Depression deja vu

So this morning on NPR, I got to hear Steve Inskeep interviewing economist Joseph Stiglitz. I couldn't believe that Inskeep posited to the economist that Keynesian economics and supply side economics are basically the same. Um, no, not at all.

Mr. STIGLITZ: If you're spending money for investments to increase the productivity of the economy - infrastructure, technology, education - that has two affects. It grows the economy today, puts people back to work, but it also increases the future potential output of the economy. And when you increase output, both today and in the future, that means more tax revenues, and that means it's money well spent, even from the narrow fiscal perspective.

INSKEEP: Mr. Stiglitz, isn't that the flip side of the Republican argument - or the conservative argument, let us say - which essentially is if you want to make the economy grow, cut taxes and ultimately the people will invest the money and there'll be so much more economic growth, you'll get more tax revenue coming in. Isn't that the same argument?

Um, sorry, Steve, it is NOT the same argument. Thirty years of supply side economics have proven that cutting taxes on the wealthy does not produce more investment, more jobs, and more revenue. Supply side economics have resulted in the teeny tiny top of the pyramid getting richer and hoarding that money—or investing it in places like Cambodia and China, with fewer environmental regulations, lower wages, few to no employee protections, etc. We have the highest unemployment rate since the Great Depression and instead of encouraging deficit spending—building bridges, reinforcing levees, fixing roads (from city streets to the interstates), keeping teachers in the classroom and cops on the street—a solid third of this country, those who will believe that Obama is the antichrist and that all democrats are terrorists, led by the Very Serious People of the media (those who make a lot of money like Inskeep himself) argue we need austerity. We can't afford to spend more now to invest in the future, spur growth, and get the economy growing.

Amazing that the WPA and the CCC among the many other govt established programs put people to work, put money back into the economy, and actually produced things of lasting value, from the hiking trails in many national parks to the TVA to a wall that still protects the erosion of a hill in my hometown neighborhood. Deficit spending worked because 1) we had a president who stood up to his enemies and the naysayers, and 2) the hurting middle class identified with the "unfortunate many, rather than the fortune few," as renowned New Deal historian Eric Rauchway writes in his terrific short history, The Great Depression & the New Deal: A Very Short Introduction. 


Rauchway offers a concise and cogent overview and analysis of the events that led to the Depression and the government's response under both Hoover and FDR. It is just disheartening that a number of people in this country believe that we have too much regulation and that government is the problem, the enemy holding us back from overwhelming prosperity.  Do we really want to go back to a time of child labor, no workplace safety, no minimum wage, no meat inspectors, unfettered polution—to unchecked social Darwinism. Wasn't the crash of 2008 warning enough?

Rauchway reveals that Roosevelt wasn't really a traitor to his class. He wanted to preserve our democracy and the institution of capitalism and protect it from the forces sweeping across Europe, from Bolshevism to fascism. But to do so, all Americans had to have a stake in our economy.

The Roosevelt Administration wanted the market to work more equitably, to allot to workers and consumers higher wages without government's direct intervention. to achieve this end the New Deal fostered the growth of worker and consumer organizations empowered to bargain collectively, and therefore more effectively, for a better deal in the marketplace. A simple theory supported this policy: if business had grown ever more organized and therefore efficient at cutting its cost, so should the buyers of products and sellers of labor also organize and learn efficiency. 

We are a society, which I know is anathema to many Americans. It's amazing to me that we have become so cruel—so accepting of poverty, of misfortune, of torture, of greed. The bloviators on talk radio and cable news and the likes of Ayn Rand just tap into and bolster the ego's selfish nature (remember Wall Street and Greed is good?). We have gone back in time nearly a century, to refight this  battle between the haves, the have-mores, (W's base) and the rest of us. The battle for control and the ultimate prize is our democracy. Rauchway illuminates Roosevelt's convictions and his courage:At the 1936 Democratic National Convention, Roosevelt

declared war on "the privileged princes of the new economic dynasties. . . . These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power. Our allegiance to American institutions requires the overthrow of this kind of power." 

Sound familiar? As he sums it up so very well:

Despite Roosevelt's care in constructing the New Deal, despite the restraint and caution and respect for American federalism of the New Deal's every measure, despite the overriding evidence in both word and deed that the Roosevelt administration came time after time to rescue American capitalism and had no intention of replacing it, Roosevelt met at best foot-dragging, often disengenuous cooperation; as the New Deal succeeded and the Depression lessened, outright hostility from members of his class who (it turned out) regarded even slight shifts in the social order as portents of Anarchy.

It is amazing and heartbreaking that, like the Civil War, we have to wage this war for fairness and economic justice and opportunity for all again. And unlike in the 1930s, when people saw themselves in their neighbor, the Americans of 2011 see themselves as better and removed from their neighbor. Many blame the unemployed for being unemployed and identify with the rich rather than realizing that tomorrow their number might be up. Though these words were spoken eight decades ago, they hold true for the U.S. in 2011:

in Madison Square Garden on October 31, he said, "Tonight I call the roll—the roll of honor of those who stood with us in 1932 an still stand with us today. Written on it are the names of millions who never had a chance—men at starvation wages, women in sweatshops, children at looms." And arrayed against them "the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. . . . They are unanimous in their hate for me—and I welcome their hatred. I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match."

If only. It's deja vu all over again, and this time, the rich have even more money, more power, more influence, and a bigger voice with which to poison and confuse a dumbed-down nation.