, even if they do not actually accomplish tangible things. For example, the Employment Act signaled a significant change in the role of the Federal Reserve and the bureaucracy in guiding the American economy.

[Kenneth Salas]

De Long's article questions whether the government's active role in the economy truly impacts major macroeconomic factors in the U.S. such as unemployment and total output. Rather than playing a dominant role in the economy, government policies including the Employment Act of 1946 serve as a signal that allow “automatic stabilizers” to function. Considering the government lacks institutional capacity and knowledge of economic structure, some economists argue the government can potentially exacerbate long-term consequences by trying to impose fiscal and monetary policies to avoid /control a recession. This article provides the reader a better perspective on how the government impacts the U.S. economy and the potential consequences that can result from its actions.

[jashoda kashyap]

Delong outlines the basics behind two acts enacted to avoid getting into situations similar to the Great Depression. The Humphrey Hawkins Act was mainly ineffective because it lacked institutions. merely enacting laws is useless. After the enactment of the Employment Act, the magnitude of depressions and volatility were a lot smaller. The largest change that the Employment Act affected was the policy of allowing government stabilizers to function. Delong believes that the Employment act was inevitable, unless the attitudes of everyone in 1946 were more similar to those of people in 1929, meaning that people did not learn anything at all from the Depression.

[Peter Li]

This paper covers the 1946 Employment Act, its role in establishing larger government responsibility in macroeconomic affairs, the institutions it established, and its somewhat haphazard results. I liked Delong's discussion of the old-school thought of the Depression as "good medicine" for the economy versus today's view that the Depression could have been tempered with skillful intervention. A regression output and good data were also presented on the lack of automatic stabilizers in the pre-WWI period and the increasing rise of deficit spending to combat high unemployment ever since. Perhaps if the sentiments toward automatic stabilizers and greater government presence were not reflected in an act like the 1946 Employment Act - that the US would adopt a hands-off economic mentality - the US would not occupy such a clearly dominant position in the world economy as it has since WWII. Its worth pondering the paper's statement that inflationary periods of the 1970s most likely could have been avoided, but likely at the cost of America suffering another Depression.

[Sean Tennerson]

I agree with Delong's assessment of the Depression; though it was a very dark part of our history, it was a time of learning for our government. The beginning of the 1946 Employment Act and the later Humphrey-Hawkins Act were large steps in the US in reference to fiscal and monetary policy. These two institutional changes cemented the roles of the federal government and the federal reserves as active participants in the macroeconomic management of the US. It is not proven that these two acts have resulted in macroeconomic actions that have extensive, if any, long term affects, though the short term affects have proven to be very beneficial to the health of the economy. Since their implementation, there has been a trend toward fewer and less severe recessions. Therefore, because of the need for change in government and Federal Reserve interaction in the macroeconomy, short term economic problems have been avoided or have been manipulated in ways that avoid deep and financially destructive recessions, which I guess one could extrapolate to a more long term view of the economy in which fewer short term problems make long term growth more sustainable and possible. But, since it is only possible to view the economy on a historical basis to measure growth, such a thing cannot be interpreted in the here and now for future growth predictions.

[Kevin Chiu]

Professor DeLong’s article discussed the effects of the Employment Act of 1946 and the Humphrey-Hawkins Act and how these two acts called for the government to play a larger role in macroeconomics policies in the America. After reading this article, it made me realize the importance of institutions and how the establishment of institutions made the impact of macroeconomic policies more effective. An example would be how the view of government involvement changed drastically after the Great Depression; it changed from low government involvement to high government involvement (changes of fiscal and monetary policy). The government and the Federal Reserve has played a more prevalent role in controlling the unemployment rate and inflation rate.

[Jerry Hong]

In the article, DeLong claims that the Employment Act of 1946 should be treated as a signal: "a signal that henceforth an administration that failed to achieve acceptable macroeconomic performance was a failed administration." Although he provides thorough analysis, I would like to take an opposing stance. True, the Employment Act of 1946 and and the Humphey-Hawkins Act could be considered as ineffective laws. However, I would argue that they took a step in the right direction because they were meant to make helpful, lasting changes on the government's role in American's economy. First, note that the Employment Act was an act that mandated the government to help people get employed. The government did not want a repeat of the Great Depression, and it did succeed in this sense. Even though there should have been and was a slight recession after WWII, society did not experience the hardship that it did after WWI.

Asking if the Employment Act of 1946 was important is analogous to asking if the Marshall Plan was important. Like we mentioned before, the Marshall Plan was important not because of its direct aid to the European countries, but rather the indirect expansion of European countries ability to use the fund to invest and not worry about raw materials. Was the Employment Act of 1946 important? Perhaps at the surface, no. However, it's indirect effects are what help shape the economy to what it is today. We learned from our mistakes, and we have successfully avoided a second great depression. Hence, the Employment Act could arguably be indirectly important.

[David Thomason]

DeLong’s article on the Employment Act of 1964 emphasizes the changing opinions concerning the government’s role in the macroeconomy. Specifically, it represents the lessons learned from the Great Depression. The Employment Act may not have actually created institutions that were effective. The fact that the Council of Economic Advisors ended up being staffed with scholars and not ex-civil servants (and therefore is more effective) is more of an accident than the intent of the authors. Congress was simply trying to reduce freedom of action by the president. But, the act signaled that the government was committed to macroeconomic management. It represents the shift in opinion that the government did have a role to play in preventing recessions like the Great Depression. This shift caused monetary policy to have more of a tendency towards inflation, but it came with making reducing unemployment a priority. It was able to act more appropriately to prevent deep recessions. Therefore, the Employment Act of 1964 is a marker that lessons were learned from the Great Depression, and that the government was prepared to act accordingly.

[Robert Chomik]

I thought Delong's analysis of the Employment Act was interesting. I thought that he hit the jackpot with the idea that laws have effect, if create processes and institutions, rather simply establishing goals. Laws that establish goals do however less quantitative role of changing opinions, perceptions and aims, which are much more discrete than the laws creating institutions. I also found interesting the idea that the Employment Act was a product of its time and I think that had there been no 1946 Employment Act, there probably would have been a similar legislation around that time, following the Great Depression and the dominance of Keynesian economics accompanying it.

[Timothy Wong]

This article is centered on the Employment Act of 1946. This act was enacted as an attempt to stabilize the U.S. macroeconomy by creating institutions. It had many positive effects during the time period. Although it was only a proposition, many people were informed of the situation at the time, which made the public more knowledgeable. The act said that lower inflation and unemployment was good, but it could not achieve that. This could be explained by the Phillips Curve which came about 20 years later. It isn’t possible to achieve both low inflation and low unemployment; according the Phillips curve, there is a tradeoff between inflation and unemployment. At high levels of unemployment, there is lower inflation, and at high levels of inflation, there are low levels of unemployment.

[Ben Sumarnkant]

DeLong’s article on the Employment Act of 1946 brings to awareness a fact that people in this modern day take for granted – the government’s dominant presence in the economy. Headlines about the Federal Reserve making a decision on interest rates appear like clock work. This article discusses how this was once not so, the result of small government from a fiscal point of view. The government’s commitment to macroeconomic stability, as laid out by the Employment Act, results in a large government that has its hands in many of the issues surrounding the economy. This article points out that such a commitment really is more politicking than sound economic policy, since a large government is not nimble enough to respond to changing economic conditions in a timely manner.

[Hanwen Chang]

From the paper by Delong, the author introduces the Employment Act of 1946, which established Congress’s Joint Economic Committee and the Council of Economic Advisers. One of the major changes comes after World War II, to allow government’s automatic stabilizers to function. The article discusses the government’s responsibility on implementing proper economic policies, whether it’d be monetary or fiscal, when problems arise. Delong argues that Humphrey-Hawkins, a proposition to reduce unemployment rates, inflation, and government spending, creates no institution and that it has no effects on macroeconomic performance. It also raises questions on the inability of the federal government to resolve economic crisis in time and the consequences of it failing to do so.

[Kim Luong]

While the article suggests that the Employment Act of 1946 was essentially ineffective, I feel that it was incredibly important in leading the changing attitudes of legislators and of influential parties in general. DeLong uses the Humphrey-Hawkins Act (1978) to demonstrate the ineffectiveness of a law that created goals rather than institutions, which I think is very true in the sense that there is no absolute requirement for showing a quantitative change. However, as far as pre-World War II economic thought went, monetarists did not emphasize the effect of unemployment and stimuli on the economy, though we now realize that Keynesian theories are much more applicable. It is along these same lines that the new administration agreed to pass legislation promoting full employment and stimulating the economy, as much as the federal government (at the time without true economists leading the way) could achieve. I think this step in demonstrating the changes in the government’s role in the economy is extremely important, especially since DeLong even states that the growing government could have a much larger impact on the economy. The Employment Act of 1946 paved the way for groundbreaking legislation and institutions that would show the world that the government realized the mistake in waiting for the Great Depression to sort itself out—allowing people to exert more control over their economy and that the government could in fact stop the economy from such drastic recession again.

[Alex Zhong]

Delong’s article brings to light the importance of keeping the government involved in the management of the economy at the macro level. One of the most intriguing statements made in the article claims that were the federal government not granted the power to operate its automatic stabilizers and used Keynesian principles of increased government spending to battle recessions, the world would have most likely seen fewer periods of massive inflation. However, the trade off would incur a much higher risk of encountering another Great Depression. The greatest economic concern post World War II was inflation, but when one realizes what could have happened had the Fed not focused on keeping unemployment from distancing itself from the natural rate, inflation is not so bad, especially compared with the prospect of another Great Depression.

[Wei Shao]

I was always under the impression that macroeconomic policies during the Great Depression was employed and standardized as a means to offset and in a sense control the automatic stabilizers. However, as noted in the paper, the automatic stabilizers, though very real, had little macroeconomic effects during the Great Depression due to low expenditures, low output, and the small size of the government. Therefore, the Keynesian macroeconomic model of the Employment Act of 1946, designed to stabilize and cure recessions at the cost of the budget balance, was, as Professor De Long indicated, the signal of a shift in the sentiments and heart of the public, which made it much more influential than the latter Humphrey-Hawkins Act. What it ultimately demonstrated was that the age of laissez faire was over, and the once-small government needs to take action to oversee the state of economy in the country. I believe that if the Keynesian model had not been established in 1946 as the dominating standard in economic regulations, it was an inevitability that would eventually take form due to economic pressures. The fact was that the old form of economic regulations simply could not keep up with the development of the world. The free market was becoming ever more sophisticated as well as intertwined and connected with the community, making it ever more so delicate, with huge social repercussions in the event of even the smallest economic hiccup. To protect the public from this volatile economy, the government would eventually need to enact an Employment Act, if not of 1946, then perhaps (as Professor De Long put) of 1947, or '48, or '49...

[Robert M Lee]

The 1946 employment act was essentially a step forward by the federal government to manage the economy through macroeconomics. Using fiscal automatic stabilizers to control uncertainty in the business cycles, they produced cyclical fiscal deficits. This marked a change in the government’s stance on automatic stabilizers and changed their viewpoint from the pre-WWII era and signified it as an important tool for the post-WWII economy. The article pointed out that this act changed opinions and perceptions about the responsibility of the federal government towards the use of fiscal and monetary policy in stabilizing the economy. The article also stressed the importance of creating institutions from laws to enforce them, whereas they are ineffective when they merely declare objectives.
Combined with the Humphrey-Hawkins Act, both brought about a number of policies in hopes of lowering inflation and unemployment. However, it proves to be a difficult task in controlling both simultaneously.

[Christina Kiang]

The American economy experienced drastic recession after WWII due to the Great Depression. Employment Act of 1946 attempted at moving the economy out of the recession by implementing government commitment to macroeconomics. The Act focused on stabilizing unemployment through business cycles, developed the Council of Economic Advisers who assisted the President and his staff, and delegated more fiscal responsibility to the government such as the Economic Report of the President which outlined economic goals for unemployment and government expenditures.
The Employment Act brought about many positive changes to the economy but the government experimented causes and effects to established what policies they should actually implement. Automatic stabilizers were found to be effective since they take action within the quarter while the government struggled with consistent successful changes with discretionary fiscal policy. The government also had to find appropriate ways to tackle the differing structural and cyclical deficits.
Due to the popular development of the liberal belief that the government needed a more active role in the economy, I find myself agreeing with Delong's belief that the Employment Act of 1946 was inevitable. The dark days of the Great Depression and the economic lag afterwards pushed the government as well as the public for a greater emphasis in government intervention. Although effects on unemployment and deficits are seen and outlined in this article, the true efficiency of the policies can be debated. THe economy on the macroeconomic level has far too many factors that hinder my belief that the fiscal and monetary policies carried out by the government can battle the unemployment problems.

[Minna Howell]

In Brad Delong's article he emphasizes the "changes in hearts and minds" that are significant in policy changes or in the passage of law. He uses the example of the Employment Act of 1946 as such a change because of the lessons learned from the Great Depression and World War II, which meant that the federal government committed itself to macroeconomic management in the post WWII era. DeLong also points out that one of the largest changes undertaken in this era "is the post World War II policy of allowing the government's automatic stabilizers to function" (5). Furthermore, these automatic stabilizers have been particularly large because of the increased size of the government as a share of national product. I agree with Delong in that the government has neither the knowledge nor the institutional capacity to do much more beyond allowing the automatic stabilizers to work, particularly because of the unexpected quality of recessions. I must admit that I was somewhat confused in his discussion of stuctural deficits versus cyclical deficits, however I fully understood his connection in the shifts of opinion in the post WWII era that have led the Federal Reserve to take into consideration other factors beside price stabilization. Thus the line between the inflation of the 1970's and the goal of the Federal Reserve to keep unemployment from rising too much is quite clear. Delong's last comments on how much less the cost of the 1970's inflation was compared to the cost of another Great Depression again recalls the question (mentioned in lecture) of how things would have been different had Hoover maintained his presidency and someone other that Roosevelt had come into power in th 1930's.

[Yu Xu]

The 1946 Employment Act clearly had a positive effect on the macroeconomic system of United States; even though it was not efficiently enforced later on, but the spirit and message it was carrying was government’s commitment to promote maximum employment, production, and purchasing power. It seems that it is another “tail” of the FDR’s New Deal during great depression, like the “CCC”. This act also indicates the permanate change of government’s role in the economy, that now since great depression government have a ultramate power to stick their hands into the economy to make things go in directions that seems right for them.

[Tanya Chang]

De Long’s article, after introducing the Employment Act of 1946, discusses that laws are more effective when institutions are created, rather than laws that merely establish goals. He does argue, however, that while laws that establish goals are less effective, they can serve the purpose of changing opinions, perceptions, and aims. The Employment Act of 1946 represented the government’s commitment to macroeconomic management, in which it will be responsible for promoting maximum employment, production, and purchasing power. However, while the act established the acceptance of automatic stabilizers, De Long argues that many times the government lack sufficient knowledge to effectively accommodate for economic downturns. He uses recessions as an example, where they are not expected, not forecasted, and develops quickly, making it difficult for the government to react and implement policies quickly. While the Employment Act may not have been very effective, it did however change perceptions of governmental role in economic policy and increased the participation and power of economists in the government.

[Xia Hua]

The article analyzes whether the 1946 Employment Act had effects on the macroeconomy. Laws have effect when they create institutions and processes but laws that merely set goals have no independent effect but can serve as changes in opinions. The Humphrey Hawkins Act was one such law that set requirements but there’s no effect. The Employment Act established government institutions enacted to promote employment and fiscal stability. I would say that the Act is effective.
Many argues that federal deficits during recessions are cyclical, therefore, steps to reduce it immediately would further aggravate it. Since WWII, policies have been aimed to reduce cyclical deficits. The post-World War II policy has allowed the government’s automatic stabilizers to function. The increase in the magnitude of automatic stabilizers comes from the increase in the size of the government as a share of national product. The post-World War II period shows the greatest cyclical responsiveness of fiscal balance to unemployment. Due to time lags for government to respond to recessions with fiscal policy, government simply lacks the knowledge to design and the institutional capacity to exercise discretionary fiscal policy in response to any itself macroeconomic cycle of shorter duration than the Great Depression. Automatic stabilizers, however, swing into action within the current quarter.

[Delara Bastani]

My favorite aspect of this article was DeLong’s paraphrasing of White House officials and advisors. As a layperson, I know that I lack comprehension of what is needed to run the nation, but I am still indignant to learn that “the public interest is just one more interest among many, and why should it deserve special consideration?” The government was formed by our founding fathers specifically to serve the public interest, and public officials must honor this commitment. What can we the public do to protect our own interests? DeLong elucidates how the Employment Act was pitched to the American people as a champion for “general welfare”, but ended up not achieving much because institutions, not laws effect change. Off the top of my head, I can think of many laws and acts within the nation, the state, and my community which have yet to fulfill their promise. In the future, Americans should make certain that politicians are creating new institutions to serve the public, rather than pacifying us with ineffectual laws.

[Stella Kang]

Many policies haven’t fulfilled their intended effects or goals in history, but I never really realized the distinction between laws that are meant to create change and laws that “merely establish goals” which have no independent effects in the long run. Through this lens, it’s easier to understand how the Employment Act of 1946 came about and what the rationale was behind it. It is interesting that this act created the Council of Economic Advisors “on accident” and how it has evolved into the influential institution it is today. The CEA is one of the key results of the act as it elevated the position and importance of economists in the government. Overall, the Employment Act came about because of the political context and environment at the time and sought to act as a “signal” to change public sentiment and opinion.

[Soo Hyun Kim]

Humphrey-Hawkins Act, a law that merely establishes a goal, "committed" the federal government to reduce unemployment rate while also reducing the inflation rate to 0 by 1988. Our basic understanding of the Phillips Curve tell us that this goal is hardly achievable, but as Delong mentioned, laws that "merely establish goals can and do serve as markers of changes in opinions, perceptions, and aims." The 1946 Employment Act is more of a signal of unsatisfactory macroeconomic performance of previous administrations rather than a law that affects the economy. This signal shows the fear of the recurrence of the Great Depression that was present in the policy makers. Although the law failed in its objective, it probably alleviated the concerns of the public who feared another great recession. It showed the will of the government to keep an eye on the general economy.

[Jenna Lee]

After WWII, there was a big difference in how the government intervention and management is seen, from little to no government action to constant government management. Beginning most likely with the New Deal, large-scale government action was seen as good and sometimes even necessary. This article highlights this fact as well, with the Employment Act of 1946, acting to "commit the federal government to the business of macroeconomic management". Government automatic stabilizers were set in place and allowed to function so that something like the Great Depression would be less likely to happen. Automatic stabilizers are beneficial because they act when they are needed whereas government action that is not automatic arrives after it is needed, causing more disruption in the economy. Delong says that this is why the Great Depression was different: because it was of such long duration that the government was able to act when it was needed and not after. The trick, perhaps, is to have a balance between big-government and no-government. Either extreme is bad news, but somewhere in the middle will seemingly work out well. Overall, Delong says that the Act was a signal of the future of management of stability, and this was overall a good thing.

[David M. Aviles]

Delong points out that the 1946 Employment Act was one of the shifts of government involvement in the macroeconomy. It's mentioned that laws with goals aren't successful when compared to laws with institutions. The Humphrey Hawkins Act was such a law with goals in sight but no institutions to back it up. The Employment Act started institutions which aided in employment and fiscal stability. The drawback behind such an institution is the enforcement of public policy. Recessions are often quick, unexpected and hard to respond quickly to and in the correct way. The fact that the Employment Act wasn't entirely effective was not chalked up to a loss because it changed the perception of government and its involvement in the economy. After the Great Depression and severity of economic swings from the First World War until after the Second, the economy was in a situation where the invisible hand no longer functioned as before.

[Alice Kousoum]

The conflicting attitudes about government intervention in stabilization policies served as the heart of this article’s debate. Some argue that governmental controls could possibly deepen a depression. If this was not that case, it could possibly stabilize it slightly but prolong is existence. Others argue that automatic stabilizers have not had enough of an impact narrowing business cycles. The confrontation of these attitudes led to the Employment Act of 1946. In many ways, this act did not solve all of the economies problems in that it only served as a marker the economies goals. However it did not establish solidarity for any institutions. However the Employment Act was bound to be created as attitudes towards laissez fair were no longer as dominant.

[Kyle Jeffery]

Delong criticizes the government’s attempts to stabilize the economy and smooth out its cyclical nature with discretionary fiscal policy. The problem, according to him, with discretionary fiscal policy, is that it is at best speculation and at worst a wild guess. The process of implementing changes takes about 5 quarters, whereas automatic stabilizers go to work almost immediately. Indeed, it is automatic stabilizers that should be augmented instead of attempting to predict economic cycles. Another problem with the postwar economy and government policy is the use of structural or “planned” deficits. This technique yields immediate effect via the increase in spending, but merely postpones the payment for the borrowed amount. This technique of stabilization policy should be strongly avoided because of the burden placed on future generations in the form of heavy taxes. Structural deficits also reduce the likelihood of government spending when it is needed again.

[Sung Rho]

Delong’s paper talks about the causes and effects of the Employment Act of 1946. This act which called the President to estimate and forecast economic activities in the U.S., and made sure that the government participates in a larger macroeconomic role in order to help the United States economy by coordinating and utilizing all its plans, functions, and resources. In this paper, it stated that the government should promote free competitive enterprise, with the general welfare, with maximum employment, production and purchasing power. However, each part of the Act was too much for the government to balance. Through this paper, Delong shows how the Acts were used to show the people to take a more in-depth look into the economic issues within its country. This is why even if the Employment Act of 1946 was not passed; the monetary policy would have shaped the macroeconomic performance which would lead to another Act.

[Cam-Tu Nguyen]

The Employment Act of 1946 called for increasing government involvement as an important role in the macroeconomic management business. However, this article showed the intention of the government when passing this act and the limited result that it actually accomplished. Establishing goals was essential but the results were important too. Through multiple period economic analysis, this article questioned whether the Employment Act of 1946 and also the Humphrey-Hawkins Act were really effective or efficient. Although it seemed that these acts did not accomplished much, the lack of them would have put the United States in a very different and probably worse situation. After the Great Depression, it was important for the government to deviate from the laissez-faire style of government to bring the economy back to its speed.

[Dwight Upshaw]

I already wrote a long thing here and then it didn't go through!

Delong argues that the 1946 employment act was shift in the role and size of the government in the post WW2 period. This change came about because of what was seen in the great depression and the government failing to act from 1929-1933. Now as a result of the 1946 employment act we have automatic stabalizers that keep the economy in check. When revenues and employment dips, then the deficit rises. This is needed because within most recessions the FED can't act soon enough because recessions are short and the FED could only act if the recession turned into a depression like the great depression. Some also argue that the defecit created by these automatic stabalizers is a dangerous devepment.

[Ronald Yokubaitis]

This article by Delong discusses how laws and acts are made in order to set up institutions in the government. Delong’s paper analyzes the creation and effect of the Employment Act of 1946 as well as the Humphrey-Hawkins Act. Both issues focus on the government taking a larger macroeconomic role in order to help the United States economy. The Employment Act of 1946 really illustrates the new role the federal government has taken for the economy. After the great depression and the new deal we can see that the government is heavily focused on trying to help control the economy. However, it wasn't until this act do we actually see the government make full on laws specifying the use of monetary stabilizers. This is also important because the Fed can't act as quickly as the government in righting the economic ship therefore having macroeconomic control in the government could help us out of recessions.

[Qingyun Tang]

This is probably also my first time of knowing the details of The 1946 Employment Act. Like the article said, if the act was not in 1946, there would be one in 1947, or 1948, or 1949. Economists learn from the mistake of the Great Depression and World War II. Large scale government actions were seen to be necessary and probably a must have to make the economy grow persistently after the war. This was a very dramatic comparison with pre-war situation. Maybe the Great Depression helped, because it was so long that the government had enough time to act to it; unlike before, government would just sit and let the economy automatically adjust itself.

[Wing Ting Yim]

I didn’t know what Employment Act was until I read this article. The 1946 Employment Act basically about federal government took a bigger role to help stabilizing the United States economy through some policies to help lowering unemployment and inflation. As Delong mentioned, the 1946 Employment Act was a signal of the involvement of federal government to the economy. However, sometimes it was not that effective, such as keeping low unemployment cannot keep lowering the inflation at the same time. It was a lot harder to achieve the goal and expected. However, I believe the Act is quite successful of having economists involved in government.

[Yufei Li]

The 1949 Employment Act is a policy that demonstrates the federal government’s “commitment to the macroeconomic management business.” The motives of such policies and its long run effects are questionable as demonstrated by the Humprey Hawkins Act, which had essentially no effect. But the 1949 Employment Act and the Humprey Hawkins Act is a direct result of the United States experience in the Great Depression and its “New Deal” reaction; it solidified the necessity of government intervention rather than mere laissez faire economic policies in order to maintain the health of the economy and prevent future depressions.

[Aneesh Kadakia]

The Employment Act was an indicator of a permanent change in how the government would shape the macroeconomy. No longer would it sit on the sidelines waiting for market forces to work themselves out, clearly the now Keynesian influenced government felt that it should play an active role in managing the economy, especially to minimize the damage from recessions, and according to the article, this was really influenced by the change in attitude of the American people themselves. Again, it is semingly difficult to reduce both inflation and unemployment, but it also served as an indicator that the government will now try to work on these problems, and after the Humphrey-Hawkins, particularly in the 90s it seems that both unemployment and inflation have been kept to very low levels. Still, it was found that the automatic stablizers worked much faster than did fiscal policy, which is usually bogged down in Congress, which calls into question how effective the Employment Act really was, and in this case, it was not really effective as an instrument.

[Simon Zhu]

There were a lot of interesting arguments made in this article, two of which I take issue with. First is the correlation between government spending and unemployment cited during the great depression, wwii, et al. There were so many possible confounding factors besides government spending during that time period that any correlation recovered needs to be scrutinized with a lot of skepticism.

Secondly is the conclusion. It's true that perhaps we have avoided the Great Depression, but what is to say that the worst detrimental effects of government's easy use of spending have not yet materialized? Could this current war not be the result of the government throwing money at a short recession (the 2000 downturn)? What if the alternative to the Great Depression is a gradual weakening as the United States prices itself out of the world economy with bad investments.

[Rosemary Lu]

Delong explains the uses and economic consequences of the Employment Act of 1946. The job of the Federal Reserve and legislation like the Humphrey-Hawkins act are to help stabilize and reinforce the wellbeing of the American economy. Delong looks into the actions of the Federal Reserve and analyzes many actions from the Great Depression as well as other times.
One of the most interesting points that Delong addresses under the “structural” deficits section of his paper is about the voters and their understanding of the government actions. He explains that as voters, people have a limited sense of what the government is doing that is directly related to how the policies affect their money through taxes and government benefits and spending programs. Therefore, the in order to make effective government decisions from the Federal Reserve board, people need to consider the assumed actions of the voters, which again, are directly related back to the way these policies apparently affect the voter’s money.

[James Kim]

In post-Depression America, it's easy to see why acts such as the Employment Act of 1946 were created to avoid another such catastrophe. A closer look at the act reveals that it calls for the government to play a large role in the macroeconomy. In the article, Delong reveals some of the shortcomings of the act that can be explained economically, such as the fact that fiscal policy takes a long time to implement when institutions can be set up to automatically stabilize the economy. However, the shortcomings of the Act should not outweigh the fact that it played a large role in getting the government more involved in the health of the nation's economy. The Employment Act of 1946 was a large step in the right direction towards more effective policymaking.

[Yaoyao Wang]

DeLong's article convinced me that the Employment Act of 1946 was merely a “signal” of commitment by the Federal government to establish macroeconomic policy. The purpose of the act was to “promote maximum employment, production, and purchasing power”, but the apparently the government is unable to meet the goal of the act completely, for it is extremely difficult to control unemployment and low inflation at the same time. The creations of Joint Economic Committee and Council of Advisers who are to assist the president to formulate economic policy obviously have a hard time making adequate suggestions. Especially today, I don’t understand how the President can forecast the future state of the US economy given the unpredictability of the market and our increased deficits. The Act did seem like a short political goal than a real act that aimed at providing tangible benefits for the US economy.

[Patrick Humphreys]

I thought this article gave an interesting insight into the power of the Great Depression. We all know the horrible economic statistics from the period, but I think we fail to appreciate the depression’s impact on the American psyche. Within a few years America went from a classical liberal state with almost no intervention in the economy to a state that would actively try to control unemployment and inflation. I agree that the government did take on a bit more responsibility than it could handle (so its true impact was less than advertised), but the signaling function was still quite powerful given the actions of pre-depression presidents. Additionally, when you examine the function of automatic stabilizers you can see how profound a change had occurred. In the past, deficits were avoided at all costs, but now they are not only accepted they are allowed to automatically occur at the first sign of a recession.

[Richard Paek]

The 1946 Employment Act was a signal that an administration who failed to achieve macroeconomic performance was a failed administration. I found the author’s third answer to the question of what it would be like without the 1946 Employment Act very interesting. Without the act, economists would not have as much influence in the government. The Office of Management and Budget would take over the functions of the Council of Economic Advisers. Additionally, public policy would not focus as much on microeconomic efficiency. I believe that focusing less on microeconomic efficiency could lead to inefficiencies in businesses as there is less public policy intervention to help them out.

[Christopher Simon Avedissian]

In the 1946 Employment Act, the federal government gives itself a larger macroeconomic role by moving to stabilize the American economy in the post-WWII period. Delong's discussion focuses on the issue of the government intervention/role within the economy. This article highlights the fact the Employment Act was a sign of realization that there needs to be some management by the government within the economy, and that it was an in-depth view, for the current population, into the dragging economic weaknesses of the country. Although Delong criticizes the government and its attempt to repair the economy's cyclical nature, he does not state that the 1946 Employment Act was ultimately a horrid decision. Delong sees that Smith's idea of the "Invisible Hand" is no longer noticeable within the economy, and that the federal government has to play a bigger role.

[Alex Zaman]

The Employment Act of 1946 went a long way in changing the role of government in macroeconomic affairs, signifying a transition from limited intervention to market-directed economic policy decisions. DeLong makes a few key points regarding the importance of automatic stabilizers, which unlike most fiscal policy, has immediate effects on the economy. Because of the lags associated with the political and legislative processes, fiscal policy is unsuccessful as an immediate economic stimulus, whereas automatic stabilizers go into effect within the same quarter. Seemingly underappreciated is the role of the Council of Economic Advisers as a liaison between the Federal Reserve and the current Administration, as well as its growing responsibility in the microeconomic sector. Perhaps the most important indirect effect of the Act in this regard is the appointment of academics who are genuinely concerned with the economic well-being of the nation, rather than leaving the work to civil servants and other government officials who “are well aware that those in authority are rarely pleased by bad news” (22). This in effect counterbalances many of the political and foreign policy interests held by officials with the objective economic interpretations of short-termed academics and intellectuals

[Anthony Samkian]

One of the most interesting arguments Professor DeLong makes in his article is that discretionary fiscal policy has been largely ineffective in stabilizing the economy since World War II. He argues that except of the Kennedy-Johnson tax cut there has been no other instance where discretionary fiscal policy had its desired effects (15). Professor DeLong attributes the ineffectiveness of discretionary fiscal policy to the time lag between the first signs of a fiscal stimulus need and the actual implementation of the policy. He says that the U.S. government does not have the knowledge and institutional capacity to use fiscal policy in macroeconomic cycles shorter than the Great Expression (15). This makes automatic stabilizers so important; they take effect in the time period when they are needed, not several quarters later. The Employment Act of 1946 was important in that it led to the introduction of these automatic stabilizers. Before the Great Depression government revenues and expenditures were too low for automatic stabilizers to have any significant macroeconomic effects. But the Employment Act of 1946 changed all that; it represented a transition form a laissez faire government to a government that is responsible for stabilizing the economy. I think this transition to a more intervening government is one of the main reasons why the United States has been able to avoid another Great Depression and probably will avoid a recession of this magnitude in the future.

[Brandon Leong]

I agree with Professor Delong's article that the importance of the 1946 Employment Act should be measure by the shifting sentiment of the Federal Government's role in guiding the Macro-economy. I have the second answer to the question posed by Delong at the end very interesting. Delong writes how in this alternative universe, “an outbreak of inflation like that seen in the 1970s would have been very unlikely” but “a repeat of the Great Depression would have been” more likely. Although I did not live through either of those experiences, I can imagine that most people would choose to have the inflation in 1970s than another Great Depression. So, one of the main points I got from this article is that the 1946 Employment Act has not led to a perfect economy, but it has led to a better one than if it had not been enacted.

[Lauren Frasch]

Delong’s paper analyzes the Employment Act of 1946 and the Humphrey-Hawkins Act of 1978, and their effects on the economy. The Employment Act committed the government to lowering the unemployment rate, increasing production and increasing purchasing power. The Act of was a reaction to the publics fear of the wrath of the “invisible hand” after war and the Depression, and their desire for a regulated economy. Delong argues that the Act only set goals for the government and the economy in order to placate the nervous public feel more secure. Ultimately, however, the Act merely set goals and did not outline any effective means to achieve those goals. This can be seen by the fact that, today, nothing but the Humphrey-Hawkins Testimony remains from these two Acts.

[Eric Regan]

In his article, DeLong stresses the importance of two key components that should be analyzed when considering the overall effects of the Employment Act of 1946 on the U.S. economy: the institutions it created and the changes in mentality that led to its establishment. First off, it allowed for the federal government's "automatic stabilizers" to function so that in times of recessions, the government would increase spending and run large deficits in an attempt to steer the economy back on track. While reading this, I was reminded of the automatic adjustment system of the gold standard, where countries that had large trade deficits experienced a gold outflow, which would decrease prices and lead to a rise in exports and fall in imports, which erased the deficit. Near the end of the article, DeLong argues that even if the Employment Act had not been created in 1946, the shift in sentiments and increasing pressures following World War II would have led to its establishment anyway in one of the subsequent years because the government had realized that it needed to have a larger role in monitoring the macroeconomic policies of the economy.

[Guadalupe F. Garcia]

The 1946 Employment Act seems to mark the change in people’s minds. The change from laissez-faire government intervention to a more active role of government. Very understandably, the act rises after WWII and the Great Depression when it has been made clear that by playing a more active role in leading the economy, the government can prevent recessions or at least lead society to see them through with the most minimal negative effects. The 1946 Employment Act is a positive thing, but like many other good things it has been put to the test and run into problems that need to be considered.

[Elizabeth Talbot]

It seems to me from the article that the 1946 employment act was significant in that it created a policy stance in government with an eye toward stabilization and support of the macroeconomy at large. In addition, it resulted in the CEA. Delong's point about the actual effects of the discretionary power of government over fiscal policy and the automatic stabilizers and their relative ineffectiveness is interesting. I had previously thought that after the great depression the government became much more effective in its use of stabilizers to revitalize a depressed economy. However, DeLong pointed out that it take much longer than many recessions last to actually get more money in to the economy. The fact that the government has grown so substantially, as DeLong points out, is the main reason that it is effective as an automatic stabilizer, because its spending is such a large part of GDP. Overall, it seems that the great depression, along with the 1946 unemployment act have created a govt with the right ideas in mind, but still one too embroiled in politics to be as effective as it could be.

[Carson Le]

The 1946 Employment Act seems to fit well with the the trend of governments increasing size and influence throughout the 20th century, especially after the Great Depression. The management of the US economy is now one of the governments main concerns, as it should be. Though all the goals of the act, maximum employment, output, etc, may not have been completely met, the effort shows the change in the governments mindset. The implementation of automatic stabilizers, or at least the idea, has big implications for the long run stability, and growth, of the economy.

[Katelynn Nguyen]

In this article, DeLong draws the conclusion that implementing laws such as the Humphey-Hawkins Act was one that was rather ineffective since the economic consequences of Employment Act of 1946. These established goals were suppose to build some sense of institutions. These laws were to affect the government in long terms matter but rather the consequences varied, one being the Federal Reserve Chairman reporting to Congress semiannually. Consequences of the employment act was rather uncertain but more importantly the overall response to the changes signaled recognize of the people.

[Stephanie Pai]

The Great Depression was a period of time from 1929 to 1941 in which the economy experienced high rates of unemployment (averaging well over 10%), low production, and limited investment. This period of stagnation prompted radical changes in the way government viewed it's role in the economy and lead to our modern study of macroeconomics.

This article discusses several of these changes. One of these was the the Employment Act of 1946 and how it could have been used help the economy recover from the Great Depression. The Employment act of 1946 was an attempt by the federal government to develop macroeconomic policy. The act requires the President to submit an annual economic report within ten days of the submission of the national budget that forecasts the future state of the economy, including employment, production, capital formation, and real income statistics. The most important report would be the unemployment rate. The unemployment rate effects many things, such as, productivity, interest rate, inflation, income, and government revenue.

The article also discusses the importance of automatic stabilizers. During the Great Depression, automatic stabilizers came in existence as a response. Automatic stabilizers works to limit the expansions and contractions of the business cycle. An increase in aggregate production and income associated with a business cycle expansion causes an increase in taxes and a decrease in transfer payments, both of which limit the increase in disposable income and thus limit the expansion. On the other hand, a decrease in production and income associated w/ a contraction within the business cycle causes a decrease in taxes and and increase in transfer payments, which eventually limits the contraction.

Between the years of the Great Depression and WWII, the government tried to increase the confidence and productivity of the people.

[Jun-An Chen]

This articles addresses the start of the government’s commitment to create institutions that regulate the macro economy of U.S. The passage of Employment Act marked the initiation of the government’s role in macroeconomics. One of the most important functions discussed in the article is the government’s role to stabilize the economy. The article talks about automatic stabilizing effects, which results from the government’s size in the economy. The government’s spending increased the deficit but helps relieving unemployment. The article states, despite a few successes, the policies are often accidental and slow, because economists work with shaky data and slow legislative process. Unlike other slower policies, automatic stabilizer acts as a safety net that kicks in during the current quarter Finally, the article concludes that even though results could be the same without the establishment of the Employment act; nevertheless, its existence assured people of the government’s intention and efforts to regulate macro economy.

[Job Gregory]

I was interested at Delong's point that legislative measures to curb recessions take too long (4 or 5 quarters) to put funds where they need to be. Once the funds arrive, the need for them has already passed and they should probably be somewhere else. This coincides with his broader Friedman inspired argument that government lacks the economic understanding nor institutional efficiency to steer the economy from recession. I agree with Delong that automatic stablizers DO have a stabilizing effect on the economy, and also think that the Great Depression must be included in the analysis (Some argue that pre-depression macroeconomic trends should be compared with post WWII macro trends to contrast the effects of automatic stabilizers.). Finally, I am living proof of his assertion that voters view borrowing and spending by the government as a standard operating procedure is a dire moral evil... I am a democrat and am always pissed about the deficit and the burden it places on taxes of future Americans.

[Huinan Zhang]

The Employment Act of 1946 has marked the switch of Federal Government’s role. Before the Great Depression, US government is detached from managing the country’s economy. Since the establishment of the 1946 Employment Act, it is obvious that US is following the Keynesianism that federal government need to be more activate in managing the macro-economy. Fed start to become the steward of the US economy, and it became responsible for promoting maximum employment, production, and purchasing power. Also, due to the change of the perspective of government’s role in the economy, the Fed also changed their viewpoint from the pre-WWII era and signified it as an important tool for the post-WWII economy. This is why US did not suffer from the depression again after the war ends.

[Shuwen (Shirley) Liu]

I haven't heard of Employment Act of 1946 before until I read this Delong's article. Therefore, it is kind hard for me to read the article in the beginning, since I know nothing about the Employment Act of 1946. But it was very interesting to talk a close look at such act, both on its effectiveness and failures. It is really hard to come out an effective act that without any default to it, but the failure of this act does give us an important lesson so we won't make the same mistake in the future. Overall, I did think it is a good thing to have such employment act, even though it is not as effective as we expected.

[Patrick Traughber]

Delong's article regarding the Employment Act of 1946 offers insight into how the government should handle economic policy. As Delong explains, the significant lag in information about economic data reaching those in charge of policy decisions shows that politicians are probably not the best decision makers when it comes to stabilizing the economy. Instead, it seems clear that the Federal Reserve should have the role of stabilizing the economy and avoiding major recessions. Given their access to current data in the economy and the teams working on their behalf, those in the Fed seem the most informed. Likewise, it seems that politicians should focus on more long-term goals that make for a steady, growing economy such as eliminating structural deficits and making sure government spending is financed by an increased tax burden rather than borrowing, as that ensures citizens do not have a utopian view of the current economic condition (people should feel the burden of increased government spending).

[Shannon Lee]

This article discusses the Employment Act of 1946 seemed to be a good idea on how the government should respond the the economy. After the Great Depression it seems that government intervention is necessary in order to prevent a huge collapse. The government needs to ensure that there is enough activity to prevent further depression even if there is sign of a recession. Although the economy may not be at maximum productivity, at least we have learned from our past mistakes and are more cautious of the future.

[Min Park]

I did not realize that there was an Employment Act in the United States that monitored the employment and inflation levels within the country. Although these measures are in good heart, I wonder if they are in the best interest of the economy. Following the Great Depression, it was necessary for the government to engage in deficit spending and go into a large debt to spend more on welfare services. But, if unemployment is naturally high during a recurring recession in the economy, is it necessary to engage in such an activity again? Or how else will the government be able to reduce unemployment in the future? Another cause for concern that is not only relevant to these statistics is the fact that the unemployment rate does not provide a measure for the quality of work for the average United States worker, which is a very important indicator of the workplace as well.