Send a Tweet
Most Popular Choices
Share on Facebook 17 Share on Twitter Printer Friendly Page More Sharing
Exclusive to OpEd News:
OpEdNews Op Eds   

Politicians Need a History Lesson to Not Repeat It

By       (Page 1 of 1 pages)   1 comment
Follow Me on Twitter     Message John Basel
Become a Fan
  (6 fans)

Politicians Need a History Lesson to Not Repeat It


The Great Depression started as a recession in September of 1929.   There are many opinions as to how the recession became a depression but most agree that inaction by the Fed contributed to the decrease in money supply and the increase in public fear which led to drastic cuts in spending. Price deflation then created the environment for substantial decreases in income and employment.


After Franklin Roosevelt (FDR) took office in 1932 and implemented the massive spending plan know as the New Deal the nation's Gross Domestic Product (GDP) went up and unemployment went down. Coincidentally, the country endured a horrible drought during this time (known as the Dust Bowl) and the president was labeled a socialist by his opponents.   Sound familiar?  


There are those who will tell you that the New Deal was a failure and that the Great Depression endured for fifteen years including the entire FDR administration.   This is not true. When FDR took office unemployment stood at 25%.   Three years later it was 11%.  


In spite of the success of the New Deal, which included creating the Social Security Administration, a new wave of conservatism was sweeping Congress in 1936 that pushed FDR to decrease spending and increase taxes in an attempt to balance the budget. Sound familiar?  


The result was the recession of 1937-1938.   Unemployment went back up to 19%.   The recession was short lived but the economy never really revived until the massive spending program known as World War II began late in 1941.


More recently one doesn't have to look hard to find examples of cuts in government spending during economic recessions that have had the opposite of the intended effect.   Great Britain is a little more than a year into spending cuts. Retail sales have plunged and incomes are down.   Germany's austerity program was less aggressive than Britain's and initially appeared successful as they experienced some economic growth in 2010, however, since then their economy has worsened.


The moral of the story is this.   When consumer spending dives for an extended period the government should increase its spending to make up for it.   This is the basic Keynesian approach.   Spending should only be cut back when consumer spending recovers.


Let's hope we are not doomed to repeat history due to our ignorance of it.

Must Read 1   Well Said 1   Interesting 1  
Rate It | View Ratings

John Basel Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

A graduate of the State University of New York at Buffalo with an MBA in 1980, John went into the banking business from 1981-1991. John went into the gymnastics business with his wife, with whom he has two children, in 1992 and grew it enough (more...)

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

What is a Socialist Anyway?

Healthcare Forum a Big Success, But Reveals Divisions

The Civil Rights Act of 2010?

Two opposing viewpoints of Obama's speech in light of the Israeli/Palestinian Conflict

To View Comments or Join the Conversation:

Tell A Friend