Framing the Dialogue

The Worst Economy Since the Great Depression

This will be an unusual post for me.  I am going to use mostly quotes to tell a story.  A story that I hope will propel you to action.

“The crash was the honest acknowledgement of the breakdown of capitalism…caused by speculating margin traders brought down the nation.”

“The country, he believed, had grown too fast:  beyond ‘our natural and normal growth.’  The problem was that there had been ‘an era of selfishness.’  There existed ‘throughout the nation men and women, forgotten in the political philosophy’ of the last years.”

“Here was a president who would not barricade himself…He was right there with them in this time of crisis.”

“The country was in no mood in any case to put concepts under a microscope.  What mattered was change.”

“There should be at least a full and fair trial given to these means of ending industrial warfare…thoroughly unwholesome conditions in the field of investment and made the connection of trouble a principal task of recovery.”

“Three angles from which the administration was attacking industry.  The first was now old history:  the government was spending public capital to enable government to outcompete the private companies…The second was the prosecution of figures…The third was aggressive legislation.”

“The tax bill included a graduated corporation tax – to punish big business.”

“I will…fight to the end against any candidate who persists in any demagogic appeal to the masses of the working people of this country to destroy themselves by setting class against class and rich against poor”

“Targeting…of the salaries of some executives to the papers…this disparity could clearly be turned against them.”

“Test of our progress is progress, not whether we add abundance to those who have much; it is whether we provide enough for those who have little.”

“U.S. doctors must become an officer in the Federal Public Health Service…the federal government would pay for whatever service citizens could not pay.”

“Saving – the Private Man’s Only Safeguard…Spending – the Nation’s Hope…the growing feeling of the insecurity of future investments due to national government policies.  Stocks and bonds are now very uncertain.”

“The United States seemed a less reliable place…knowing that the government wanted to enter an area of the economy was one thing.  But knowing that it could always make vast changes was more disquieting.”

“should nationalize them if the time was right, but if it wasn’t, he should ‘make peace on liberal terms.”

The above are a series of quotes, not from today, but from the Amity Shlaes’ book about the Great Depression.  I did make a few edits of the passages to mask the fact that they pertained to that era rather than what we are going through now.  The parallels are staggering and frightening.

“Those who don’t learn from history are doomed to repeat it”

                                                                          George Santayana

The politicians are in full furry to accomplish their agendas during this crisis.  No sense wasting a good crisis.  They see our economic plight as opportunity to advance the policies that they have been waiting to implement.  We need to not just learn about our history, but also get involved in the process…NOW. 

I would like to be able to say the politicians in Washington are taking unprecedented steps to control our lives, but FDR and his followers have done it before.  One thing is correct in many news reports comparing now to the era of the Great Depression…we are facing a drastic increase in the role of the federal government.  Here are more quotes/facts from The Forgotten Man:

“Hoover…raised taxes when neither citizens individually nor the economy as a whole could afford the change.”

“Roosevelt…created regulatory, aid, and relief agencies based on the premise that recovery could be achieved only through a large military-style effort.”

“The trouble, however, was not merely the new policies that were implemented but also the threat of additional, unknown, policies.  Fear froze the economy, but that uncertainty itself might have a cost was something the young experimenters simply did not consider.”

“Keynesianism also emphasized government spending.  Yet focusing on consumers meant that Washington neglected the producer.  Focusing on the fun of experiments neglected the question of whether unceasing experiments might frighten business into terrified inaction.  Admiring the short-term action of spending drew attention away from its longer-term limits – economies often go into recession when the spending disappears.  Supplying generous capital to government made government into a competitor that the private sector could not match.”

“Compared to the private sector, after all, the federal government was a pygmy.  Its size was less than 2 percent of the national economy, smaller even than that of state and city governments.”

Note:  Estimates vary, but the size of the current federal government is around 20 percent of GDP.

“Albert Wiggin of the Chase bank argued that Hoover had his logic about wages backward.  ‘It is not true that high wages make for prosperity.  Instead, prosperity makes high wages.”

“In the period of a year, 10,000 pages of law had been created, a figure that one had to compare with the mere 2,735 pages that constituted federal statute law.  In twelve months, the NRA had generated more paper than the entire legislative output of the federal government since 1789.”

“established the Federal Writers’ Project to employ unemployed writers…Among the hires were 150 jobless newspapermen”

Note: Sen. John Kerry is planning hearings to try to save the newspaper industry.  A Democrat colleague in the Senate introduced legislation to allow newspaper companies to reorganize as non-profits.  It seems that the Dems know who butters their bread.

“Unhappy with the results of recent Supreme Court cases, FDR would “simply send over to Congress legislation that would increase the number of justices from nine to a figure that could range as far as fifteen.”

“the market had been thin – relatively few shares had traded…the traders were finally awakening, just as everyone had hoped they would.  But they were awakening only to run.”

This last excerpt illustrates, unfortunately, how many elected officials “work” the citizens.

“He [Roosevelt] told Secretary Henry Morgenthau and Homer Cummings at lunch that he hoped to keep the bond market in confusion until the Supreme Court decided the gold-clause issue.  Then, if the Court decided against the administration, things would still be so rough that the people would turn to the president and say:  ‘For God’s sake, Mr. President, do something.”

And I would like to finish with some words from one of my favorite authors:

“Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good. In area after area – crime, education, housing, race relations – the situation has gotten worse after the bright new theories were put into operation. The amazing thing is that this history of failure and disaster has neither discouraged the social engineers nor discredited them.”

                                                                                   Thomas Sowell

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