As people liken this extended recessional period to the Great Depression, one can not help but draw a parallel between Franklin Delano Roosevelt and Barack Obama. At a press conference held on July 23, 2010, Obama characterized the state of the present U.S. economy as ‘worst recession since the Great Depression’.
Such statements whet the appetites of the mealy mouthed troglodytes of the fourth estate as they scurry off to their respective caves to grind whatever axe they possess in preparation for their defense or attack on the 44th President.
It was Benjamin Disraeli who proclaimed there are lies, damn lies, and statistics. Disraeli assertion appears valid as evinced by Economy theorists and pundits who can and will present statistical data in support of their glass being half empty or half full presentation.
Perhaps one becomes lost within this maelstrom, this whirlwind of conjecture and esoteric jargon that less than 1/3 of the U.S. population truly comprehends.
Franklin Delano Roosevelt famous statement at his 1933 inaugural address that ‘only thing we have to fear is fear itself’ is especially poignant in times of economic hardships.
It is fear that fuels the downfall of a country’s economy and undermines the recovery process. Fear causes one to gather their belongings and keep them in a safe and secure location. It is fear that keeps us indoors trying to keep away from that terrible recessional monster that may consume, in whole or in part, our worldly possessions. We, the people, do not spend money nor do we invest while that recessional monster roams free.
To combat our fear, the government offers stimulus packages, cuts interest rates and writes fiscal policies. Such measures take that Depression-era 3 “R” approach also known as relief, recovery and reform.
Beginning with the Roosevelt administration, an economic movement began that followed along with the theories of famed British economist John Maynard Keynes. Keynesian macro-economic theory, in short, calls upon public policy to deal with the lows and the highs, the ebb and flow of the economic cycle.
It is contestable as to whether Roosevelt’s “New Deal” administration was, in fact, aware of Keynesian macroeconomic theory for the latter unfolded contemporaneously. The New Deal policies did embody the spirit of Keynesian theory.
Inducements toward spending and investing, such as stimulus packages and tax cuts for the wealthy, are both necessary and sufficient to move a stagnant economy. Inversely, we are also in need of restrictive measures when economic times are good. Thus we lessen the peaks and valleys of the business cycle and take some control in the bull or bear market economy.
At day’s end, deficit spending and other measures are mere wagers that gamble upon human nature as to how all members of a capitalistic society will respond. Yes, all members irrespective of one’s socio-economic position or political affiliation for we are all members of this same economy and active participants in its recovery.
Image Contributed by Paris Kaye