Let's take a look at some more information from chapter ten, and we're going to look at some programs under Herbert Hoover's administration. He was president from 1929 to 1933. Silent Cal could've probably been president. He certainly served a first-term. He could've run for a second, but he said, quote, "I do not choose to run," end quote, not a lot of information on why except that he hated being president. So, Herbert Hoover, also a Republican, therefore runs on the Republican ticket and ends up winning. Now when Herbert Hoover is first elected and then serves in early '29, things are going okay. Then it's in, essentially, October that the stock market crashes. We have Black Tuesday, the stock market crashed in '29 and things just go down a tube and immediately Hoover, he's called a laissez-fairest president by many, but that's not 100% true. He starts with laissez-fairest kind of tendencies saying, "Hey, this is just going to be, y'know, a normal kind of recession. Let's just sweat it out." So, he was in complete accord with the economic theory of the time, which is classical economic theory, and classical economic theory states that prices and wages are flexible and that markets tend to do a good job regulating themselves, and the economy will naturally recover, and that would've been true had the Federal Reserve not pursued contractionary policy for a period of over three years, and severe contractionary policy that throws into the Great Depression. So what happens is Hoover moves away from laissez-faire-ism and towards more government intervention in the economy. And then, towards the end of his term, before he runs for, of course, a second term, he tends to move back to the classical economic theory of, let's just leave the economy alone, and let it do what it's gonna do, and things will recover. So, he is mistakenly called a laissez-fairest. He, in the middle of this term, actually pursued more government regulation than pretty much anyone before him in history. So what happens, and what I'm going to start with focusing on is he promotes volunteerism, and what that means is he, he asks business owners to increase the wages that they pay employees, and that doesn't work, but I'll, I'll write that down. So he first says, "Hey, pay higher wages to workers, and if you pay higher wages to workers voluntarily, then what will happen is their incomes will be higher, so they'll buy more goods and services, and when they buy more goods and services, that'll get us out of the problem, that will pull us out of this depression." Now the idea is though, that what's happening for real wages or the real cost of labor to firms, because of the deflation that's occurring, these real wages are rising. So for workers that firms cannot decrease their pay or lay off that have a fixed nominal wage, and I'll write this down. Recall that the real wage equals the nominal wage over the price level. So we looked at this when I introduced aggregate supply and aggregate demand from appendix ten, and for nominal wages that are fixed because there's deflation, there's falling prices, what this means is real wages are really rising for those employees that are locked into contracts. So for these workers, the real cost of labor for firms is increasing. So, firms don't want to voluntarily increase real wages by more than that, because of course it affects their costs, and increases their costs by more. When the prices of their products are falling, it's just going to make it more likely they go out of business, so volunteerism doesn't work. Hoover's telling somebody who had their hand on the burner to put their other hand on the burner., and the first hand will feel better. So that's kinda the way it goes. Now, because nobody listens, he promotes labor unions, and both of these are gonna work exactly the same way, and he promotes the labor unions through something called the Norris-LaGuardia Act, and this is in 1932. You don't have to know the exact year. Just know that this is under Hoover, and you're all good. And what the Norris-LaGuardia Act does is it bans these things called yellow-dog contracts, and what a yellow-dog contract is, is it's the exact same thing as an ironclad oath from the late 1800s. Yellow-dog contract is just a new slang term for the time for, for ironclad oaths, where workers to, to become employed for a firm, must sign a yellow-dog contract saying that they will not unionize, and they will not start a labor union. So, by banning these yellow-dog contracts, as well as stopping injunctions from courts for workers who go on strike or boycott or, you know, picket peacefully, this causes labor union power to increase, and from chapter six, we saw how to model labor unions, and we don't have to redraw that because you can always go back and reference that lecture. But the key is, with a labor union, is that union wages compared to competitive are higher, and employment falls because the firm was going to respond to the higher cost of the workers by hiring fewer individuals, and not only that, the labor unions, when they gain more power are going to cause higher levels of unemployment because there's, there's individuals who now want to work for the higher wage but don't get hired by the firm. What I do want to show is what this does for the nation as a whole because this Norris-LaGuardia Act is an act that of course affects the entire nation. And, what we will use to do that is aggregate supply and aggregate demand, which is just again our model from appendix ten. I am going to model the short run, but you want to know here which curve shifts, aggregate supply or aggregate demand. More, more labor union power, because it lowers employment, that's, that's less labor. It's an aggregate supply shifter, so short-run aggregate supply would decrease. If we did long-run aggregate supply, long-run aggregate supply would also decrease from this, so we'd get the exact same effects in the long run in the short run. The equilibrium price level is here. Equilibrium real GDP is here. Aggregate demand doesn't change because overall the money supply is not changing, but income is generally not changing either as a whole. So some workers get paid more, but now some workers make no money, so that's why we don't shift aggregate demand. So, short-run aggregate supply decreases because we have fewer workers with a greater labor union power. This causes for the economy, the prices of goods and services, to rise, so this is the isolated effect from this act. This does combat deflation occurring over the Great Depression, but it's not a good way to combat the deflation because this causes output to fall. It's output falling that's, that's combatting the deflationary pressure. There's less stuff to buy, there's less stuff that's produced. And, of course from before, now you have fewer workers and you have more individuals who are unemployed. So, the volunteerism would've done the same thing, except the volunteerism is not very successful because firms aren't going to voluntarily do things that make them worse off. The labor unions definitely have a relatively much larger effect here of making the Great Depression worse than it would have been. So this first policy under Herbert Hoover is really counter-intuitive over the Great Depression. But he's again, understanding the economics kind of backwards. You just don't increase the wages. You pay all the workers and they buy more stuff. The whole reason for the deflation is monetary, and that's why, that's why the prices are falling, and eventually the wages will fall because of that, so. Thank you for listening.