Milton’s aim in Paradise Lost was “to justify the ways of God to man.” This is a huge task, but since the Republican Party has sought to deify the wealthiest among us, referring to them reverently as “The Job Creators,” it appears they wanting to take on the task. In the gospel, Satan takes Jesus up onto a mountain and offers him all the kingdoms of the world, if he will but bow down in worship to the devil. There is evidently quite a lot of this going on, because ten percent of our population out there has vast wealth, and as Satan liked to say “all the kingdoms of the world” at their disposal.
But let’s forget for a moment about the rush on $39,000 designer crocodile back packs and the cute little Olson twins, and talk about The Great Depression. The scenario went something like this…In the wake of the First World War American factories were converted to peacetime purposes. Production and employment increased along with company profits, but a growing disparity in wages generated a gap between owners and workers. Sound familiar? Stop me if you know this one.
People invested in the stock market, which grew, almost like a… you guessed it, bubble. Everyone was taking advantage of the new “credit system.” Money was just not flowing like holy water into the market, as the growth would have indicated. It looked just like money, but it was an illusion of money that had been created by the credit system. Soon over-extended investors were selling their shares on margin to pay their bills. The wave of selling caused reverberations, with shareholders liquidating their holdings before their stocks became worthless. Efforts to stave off the downward spiral failed and the market, like a Jackass stunt man, hit the dirt.
Thomas Wolfe, who was just a terrible whiner, wrote: “The unending repercussions of these scenes of suffering, violence, oppression, hunger, cold, and filth and poverty going unheeded in a world in which the rich were still rotten with their wealth, left a scar upon my life.” What a thing to say! Now that guy was making a real effort to start a class war. I can hear Eric Cantor’s strident and hemorrhoid-bursting condemnations in defense of the “The Job Creators” Holy, holy, holy!
Unfortunately people with tons of money don’t always create jobs, and they surely don’t risk their own precious funds. This task is left to the chumps of small business, or what we like to call the backbone of our society. So here’s a quiz: Whose fault was it, that Great and ignominious Depression? I personally blame the devil, but that’s just me.
Irving Fisher, an economist who examined such things, attributed the great Depression to over indebtedness and deflation. He tied loose credit to over indebtedness, which fueled speculation and asset bubbles. Roughly translated, the upper class, or as we like to call them, the jumping out of windows class, and currently, The Most Venerable Job Gods class, had too big of an appetite which precipitated gas in the economic channels. For Fisher, there were nine actors in the mechanics of boom and bust:
Debt liquidation and distress selling Contraction of the money supply as bank loans are paid off A fall in the level of asset prices A still greater fall in net worth of business, precipitating bankruptcies A fall in profits A reduction in output, in trade, and in employment. Pessimism and loss of confidence Hoarding of money A fall in nominal interest rates and a rise in deflation adjusted interest rates.
Oh gosh! Who could believe that for a minute? Ben Bernanke, the current Chairman of the Federal Reserve Bank. They call the believers of these ideas the Macroeconomists. During the Depression prices went down. Witness our own sump pumped effluent in housing prices. As for other prices, I don’t know why they aren’t going down now. They certainly should, according to laws of supply and demand, but instead they are going up. Commodities like oil and grain, worldwide, are up sixty percent. Let alone $39, 000 for a back pack! You could buy two pair of shoes for that money.
According to the Austrians, and listen up because some of their ideas still hold sway among Republicans, artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the Crash of 1929 only made things worse. This is where Ron Paul gets his brain stew, from Austrians. Two economists, Catchings and Foster, who were influential with many policy makers, including President Herbert Hoover, drew upon the Austrian beliefs. They held that the economy produced more than it consumed, because consumers did not have enough income. Thus the unequal distribution of wealth throughout the 1920’s caused the Great Depression. In the case of our Libertarian friend, Mr. Paul, no mention is made of inequality. Rather, Ron Paul holds, not unreasonably, that our wars have consumed capital, extracting it from a normal economy.
There are other conclusions and thoughts about the origin of the Great Depression, but these particular threads are the most influential within our current predicament. Most people would agree that they have resulted in a huge and aggravating knot. We can readily see the failures and weaknesses of our current electorate, when we examine our history, and the President who opened the door and allowed the rat of widespread poverty to enter the room.
So who was Herbert Hoover, besides the brunt of jokes about the Depression? Wikipedia tells us: “Herbert Hoover organized shipments of food for millions of starving people in Central Europe. He used a newly formed Quaker organization, the American Friends Service Committee, to carry out much of the logistical work…” This Quaker Republican, remembered not quite so fondly as President, is considered to have been the greatest Secretary of Commerce in history.
In his inauguration speech, Herbert Hoover said that he “looked forward to the day when poverty would be banished from the Nation.” Fast forward to the present day, and hearing such a comment, a cynic might acknowledge that our degree of homelessness would indicate that some of the banishing had started with throwing people out into the street. However, to give Hoover his due, he noticed and spoke of poverty, acknowledging that it existed, something most Republicans today cannot bear to do except with derision. These humanitarian credentials could have made him a Democrat, had his community not been largely Republican. This is pretty lucky for Democrats.
So this mixed bag of a fellow, Herbert Hoover, believed in Voluntarism, a philosophy according to which all forms of human association should be voluntary. Leave it to a Republican to crack the door, so that he might slip out unnoticed. Hoover feared that coercion by the government would destroy individuality and self reliance. Evidently Mr. GE, Jeffrey R. Immelt, Mega Deity, High in the Pantheon, feels the same way, because he’s been afraid to pay all of his taxes.
Let’s examine the notion of social contracts. For example, why should marriage exist? Talk about screwing up your individuality…who would dispute that marriage is an eternal potato sack race? We could just whisper I divorce thee thrice, finding yet another way, besides preventing abortion, the Republican preoccupation, to place women in poverty and jeopardy. In fact, let’s have no taxes. We’ll just have “Yes Mum” and “No Mum” street beggars. The one can of spinach you can obtain from your parish is plenty. Why do we need a President, when anarchy will do very well, thank you. We’ll have Senator John Boehner as our very own, handsome and tan, golfing Mad Max.
In his memoirs, Hoover claimed to have rejected then Treasury Secretary Andrew Mellon’s suggested “leave-it-alone” approach, and urged business leaders not to lay off workers or cut wages. As calls for greater government assistance increased, he nixed relief payment to individuals as addictive and reductive of an incentive to work. Unfortunately, there were no jobs, and there was no money for a flower cart, or ponies for an orchestrated pony ride. Faulkner in his short stories described daredevils, who climbed out onto the wings of planes during the Depression, risking life and limb to make money on wagers. Hoover believed in balanced budgets, and he wouldn’t run a deficit to fund welfare programs. It looks like Republicans have taken a page out of Hoover’s playbook in an attempt to create a depression. Only when the economy began to fail, did they even talk about the deficit.
To give him credit, Herbert Hoover tried other ways to alleviate the Depression. The ways he saw to move forward are strikingly familiar and a bit on the depressing side. He authorized the Mexican Repatriation Program in 1929, to combat unemployment, reduce the burden on services, and remove usurpers of American jobs. That has a tinny echo. Approximately 500,000 people were forcibly migrated back to Mexico.
In June of 1930, Hoover signed the Smoot Hawley Tariff Act, which raised tariffs on imports. The idea of Smoot Hawley was to encourage buying American by raising the cost of imported goods. But because The Depression had become world wide, other countries retaliated, which reduced international trade and made everything worse. He also called a halt to Reparation payments by Germany to France. In 1931 he encouraged major banks to form the National Credit Corporation, to make loans to smaller banks, an example of his belief in volunteerism as a way to aid the economy. Hello, it didn’t work. When it became clear that the NCC was incapable of solving the problem, it was replaced by Reconstruction Finance Corporation.
When so-called Hoovervilles, shanty towns or tent cities, formed of displaced citizens, President Hoover and his Congress approved the Federal Home Loan Bank Act to spur new construction and reduce foreclosures, but it was too little and too late. The Depression had spread around the world. To sound yet another familiar note, prior to the Great Depression, Hoover’s first Treasury Secretary, Andrew Mellon, “proposed and saw enacted, numerous tax cuts, which cut the top income tax rate from 73% to 24% (under Presidents Warren G. Harding and Calvin Coolidge). When combined with the sharp decline in incomes during the early depression, the result was a serious deficit in the federal budget.”
We have really followed that recipe to produce a Depression. Certain ingredients make potato latkes, some make chili, and some make vegetable soup. These ingredients make a Huge Depression. What do we not get about this? The Republican reluctance we’re currently suffering is akin to a preference for sailboats, when people are drowning and there’s a motor boat nearby. To quote Bill Gates, as he admonished his employees, “That’s the stupidest thing I’ve ever heard.” Eventually even President Herbert Hoover, a believer in Volunteerism, a believer in a balanced budget, a believer in an non adversarial relationship with business, raised taxes, and several of his last gestures before being unseated were expanded on as part of Roosevelt’s New Deal.
http://www.pchswi.org/archives/misc/lifedepression.htm
http://en.wikipedia.org/wiki/Great_Depression#Demand-driven
http://en.wikipedia.org/wiki/Herbert_Hoover
http://en.wikipedia.org/wiki/Bill_Gates