We’ve done this before, but what’s the answer?

(Copyright 2009)
We’ve been here before, but I don’t know exactly what we did or what we did that really worked to get out of this mess. That’s partly because I wasn’t born yet. But I also think that history almost does repeat itself.
Doesn’t anyone read our own American history?
Capitalism unchecked and human greed causes great problems every time.
I’ve been reading a book by the late historian Samuel Eliot Morison called the Oxford History of the American People, and it seems that nearly everything that we face now in the current financial crisis was played out in the 1920s and 1930s.
There was a lack of regulation and there was wild speculation in which a large part of the population (including those not at all market savvy) got caught up in the frenzy to get rich quick, and there was market manipulation and then the bubble burst and eventually market controls had to be instated or reinstated.
And fast forward to the 1980s and 1990s and 2001 or so and controls were lifted and here we go again.
What is so hard about that to understand?

I just read through the part about the Great Depression. I’m still not sure what got us out of it, except that it does seem — and no big news here — that the production of war materials for World War II (even before we got involved directly as combatants) certainly helped matters.

Trouble is, we don’t want to have World War III to jumpstart the economy. And history probably would not exactly repeat itself. The rules and methods of war are always changing.

Right now, I think, we are spending a lot more every week for the war effort in the Middle East that we did for all of World War II, but far from helping our economy, it is primarily a drag on it.

And I think it would be immoral to fight a war to improve our economy, although I have to admit that most wars in some way or another involve economies. They are usually a contest for power and resources.

At any rate, we seem to be financing our current military efforts largely by issuing bonds that are bought up by China and Japan.

The history book that I am reading says that we financed about 40 percent of World War II through taxation and the other 60 percent by issuing bonds. I’ve seen the 1940s era news reels urging patriotic citizens to “Buy War Bonds”. I haven’t seen any war bond drives aimed at the general public in my lifetime, and in fact, it’s been a long time since I’ve seen a public service announcement urging the public to buy U.S. Savings Bonds. I did read recently that desperate investors were parking their bucks in government bonds at zero or near zero interest just to avoid losing money.

Our current military spending in some way may help our economy, but it is not like that in World War II where we had to start from near scratch and build up a modernly-equipped military to fight a massive land and sea war. We had to produce one heck of a lot of goods and put a lot of civilian men and women to work in the war production effort, beginning a year of two before Pearl Harbor and then four years afterward. And a large percentage of  young men were drafted or volunteered for the military (and women volunteered in large numbers too), thus instantly becoming employed. Unemployment went from double digits to nothing.

Pre-war efforts such as the Civilian Conservation Corps and other so-called make-work programs put huge numbers of the population back to work, helped put food on their tables and restored their dignity. Most people simply wanted work, not a handout, although the latter was sometimes necessary to ward of disaster.

Even with the government programs unemployment remained high for most of the 30s, with the war finally coming along to lift the economy and put everyone to work.

The boom continued even after the war because servicemen came home and were able to use the GI Bill and go to college and get good jobs and there was a pent up consumer demand from war time privations (something we have not had this time around, except that,again, I think the billions we have spent in the Middle East have drug down our economy), and we became the leader of the free world and spread our economic tentacles all over the globe.

But the rest of the world caught up or is catching up and so we are no longer playing the same game.

And a theme I can’t let go is that we have to our detriment become a nation primarily of consumers rather than producers (a generalization that of course does not fit everyone, but the majority of the nation nonetheless).

Our new president talks of promoting new green industry. A good thing, no doubt. I think the Republicans if they are smart will co-opt him and pretend it was their idea all along. It would make good political and business sense.

But green or conventional, we need to revitalize our industry and make use of our natural material resources, such as coal and oil and natural gas, and lumber, and minerals, and agriculture and put people back to work in well paying jobs and forget this service economy.

Services are vital, but they are a supporting role; you can’t make a living out of just servicing services. I agree with poor disgraced former Democratic House Speaker James Wright who complained during the Reagan presidency: “we can’t all deliver pizzas to one another”.

I’ve used that line before, and we as a nation have been here before, and perhaps we are doomed to repeating our actions over and over again like the Groundhog Day movie.

P.s.  We knew former President George W. Bush was not a good student, so we can understand him saying things such as the “fundamentals of our economy are strong” as it fell apart around us, thus looking like he was doing a Herbert Hoover impersonation. But unsuccessful presidential candidate John McCain who professed to be a fan of Republican reformer President Teddy Roosevelt seemed to indicate he knew a little history. But Teddy was early 20th Century — McCain should have read further. “The fundamental strength of the nation’s economy is unimpaired,” said President Hoover, and nine days later what had been until recently the biggest bank failure of  the nation’s history occurred. Last Fall, McCain was using the phrase “”the fundamentals of our economy are strong” as major banks fell. 

 

 

 

 

 

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