To the editor:
Reading the letters to the editor, I was surprised at how many people cast the current economic crisis as something government caused. The overwhelming evidence is the opposite, that the destruction of our financial regulatory system, the absence of government, allowed speculators to raid and manipulate our financial markets almost exactly like they did in our parent’s childhood leading to the Great Depression. The Great Depression didn’t immediately result from the Stock Market Crash of 1929. It resulted from the chaos that followed it. I’ve attached two graphs from that period – the Stock Market and Unemployment.
The failure to intervene for the three years after the crash allowed the economy and the unemployment to reach desperate levels. F.D.R.’s interventions in 1933 stopped the descent into ruin, but didn’t solve the problem. It had become too chronic. So it’s true that it took World War II to finally get people completely out of the doldrums.
We’re in the same situation now.
The reason for the Economic Stimulus Package now is to head off the deflationary spiral downward that threatens to continue as it did from 1929 until 1933. Unfortunately, all of the other measures used to buoy up the economy in hard times have already been exhausted. George Bush responded to the 2001 Recession with the largest tax cuts in history, and the other method of propping up the economy, lowering Interest Rates, is also no longer available. They’ve already been lowered to near zero.
So, in spite of the daily propaganda that pours out from Talk Radio and Fox News claiming that this spending package is some kind of attempt to Socialize America, the truth is that it is the wisdom of our own history and our economists who spend their lives studying these phenomena. The best recent example is Japan. Recall that they had a booming economy, the envy of the world. In the early 1990’s, they allowed financial speculators to do this same thing to their economy. They were too slow to act for the same reasons that many here fear massive government intervention. The result is now known as the "lost decade" – the prolonged Recession/Depression that strangled their economy for over ten years and is still a factor in their daily lives.
The financial stimulus is only the short term solution. It needs to be followed by a return to regulation of our financial markets to prevent the kind of financial profiteering that got us here, and putting a stop to "outsourcing" American jobs overseas. What’s happening to us was caused by "hands off" government that allowed the financial sector of our country to bring off the greatest concentration of wealth in our history – highway robbery at the expense of the middle class. The rich got a hell of a lot richer, and the rest of us are going to pay for it in spades no matter what happens. The current course the government is following is the only hope for minimizing the impact on our lives and the lives of our children.
I recognize that this view is not the prevalent view here and I respect that. But I also believe that some of the popular media has taken advantage of the values of heartland America as a smokesceen, and allowed their real constituency, the financial elite, to run the kind of piracy that has put us in such dire straits.
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