A New Deal, an Economic Recovery Program…

November 23, 2008

(Copyright 2008)

The WALTHER REPORT

By Tony Walther

My 98-year old mom just told me on the telephone that when Franklin Roosevelt began his presidency at the height of the Great Depression he was a “breath of fresh air”. But not everyone shared her delight, she noted. My late aunt, who spent nearly all her adult life on a 60-acre farm out west of Modesto, Ca., and who worked for many years at the Farm Bureau office (not a government agency as the name might imply) never did have any use for Roosevelt, according to mom.

You can’t please everyone.

But to me, Barack Obama with the announcement in a radio address Saturday that he plans to hit the ground running when he takes office in January with a major stimulus program that promises to create 2.5 million jobs (after seeing 1.2 million lost this past year) sounds good. Via what he calls the Economic Recovery Program, he is proposing in general to stimulate the economy with public works projects to fix our ailing infrastructure – roads and bridges and schools – and develop “green” technologies to deal with our environmental crisis and to reduce our dependence on foreign oil. Incentives would be offered to the business sector for green technology development.

And according to an article I read in the New York Times online, he plans to keep his promise to cut taxes for lower and middle class workers, but may delay tax hikes on the wealthy by letting the Bush tax cuts expire in 2011.

While I always believe private enterprise is the best system, I feel government can and should help lead the way, and it appears that is what Mr. Obama has in mind.

Just to keep things straight, the remainder of this blog is composed of my personal view and not directly descriptive of Obama’s proposals:

There’s really no reason every able-bodied person could not have a job in this nation. We have the natural resources in abundance for the raw materials for heavy industry. We have huge agricultural resources. We have the brains for high tech. And we have a tremendous labor force (we are not dependent upon immigrants, but certainly legal ones should be welcomed to the promise of liberty in America at the rate of which we can absorb them).

We have a crumbling infrastructure that needs immediate attention – that means jobs galore.

For the most part, these jobs can be supplied by private enterprise, but where they can’t, we do have a government, and the unions and private interests need to stand aside and let the government provide employment. I think the private interests probably would not mind at this point. The unions might be a different story. I would rather see millions or billions of public dollars poured into public projects than into bankers’ vaults for safe keeping.

I think private enterprise would welcome public works projects to get people employed and spending dollars.

Now when I write about public projects to repair the infrastructure I mean both projects that would utilize private contractors and skilled laborers (often union), as well as the good old government make work projects, ala FDR of the 1930s. Make work has received a bad name in the past. There’s nothing wrong with make work if the made up work provides something useful. And it’s alright that the government provides work for the unemployed because it is our government. We are employing ourselves.

If the economy were moving along better private enterprise would be taking care of the job problem, but we are in a kink (okay, more than a kink).

In general I would think that it is not a good idea to have government compete directly with private industry. But even if times were good, government could still supply jobs, having folks do things that might not otherwise get done – building and maintaining parks, as an example – but nonetheless would help support our quality of life. And those things should be done in these bad times as well.

Supplying the populace with what it needs and wants through the incentive of the profit motive is usually the most efficient economic model. But poor management can bring any industry down – witness the big three auto makers (I know, the management blames the unions and the unions blame the management and meanwhile the non-union foreign-owned plants in Ohio and Tennessee and elsewhere keep rolling them out – and I’m not necessarily anti-union, but there is such a thing as killing the goose that laid the golden egg).

The old Soviet Union tried a totally state-run bureaucratic production model and it failed miserably in improving the quality of life for its citizens. Communist China never made much progress until it adopted more of a free enterprise approach. Communist Vietnam is having much better luck with its use of the capitalist model as well.

I took a college class called “Economic Geography”. I recall the professor telling of how the Soviet Union at one point had a disastrous wheat harvest not because of bad weather, but because their harvesters kept breaking down. It seems that the parts factories were not producing the right parts needed for the harvesters. In the Soviet model, all that is decided by a commissar somewhere who may have no idea of what is needed. In our model, private companies do their best to meet market demand in order to both stay in business and to reward themselves with the highest profits.

On the other hand, a concentrated effort by the government comes in handy in times of emergency.

During our Katrina there was not enough government concentration and coordination on the human disaster in New Orleans.

But, during the recent Chinese earthquake a much larger disaster, the swiftness with which the communist Chinese government moved in to aid its citizens was impressive, a certain level of propaganda aside.

Government is not always the enemy — unless you live in Myanmar.