Depression Lessons

I, like my fellow baby boomers (especially those in the first tier) have heard incessantly from my grandparents and parents about the Depression. Some of the stories were ironically funny.

For example, my father tells how his mother hustled him into the car one night, and told him the house was on fire. When he got into the model T, he noticed it was full of possessions, and his father got into the car just as the flames were evident.

Like thousands of others during the Great Depression, they burned their house down to get the insurance, so they could eat a little longer.

We can only imagine the depths of the Great Depression. To appreciate it, I believe you have to study it, watch documentaries, read novels, read textbooks and immerse yourself in it.

Only social scientists like myself, actually enjoy doing that. Most Americans would rather forget.

We forget at our peril.

In fact, my father tells me the high points, the funny parts, but does not dwell on the hunger, on the pain. He would rather forget, until a situation comes up, and his 90 year old brain, reacts from the prior poverty, hoarding food, saving paper bags, constantly saving, scrimping, obsession about savings.

My former mother in law was caught by my daughter going through the garbage, looking for left-overs that should have been saved. My daughter was appalled; but it was "post-Depression behavior", that has characterized the generation. Those dwindling members of the depression generation KNOW how painful a Depression can be. They have no illusions about the New Deal.

They know.

We don't.

In 2007 we veered close to the brink of entering a Great Depression. Only the lessons of the last one, saved us from going over the edge.

Herbert Hoover was one of the most intelligent Presidents in history. But, when confronted with the financial meltdown, he did what government was supposed to do in those days, nothing. Economic downturns were seen as outside the government's responsibility. Austerity was somehow good for the economy. So he fiddled, and the country burned!

As the Depression deepened, and people starved; no relief for Washington came. It was a long four years.

Finally, FDR was elected, and the government, through the New Deal, began to act, and things got better.

In 2007 we came real close to tipping over again.

But, because first President Bush acted, followed by President Obama, following the template that had helped survive the last Great Depression, financial collapse was avoided.

We did get a Great Recession, with stubborn unemployment, but no Depression.

And we got the Recession manipulators.

These are mostly Governors of Red States, who use the austerity effect on state revenues to cut state services. They argue that the cause of the Great Recession was excessive state and federal spending, and take advantage of the recession suffering to cut the social and educational program conservatives hate. Unions are target number one.

This has been attempted on the federal level as well, it is going on right now with the debt level debate, but has to date failed. The states have not been so lucky.

Indiana, Michigan, Wisconsin, Florida, Texas; etc., have all seen conservative Governors and legislative majorities cut government, cut education, attack unions; all under the guise of "curing the recession"..

And none of it has worked. None of it. Typical of 1936, when the nation was almost out of the Depression, and FDR mistakenly adopted an austerity approach, these con Governors have bought into the belief that less government spending is more. In 1936, the austerity approach plunged the nation back into recession; FDR famously said it was the worst mistake he ever made as President.

So the recession users, cut spending, cut taxes, starve government, with the mistaken idea that the "saved" revenue will flow into the private sector. And they offer no explanations when it doesn't.

The problem is any benefit flows into the hands of the super-rich, and as before, does nothing for the overall economy. It doesn't work. It only serves to concentrate wealth,not spread it out. It only makes the recession deeper!

Today, in the Washington Post, a writer extolled the virtues of Governor Daniels of Indiana, who has followed this same menu. And he makes the incredible statement that the cuts have "been of great benefit" to the state.

The writer offers absolutely NO proof of this "benefit"; none. As usual, the conservative promises benefits, can prove none, but repeats the promise endlessly. The real result is damage to the state, damage to the economy. For example, we are STILL waiting for the magic of the Laffer Curve, which was truly "voodoo economics".

Texas is a good example. Texas swung to the right, culminating in the Governorship of George W. Bush. Texas is touted as a job creator, of proof that government austerity works. And, there is a lower unemployment rate in Texas. And their is a sky high poverty rate in Texas. And those jobs, are mostly minimum wage jobs. And, the economic misery index is huge in Texas. In short, the "benefits" are more wealth in fewer hands, and a miserable existence for millions.

Daniels is now retiring to be President of Purdue University, good place to hide, and will not have to deal with the inevitable pain his cuts will certainly bring.

Paul Krugman, award winning economist, has been screaming at us for years, that austerity approaches by government only makes recessions become depressions. Macro-economics is not micro-economics, state budgets are not comparable to household budgets; tightening your belt might help survive a personal budget problem, but does not help on the local, state or federal level.

But Daniels and his kin, have used the recession to implement government busting, union busting policies, cutting, enforcing austerity on millions, in a mistaken belief that it helps.

It hurts. It puts more into poverty. It increases the chasm between rich and poor. It kills ambition in the young. It stirs violence. It puts us all closer to a real Depression, that put my dad into that car, as his house was burned down by his father, so they could eat.

I sometimes wonder if it would have been better to actually go into another Great Depression, which the last time proved that Daniels and his ilk were wrong, and banished the Republican ideology to the dust heap for over a generation.

Republicans did not elect a President for 20 years, they did not control the Congress for longer. In state houses around the nation, they were in a semi-permanent minority. Ever wonder why Republicans hate the New Deal? It is because they nearly were destroyed as a political party by their allegiance to economic austerity plans that do not work. The New Deal worked, still works, to grow and heal our economy.

The recession of the 1970s, caused by the Vietnam War and the Oil Embargo, not by excessive government spending, spawned the con champion of them all; Ronald Reagan. He tried manfully to end the New Deal, found his approach didn't work, and then worked to bolster the most famous of all New Deal programs, Social Security. He also did not touch any New Deal programs, but actually enhanced them.

But, Reagan used the same austerity con, blaming big government for the recession when he knew otherwise. In fact, when deficits exploded after his tax cuts, Reagan in a panic raised taxes many times, because the economy was just sitting there, not growing; the Laffer Curve, that Reagan ran on, was a miserable failure

Reagan survived because the oil embargo ended, and because he stopped the austerity approach before it destroyed his Presidency. Poor George P. Bush inherited his mess, and paid for it with a one term Presidency.

Remember the "Read my Lips, no New Taxes", that eventually sunk Bush. "It's the economy stupid" of Bill Clinton, called the nation's attention that austerity did not work, and getting a depression as a result was not worth it.

California, however, after Reagan, endured a series of failed Republican Governors, culminating in a tax starved state, a ruined education system, a prison system underfunded and overcrowded so bad that the Supreme Court ordered reforms. The government austerity approach, that Reagan had started, failed miserably. It will take California a decade to climb out of the mess that the madness of things like Prop 13 caused.

Every time, I mean every damn time, we fall into the austerity trap, we cut taxes, rip programs, we fail to follow fundamental macro-economic principles, and we fail and harm millions. I mean every time.

Federally, we are now on the verge of doing it again; of having to burn the nation down to save it, by not increasing the debt limit and massively cutting government.

Keep the car running, and load the mantle clock!