This is the first of two, or maybe three, pieces intended to give a little perspective on the current economic downturn and the stimulus package.
One thing that keeps coming up is the comparison between the current situation and the great depression. I’m sorry, I should have capitalized that; The Great Depression. It makes me wonder if one day this will have a cool name that we capitalize. The comparison, of course, is ridiculous. But who knows? It’s young yet. I’m sure they didn’t come up with The Great Depression the same afternoon the stock market crashed, while brokers were still hurling themselves out of windows. It probably took a while to catch on.
This is where I have a little bit of an advantage. I, you see, am 53 years old. What that means is, while I personally missed TGD (The Great Depression), my parents had vivid memories of it. They grew up in it, and it colored everything they did for the rest of their lives. So when people go on about how bad it is, I agree that it’s not good, but don’t start comparing yet.
As I write this, in March 2009, unemployment is at roughly 8%. When I got out of the Navy in 1976, it was over 10% nationally and had been for some time. It also stayed that way for, well, basically into the second or third year of the first Reagan administration. And nobody was really sweating it, or comparing it to TGD. That would have been, thank you very much, ridiculous. Yes, it sucked. Yes, it took me six months, SIX MONTHS to get a decent job.
But during TGD, unemployment averaged 25%. That’s not two-point-five, that’s twenty-five. One in four people in the whole country were out of work. For ten years. And when it started, there was no Social Security, no Medicaid, no Medicare, none of that. People were losing everything they had, and getting put out on the street, and starving to death. Literally starving to death.
That is why people of my parents’ generation credit Franklin Delano Roosevelt with saving the country. New Deal programs like the CCC (Civilian Conservation Corps) and NRA (National Relief Administration) put people to work when nobody else could. It quite literally saved the lives of millions of people.
It’s good to remember what kind of times TGD happened in. One of the results of the First World War was the overthrow of the Russian government by the Bolsheviks. There was a lot of fear in this, and other, countries that Communists were planning a revolution. The United States was an emerging world power, and Socialism was an exciting new idea that was making its way from theory to practice.
America responded by swinging hard right, leaving behind the idealism of Woodrow Wilson for the "normalcy" of Harding and Coolidge. Herbert Hoover was a hero during and after the war for leading the relief efforts that saved millions in Europe. He went on to be Harding and Coolidge’s Commerce secretary and rode that wave all the way into the White House. The Twenties were a boom time and government was very friendly with big business. It was Calvin Coolidge who said, "The business of America is business." The early days of the Hoover administration were a resounding "Amen."
And then, eight months in, came the crash. The government battened down the hatches and hoped that business would solve its own problems. It didn’t. Things got worse, recession became depression, and times were tough. Real tough. Soup kitchen tough. Riots in the street tough. A tent city sprang up on the National Mall in Washington, and it was dubbed "Hooverville."
Hoover actually began many of the programs that Roosevelt later got credit for, but it really took Roosevelt to get things turning around. The whole point of these programs was to give people a way to survive until the economy came back on line. Believe it or not, if you read what Roosevelt had to say on the subject, it was never intended for these relief programs to become permanent fixtures. More on this later, in another piece.
There were also a number of regulations that limited business practices that helped cause the crash. One of these regulations was the Glass-Steagall act, which separated commercial banks from investment banks. It was the repeal of this act in 1999, by the Republican congress and approved by the Clinton administration, that is one of the keys of our current crisis.
My folks were actually pretty lucky. Their families lived in the country. They had chickens, pigs, a cow or two, and a garden. My grandfathers were loggers, and everybody ate and stayed warm. Basically, if you could pay your mortgage and buy flour, you could live. In the cities, it was different. I’ve heard stories of kids who would steal a piece of fruit from the grocer on the corner, and the grocer never did anything about it because he knew it may have been the only thing they had to eat that day.
As the depression wore on there was a growing unrest centering in the cities of America. People who were scratching every day for that day’s food and shelter watched as Lenin was replaced by Stalin and the Weimar Republic gave way to Hitler. Hoover was a hero in 1928, but if he had won the election of 1932 he may have been the last President of the United States.
The cold truth that too few Conservatives are willing to face is that mankind is a fallen race. Businessmen, for all they do to keep the engine of capitalism humming along, are human beings too. They fall prey to the temptations of money and power, and strive to gather more of both to themselves even when it’s to the detriment of their fellow man. If you make it possible for them to gamble with other people’s money, more times than not they will. Business needs to be regulated by the government, at least to a certain extent.
The cold truth that too few Liberals are willing to face is that mankind is a fallen race. Politicians, no matter how idealistic they are when they start on the road of public life, are human beings too. They fall prey to the temptations of money and power, and strive to gather more of both to themselves even when it’s to the detriment of their fellow man. If you make it possible for them to take the power to make decisions and take risks out of the hands of creative, hard working individuals, they will. Government needs to be limited and decentralized, at least to a certain extent.
If these two sides of the coin, these two edges of the sword, are not kept in a careful balance, things go all out of whack. This country had tipped too far in one direction, and is now in the process of tipping too far in the other. But as bad as it is right now, it doesn’t begin to compare to the Great Depression. For that matter, it’s not even as bad as the period between Nixon and Reagan. So please, the next time somebody says this is the worst time since TGD, do yourself and everyone else a favor.
Laugh.
