Sunday, February 1, 2009

Relief or Recovery?

A comparison between Obama and FDR has been written and talked about for months now. We have especially seen it in the "Hundred Days" comparison. It's as if the first hundred days of FDR's term as president ended the depression and restored United States manufacturing. Nothing could be more ridiculous. The 'New Deal' did not end the depression in 1933 or 1934 or 1935 or 1936 or '37, '38, '39, '40, or 1941. 

FDR was in his third term as President before the depression ended. What FDR did was to provide make work programs to get people working all through the 1930s and into the early 1940s. There was some relief but there was no recovery of the United States economy. At the end of 1941 the economy was still in the throes of depression.

What ended the depression in the United States? What was it that restored manufacturing and production and lead to the hiring of millions of workers on a private capital basis and not some government handout or dole? Obviously, we know that it was World War II. Despite the abilities of FDR and his "Brain Trust" group of advisers, the depression continued on until 1942. This is the lesson for Obama to ponder as he strives to revive the United States economy. Thanks to FDR Obama may
have more tools to help pull the country out of this very serious economic downturn.

 FDR's New Deal was composed of relief, recovery, and reform. It was called the "three Rs. But, it didn't happen in that order.He provided some relief with the make-work programs such as civilian conservation corps, having artist paint murals in public buildings(indeed, those wall paintings in the old Toledo downtown Public Library is probably an example of that program), roads and bridges, and the building of hydro-electric dams in the West and TVA in the South are some examples. As long as the project continued there was "relief" for those workers and their families, but the job was completed and they were all unemployed again.

 Make-work projects just don't last. Recovery did not happen. The thirties also saw most of the New Deal Reform programs passed into law to prevent the unregulated abuses of capitalism. An outstanding example of these regulations was the Glass-Steagle Act to prevent abuses in capital markets. Unfortunately, all these reform acts did not increase United States manufacturing. Nothing did!

FDR and his "Brain Trust" were stymied. They tried this and then that, but to no avail. From 1933-1942 the United States remained in depression. 

A catalyst was needed to restore manufacturing and production in the United States, and it came with the out break of World War II. From then until the 1990s the United States avoided any serious depression because of private capital manufacturing and distribution. However, as deregulation of the United States economic and financial system came with Democrat Jimmy Carter, and then continued unabatted with Reagan, Bush, Clinton, and Bush, the United States was led by all these former
Commanders-in-Chiefs to destroy the manufacturing of U.S. companies and the production of U.S. workers. Instead, the United States manufacturing and production economy began to be replaced by a system which I term, FIRE. It seems our economy
became based on Finance, Insurance, and Real Estate or FIRE. What is so unfortunate is that this was aided and abetted by both Democrats and Republicans.

 And, they are still there as a Barney Frank, a Chuck Schummer, a Clinton, a Dodd, and on and on. A key part of the FIRE economy was/is to build homes. Well, they built more homes than there were legitimate buyers to buy and glutted the market, but we had to keep building more homes. The housing bubble was created. Now the houses are afire and so is the United States.

In my opinion the historical record shows that Obama's plan to jump start the U.S. economy with make-work schemes will not work in the long run. To me this is the real "throwing of good money after bad money". It could be money down the drain.
FDR build roads and bridges, but to no avail. The United States needs a rebirth of native manufacturing, production, and consumption. Many said throwing money at Detroit was wrong. On the contrary, to me that is exactly what needs to be done, albeit with serious strings attached. Obviously, just not Detroit but across the country, and it has to be multifaceted in that if they want taxpayer money then it stays in this
country and not building plants in Brazil, Africa, or China. We will wear shoes, shirts, dresses, slacks, socks, and ties make in the United States, not China. We will drive U.S. cars with non-oil based technology. Solar, wind, hydrogen and other forms will become the basis of United States energy within 5-10 years. Mass transit will be the norm. Lets hear Obama announce an immediate 55 mph speed limit. Carter proved
it works. We have criticized Bush for asking people to do nothing, so lets get with it.

 Now, is the time to do it. Will Obama give us relief but no recovery? That is the question.


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