If you want to understand what the U.S. faces today with no prospect of bringing unemployment down to 3 or 4 percent you need to read Since Yesterday, Frederick Lewis Allen's book written in 1939 about the Depression years in America. Allen was the editor of Harpers magazine. In 1930 he had written a classic book about the events and attitudes that marked the Roaring 20s. Since Yesterday, on the Depression decade is more relevant today.
What Allen shows is that the businessmen of the 1920s, who had inspired awe, those who Calvin Coolidge called the "Big Men" of the country, and who the country had admired and trusted, were completely discredited by 1933 when Roosevelt took office. Herbert Hoover had gamely taken the advice of the Big Men and it failed him. They had no idea how to end the Depression. Andrew Mellon, Treasury Secretary to Coolidge and Hoover and one of the richest men in America, and Samuel Insull, the Chicago-based "leverager" of utility stocks were facing de facto exile. Richard Whitney, once head of the NY Stock Exchange would eventually go to prison in handcuffs. By 1932, these erstwhile "masters of the universe" were the object of almost universal scorn.
Americans forget this history. When I hear people say that Obama has to listen to business leaders I wonder what they think these leaders have learned since 1933. They and their followers are recommending word for word the policies their predecessors recommended to Hoover --- balance the budget, cut spending, don't tax business. What the American public should learn from this repetitive baloney is that there is a big difference between believing in competitive private enterprise, which we should, and believing that business leaders have insights about policies to end joblessness which they do not.
Frederick Lewis Allen did not stop at revealing the uselessness of the "Big Men's" locker room incantations. He saw the weaknesses of the New Deal too: It never hit on a fully successful approach to unemployment. Joblessness fell from 25 percent when FDR took office to just over 14 percent 4 years later but then went back up to 17 percent in 1938. Allen acknowledges that the New Deal was an improvement, but it was not satisfactory anymore than a few percent reduction in unemployment to 8 or 7 percent will be satisfactory in the next three or four years.
Roosevelt's advantage over Obama is that Americans felt he cared for them. In "the legislation which he sponsored," Allen says, "(ordinary Americans) read a genuine friendliness toward them, a genuine desire to help them." .
Since Yesterday was published in 1940 so Allen had not seen what finally ended the Depression. What did was World War II. It put 13 million Americans in the armed forces and millions more into defense jobs making ships, planes and munitions. It was financed largely by the Federal Reserve bond-purchasing program far larger than the New Deal's "pump priming" and today's modest "stimulus" programs. Financing the war took roughly 25 percent of Gross Domestic Product for four years.
What the U.S. needs today to drop unemployment to a politically acceptable 3 or 4 percent is the peaceful equivalent of that war, a very large infrastructure bank charged with modernizing the public plant --- transportation, power and water systems, communications, recreation facilities, and more. The Fed should buy the bonds of such a bank, charging it low interest rates, just as it bought Treasury bonds at low interest rates to fund World War II. (This is fundamentally how the Chinese are funding the impressive explosion of public works in their country.) If the U.S. does not create such a large works program, I believe we are going to face a long period similar to the 1930s with corrosively high unemployment. This will discredit democratic governments just as it did during the Depression with all the attendant risks.
The argument for a big works program is based not on economic theory but on concrete historic experience. The history is there for us to draw on. What about today's business heirs to Mellon, Whitney and Insull? A massive infrastructure program financed by the Fed would be the best thing that could happen to American business. Unfortunately historic experience and even the memory of money in their pockets has never been enough to convince the egotistical "Big Men" of business that they are not as important as they believe they are and that sometimes the country needs government to play this role.
It does not matter how many aide packages or medical packages are delivered overseas for a corporation to recieve a tax break or juggle a different currency to make a buck-soon the whole thing will fall apart because of greed.
Soon all of the money stolen from the bommers will be squandered and none will be left for anyone
The banks and mortgage companies continue to steal.
If the economy was getting as good as they say-there would be no need to rob people.
Who are they trying to kid?.
Well stated; the problem is the 'big men' include those in Washington 'running' the country - the big men alre also are the government.
Denver Unemployment Examiner
http://www.examiner.com/unemployment-in-denver/kelly-wiedemer
Instead of addressing the problem, the Feds are shifting the problem to the states. Corporations and Banks are profit driven. They will not change the jobless problem other than adding more unemployed.
Public works and ultrastructure based projects will give the unemployed an opportunity to earn a living which would help us move forward.
One issue that seems lost in much of the press is normal population growth needs at least 150,000 jobs per month created. November's, 39,000 jobs means 110,000 of those entering the work force will not find a job.
The wealthy continuing to invest their money into stocks and financial instruments, does not create jobs, but does make for lovely bonuses for banks and businesses.
Our country will continue to struggle and many Americans will suffer because Congress panders to the interests of only 2% of our population.
If Congress was serious about fixing the problem, they would have done something during the past 2 years instead of just saying "NO".
My problem with it is as follows. What then. The government spending is unsustainable. There isn't the demand to transition to as there was after WWII. The industrial base, the manufacturing base is not there to pick up after the spending is done. You would be priming an empty well.
There is this mind set that refuses to see that business as usual will not work. It was never intended to work. No one who has ever started a company said to themselves I'm not going to patent my products and processes. I do not need nor am I entitled to that protection. Yet that is exactly what we as a country have been asked to do in accepting free trade.
I guarantee you if government were to declare patent protection illegal there would be no end to the howling and the gnashing of teeth. All this is pretty straight forward. Royalty fee a company does well ... no royalty fee a company goes bankrupt. Tariffs this country does well ... no tariff this country goes bankrupt.
So how is it that everyone in the country bought intothe idea of freetrade. The answer "debt". It's ok to be in debt. Debt isa good thing. Buy on credit, easy loans job or no job. Debt makes it easyto ignore the fact that nothing is made here anymore
There's an insanity to it all.
Corporations paid for their elections. They, in turn, work for those that pay them the most. Those are the only facts that matter, at least, until campaign finance reform becomes a reality, or voters learn to ignore paid commercials. (I don't hold out much hope for either of these to happen any time soon).
Trillions of fed debt.
Trillions in bank debt.
Trillions in consumer debt.
Printing more money will only pass the problems to our kids.
The only way we can consider paying back the trillions of debt is to start producing in this country, and for that, we need a stronger infrastructure.
Ultimately, the problem isn't that the "big men" ruined the economy, its that you and I did. WE borrowed beyond our means. WE had to have the brand new cars and big screen TVs. WE had to buy houses that were bigger than we'd ever need. And at the end of the day, only WE can save the economy.
The US government has been spending beyond it means for 60+ years, and there is NO reason to suspect that it will change that any time soon. If WE don't start saving more and learning to live WITHOUT 100" TVs and new Hummers (and Hondas), then the boom/bust cycle will continue. Well, it will continue about twice more, then it will be over, with no more booms to be had.
The government won't save us: We must save ourselves.
Nothing we do will recover the economy, your idea will only prolong and deepen the bust, and prevent any recovery whatsoever.
Uh, sure, but you aren't REQUIRED to take that loan. You did it by choice, as everyone did. My largest TV is a 27" tube unit (about 10 years old), and my car is nearly 20 years old. I bought a 2 bed/1.5 bath house for a family of 3. We don't own a video game system, but have plenty of books and art supplies for the kid. We spend time playing with her and teaching her Spanish and Russian, so the boob tube and video games don't have to.
And even though I'm only in my mid-40s, we could retire tomorrow on our savings if we wanted.
So, yeah: The "big men" make it easy, but you can still say no.
There lies the problem. Everything in America is ABOUT business.
And don't even get me started on the concept of "money".