HAVE WE LEARNED FROM OUR MISTAKES?

In 1932, the country was in economic collapse. The stock market crash of 1929 bankrupted businesses and, many of those who managed to survive the crash saw their remaining cash lost in one of the more than 9,000 bank closures that followed. By Inauguration Day in March, nearly all of the nation’s banks were either closed or had at one point been closed, and of those remaining open, most were operating under special state rules designed to protect them. Moreover, Gross Domestic Product (in current dollars) had fallen from $103.6 billion in 1929 to $56.4 billion in 1933.

The bank closures not only took people’s money, but tightened the money supply to the point where even business with good credit could hardly obtain a loan, let alone individuals. Unemployment reached 23.6% so demand dwindled, supply followed, and Franklin Roosevelt’s political opponent and author of the debacle, Herbert Hoover, blamed the depression and its aftermath on Roosevelt’s failure to declare that he would maintain a balanced budget at any cost.

Finally, the disproportionate distribution of wealth in the US had reached crisis proportions. The Atlanta Mortgage Examiner opined in 2009 that , “. . . the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. In 1929 the top 0.1% of Americans controlled 34% of all savings, while 80% of Americans had no savings at all.

Does this sound familiar? Admittedly, we are not in quite the same position today, largely because of the social and economic safeguards that emerged from that era. Stock trading is regulated, bank deposits are insured, unemployment compensation keeps the “short term” unemployed from becoming homeless and without food and Social Security and Medicare/Medicaid prevent our most vulnerable citizens from being completely crushed by an economic juggernaut over which they had little control. We are not “quite” in that position, but we could fall over the edge.

Today, this nation, indeed the entire world is standing on the brink of economic collapse, more from the fear of future events than from the reality of our situation. Moreover, there is a greater disparity in wealth in the United States today than at any time in our history. As of 2004, in terms of financial wealth (total net worth less the value of one's home), the top 1% of households had a 42.2% share of the overall wealth, and the wealthy, both individuals and corporations, do not seem predisposed to any voluntary realignment.

What we need now, just as the nation needed it then, is clear direction. The President cannot pull the nation and the world out of this economic morass by himself, but he can set the tone and lay out a plan for recovery which, alas, President Obama has yet to do. Short of another World War, the only thing that will make a substantial change in things is a Presidential, “Declaration of Principles” of economic recovery and expansion, much as Roosevelt did with his “New Deal.” It wasn’t popular with the Hoover conservatives, and some of his proposals were ultimately declared to be unconstitutional, but they had the effects of getting the country moving again, and relieving enough doubt in people’s minds to begin bringing money back into the markets.

It is time to tell the nation and the world that the US will expand jobs by hiring people to rebuild and expand our crumbling infrastructure. Let everyone know that we will make massive investments in returning manufacturing jobs to the US by investing in research and development, education, and supporting businesses that manufacture new products such as the “Green Tech” industry that produce products in the US, that we can sell to the world.

We need to limit global warming, of course, but such a limit will do little good if poverty, war and famine eliminate large portions of the world’s population. Therefore, while we’ve converting to an economy based upon renewable energy, we must announce that we will utilize our massive reserves of coal and natural gas to eliminate the need for purchasing oil from the Middle East and other “enemies;” and we will do it NOW.

Finally, the President needs to announce a broad based program to encourage home purchases. This would include not just first time buyers with good credit, but those whose financial fortunes brought them to credit ruin and home loss. This would not require a government investment at all, but a government mortgage loan guarantee program that releases people from the iron grip of the credit reporting agencies that now holds them down.

With these steps, we will restore not only the “full faith and credit” of the United States, but the confidence of the people that the world will be better for our children than it was for us, and that the best days of our republic are still ahead of us. Without them, we will continue along our current, inexorable path toward becoming a footnote in history.

               Have we learned from our mistakes?