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Part 121: Recession and War:
September 20, 2004:
In my last essay I offered the Entrepreneur Initiative as one way of sustaining economic growth in America. The failure of growth, if not remedied, will lead to economic recession and/or depression. Recession and depression are those soft kinds of words that political hacks and government economists love to use. They have no precise meaning. The fact is, however, the person who is out of work and watching his kids go without is in a depression regardless of the political rhetoric. The political hacks may argue about how widespread the problem is and may give it various names. That will not matter.
Having been there, I can assure you the rhetoric does not impress the person who is terrified thinking that his kids will be hungry. What he feels is fear layered as a veneer over a smoldering anger. To him, the government and industry have failed. They have failed in their promise to him. The American dream, promised to him in his elementary schooling, has been yanked away. He feels naked and betrayed, that's all!
When our political economic system does that to enough people, it is bound to cause a change in the political climate. This almost begs the question, would an economic depression necessarily be a bad thing? Would a depression push us back to our old basic values? Would we begin to demand ethical behavior from our government? Would the family come together again? Would we circle the wagons? Would people begin to help each other? This is what happened in the depression of the early thirties. People helped each other. Families were together. They had no other choice.
The last president to preside over a full blown extended depression was Hebert Hoover. It took the republicans many years to recover from that. I don't think the people so much blamed him for causing the depression. Any thoughtful person knows that a depression has many roots. A number of errors and mistakes by many people must come together to cause it.
I think Hoover was mostly blamed for not heading it off. It's not that he did nothing, it's that he did too little too late. It is possible to head off a depression if you focus on it. Of course, you must be smart to see that. If FDR proved anything it was that a depression can be turned around. He headed it off after it was in full bloom. To be sure, he had a major war effort to help restart the economy. It is clear that the government spending associated with that war were major factors in the economic surge. Without a war we would still have recovered. It would simply have taken much longer.
In 2004 we again find ourselves at the brink of what will become a historically pivotal war while our economy sputters and dibbles away. Again we have a large number of causes of both the war and the limp economy that go back several administrations. I believe we got to this distressing situation simply by ignoring our own history. We should have seen this coming and headed it off. We have had ample advice. Let's look.
"A country losing touch with its own history is like an old man losing his glasses, a distressing sight, at once vulnerable, unsure, and easily disoriented." George Walden
"There is nothing new in the world except the history you do not know." Harry S. Truman
"Those who cannot remember the past are condemned to repeat it." George Santayana
"But what experience and history teach is this-that peoples and governments have never learned anything from history, or acted on principles deduced from it." Georg Hegel
"History repeats itself, first as tragedy, second as farce." Karl Marx
I believe we are now in the farce phase of our own history and Hegel's words are much to the point. We have learned nothing from history and we have a government that deduces nothing from it. Thus, we have no historical principles on which to act and, as Santayana warned us, we are repeating our own history. From a higher perspective, it should be clear that we are also repeating Roman history in a much compressed time frame. If we continue to send morons, demagogs, and philanderers to the marble halls of Washington we may yet compress the thousand years of Rome into 250 American years.
As to the impending war I have expressed my thoughts in previous essays. One area of possible study remains. It would be interesting to study history to find if a war is an inevitable consequence of a period of economic distress. From my perspective it seems so, but following up on that is outside the scope of this effort. Finally, I believe it is time we stopped pretending we can fight this war on terrorism without cost. We will have to toughen up, gird our loins, and prepare for a long haul.
For now, it is the problems of recession that I want to address. I have offered one solution in my Entrepreneur Initiative. That by itself would help, but it is hardly enough without an honestly committed federal government. Bad behavior of government, especially at the federal level, can undermine even a strong economy. Perhaps we can recall recent history when we had an insane government crowing about these massive surpluses about to befall them. All they could think of was how to squander the money they didn't even have yet.
Well. it turned out there were no surpluses. The bottom fell out and it all disappeared. Not to be deterred by facts, our government continued careless spending and went ahead with a massive tax cut anyway. The result was a further weakening of an already failing economy and a blizzard of rhetoric about recovery.
Just for a change, I want to look at a few facts. First, this economic slum, downturn, crash, whatever you want to call it was predictable. Again, history is the teacher we have ignored. Our economy and every economy in history has been cyclical. A period of growth is always followed by a period of economic decline. That is exactly why we have a Federal Reserve in control of setting interest rates. It is a rather puny attempt to mitigate the effects of these economic cycles, to smooth them out as it were. It does not work well because it responds to events rather than foreseeing them.
Assuming we cannot prevent these economic cycles, it would behoove us to plan for them. However, failure to foresee and plan is the greatest weakness in American government. We see it every day. That is why WWII caught us off guard. It is why the crash of 29 caught us off guard. It is why the attacks on New York and Washington caught us off guard. It is why this current economic failure was not predicted and planned for. It is why the next attack on America will catch us off guard.
It is my view that we can plan effectively if we but try. It only requires honest government, especially at the federal level. With planning we can mitigate the effects and possibly even prevent economic cycles. Recently we had what was called a long period of unprecedented economic growth. We also had a government taking credit for that growth. In truth, however, the government did not cause th growth and it did not know how to sustain it. It did not even know how to foresee the crash.
Why? A failure to plan is the only clear answer. We ignore
history and as a result we fail to plan. Ignorance in Washington
is the obvious cause of this failure. instead of thoughtful people,
we have sent posturing buffoons to Washington. They have preformed
predictably. It should be clear that we can only prevent recession
by staying ahead of it through planning based on the evidence
of history. That and the fostering of creative entrepreneurs could
actually produce the dreamed of unending economic growth. I so
believe.
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