No Trampoline at Recession's Bottom
I got a response to a -column I wrote a couple of weeks ago about the libertarian aspects of the tea party movement.
The respondent took exception to my assertion that the recession was caused by ethically challenged enterprises acting with impunity in an anti-government, anti-regulatory environment. His contention was that the real problem was that the country hadn't had true laissez-fair capitalism since the establishment of the Federal Reserve in 1913.
I was actually referring to the concurrent wave of deregulation and historical revision that we experienced from the mid-1970s to the present.
Consider the legacy of Franklin Delano Roosevelt. My grandparents revered him. To them, FDR was the courageous and charismatic leader who led the United States out of the darkest days of the Great Depression and then to victory over the Axis in World War II.
In the revised narrative emanating from people who would have might never seen the inside of a university but not for his dedication to education, FDR is the father of "socialism" in America.
I like my respondent's time frame better. He and Glenn Beck prefer to place the mantle of Father Socialist on Woodrow Wilson. They actually want you to believe that the 20th century, when the United States went from a semi-isolationist regional power to the pre-eminent economic power in all the world, is when American capitalism and democracy went terribly wrong.
Let's be clear. Far from socialism, government -regulation is a necessary because corporations like BP and Lehman Brothers continue to demonstrate that the greatest threat to capitalism is capitalists.
There is a socioeconomic Darwinism to the tea party/libertarianism movement. What a peculiar notion it is to be nostalgic for a time before overtime pay, workplace safety standards or a minimum wage.
To blame labor unions or labor costs for outsourcing is to long for Third World labor in this country that doesn't have to cross -borders. To imagine that we should reduce the deficit by cutting "entitlements" rather than raising taxes on those who can afford it is to believe that we might just write off the people most affected by the recession. To balance state budgets by laying off teachers is economic suicide.
The fact is that there is never a trampoline at the bottom of a recession. It was true in 1907, it was true coming out of the Great Depression, and it's true in 2010. Employment, which bottomed out in 1931, didn't reach 1929 levels until World War II. In spite of all the government spending of the New Deal, debt as a percentage of GDP remained nearly flat while the GDP rose sharply. In fact, debt and unemployment actually rose slightly when the -government reduced spending.
It should be noted that while the national debt is high as a dollar figure, it is nowhere near historical highs as a percentage of GDP. Today we're at 52 -percent. In 1947, we were over 120 percent.
We must address the deficit, but history shows that deficit reduction is seldom accomplished in the absence of a growing economy. To that end, -several weeks ago a petition was sent to Congress that was signed by 300 distinguished economists and -academics imploring Congress to work on job -creation before addressing our debt.
That's where our focus should be, because the economy will come back only when the most powerful economic engine ever, the American consumer, comes back.
To do that, we need jobs and job security. We need to reduce our personal debt and manage credit more responsibly. We need -government to protect -consumers from predatory lenders and risky behavior of under-regulated financial institutions, and we need a tax code that favors middle-class and working-class Americans.
Because when they come back, that's when the recession is truly over.
Kevin Smith lives in Aberdeen. Contact him at firstname.lastname@example.org.
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