
...a 1930's "Hooverville" shanty
The GOP is currently reading Herbert Hoover’s play book. Let’s just hope Obama is reading FDR’s.
I wonder how many people in the country are interested today in US history? (I ask this because based on today’s schools, most young people don’t even know the meaning of the subject: “US History”.) I also wonder how many Americans understand how history is repeating itself today, especially regarding the repeating of the politics of the past Great Depression of the 1930’s.
I am sure some of you must now be scratching your heads saying, “What in the world is he talking about?”
Well, first it’s not just the similar bad economic times of then and now. That is a given. It was extremely bad back then for 25% of the nation’s working families out of work, and it’s very bad today for 10% of today’s working poor and the middle class. (And did you know that today’s 10% of Americans is about the same in the physical numbers affected as the 25% was back in the 1930’s?)
But my point here is in regards to the past politics between the two major political parties, which were the same parties as they are today. And as you will see, the politics was very similar to what is going on between the Democrats and the Republicans today.
First, let’s look at what the Republicans are saying.
Even though the Republicans were the ones that got the country into this mess, (just as they did in the 1920’s), back 85 years ago, they were also saying that “deficits didn’t matter”, just as it was previously stated by president’s Reagan, Bush I and Bush II. At least, that’s what they said when they were all in power.
But as soon as the economy went into the toilet and the Democrats came back into power, all you will ever hear from the Republicans is how important it is to pay down the federal debt. This is exactly what the GOP was saying back in the early 1930’s and especially after FDR had decided to spend by investing in America’s people and jobs instead of waiting for the banks and Wall Street to kick in with some help.
If one wants to seriously study that period in America’s past, they will see that President Hoover and the Republicans eventually did throw a few tokens for helping the disadvantaged of that time. However, after FDR won his first election, for the most part the Republicans were waiting for the Democrats to fail and the economic problems to “fix themselves”. And yes, just as they are today, the corporations and the banks back then were sitting on all their money and they were not lending it to the middle-class entrepreneurs of the time for getting any small businesses started or for growing current small businesses. (Sound familiar?)
All of the conservative rhetoric for those years after the 1920’s market crash was for dealing with the country’s debt and of course, “we can’t spend money on the American people and infrastructure projects, it will just increase the federal debt”.
But when FDR took the reins in 1933, he immediately started some government programs for getting Americans back to work. Since there was no “Unemployment Insurance” for providing the average unemployed worker with some spending money, FDR instead immediately instituted government jobs programs that started to put some spending money in the people’s pockets. As has been stated by the economists today, the best way to start re-vitalizing the economy is to put money into people’s hands that will need to spend it right away, and that’s exactly what FDR did.
But even though FDR initially did the right thing, the Republicans eventually wore him down and around 1937, FDR started to focus on paying down the debt.
As soon as the administration moved their attention to this approach regarding the debt, the country immediately dipped into another recession. And the economic recovery also went into a complete stall.
And just as it is today with President Obama, FDR was also coming up to running for another four years in office. So, even though FDR ran on the idea of “paying down the debt”, after he won his re-election, he changed his mind about paying down the debt. He then made a State of the Union speech where he basically said, “I have tried to wait for the corporations and the investment community to start hiring and investing in America, but they are still sitting on their fortunes. Therefore, I am going to start investing in the American people. Since the banks won’t lend, I will now commit millions of public dollars for lending to those that need financing for their small and medium size businesses and for buying a new home. I will also invest in more government sponsored jobs and research programs that will start new industries or improve those already in operation.” FDR went on to say that, “Yes, this spending will increase our debt somewhat, but when the average American gets a job, he immediately spends the money he earns and he will also pay taxes. And as we expand that approach, the debt will go down and the country will be all the better, after everyone that wants a job, has one.”
And as history has shown, that approach worked to the point that for decades, the US, and its subsequent infrastructure, were the envy of every nation on this globe.
Just as it was with president Hoover’s GOP, today’s Republicans only talk about paying down the debt. They vote “no” to anything that is positive for the average middle-class American. They have done this to the point that they even voted against healthcare for 9/11’s first responders, “no” on extending unemployment insurance payments and “no” for virtually any spending that isn’t immediately paid for. (Wouldn’t that have been a nice approach when Reagan and both the Bush’s and the Republicans were in power and while we had a fiscal surplus?)
Is President Obama currently drinking the GOP’s “Kool-Aid” about paying down the debt instead of taking care of the people? Or is he going to do what FDR did by running in 2012 on paying down the debt, and then, if he’s re-elected, change his mind and focus on jobs and government support for jobs, instead of worrying about minor increases in the federal debt? Let’s hope so.
I find it interesting that it has always been the case, whether in business or in human nature, one must always take risks in their investments. This is true whether you are investing in a business plan, or in people, in order to achieve eventual success. Someone always has to take a risk, whether it is in a major company such as “Apple Computer”, or in a small, one-owner business such as “Kara’s Cupcakes”. They both take some kind of lending risk and they can both become successful well beyond their original investment. And yes, if the tax loop-holes are filled, they both will repay those investments many times over through increasing their employees and by properly paying their taxes year after year.
The GOP's approach didn’t work back in the 1930’s and it won’t work today because it is against the basic rules of democracy, economics and capitalism. The Republicans’ idea is more along the ideas of the era of Charles Dickens and his Christmas Carol’s Ebenezer Scrooge. Apparently, the GOP would prefer there to only be the “Scrooge’s” and the poor “Bob Cratchet’s”, but nothing in-between such as a strong middle-class.
I’m hoping that the president is reading his American political history and that he follows a modern day, 21st century version of what FDR did, after he realized the best alternative approach.
I guess now we will just have to wait and see.
Copyright G.Ater 2011
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