I thought I was way beyond being stunned by anything I heard on hate radio, but as I was driving home yesterday, I heard something that almost made me drop my beer. Some right-wing lunatic was actually screaming that President Obama had used "fear" to get the American people to open wide so that he can ram his bleeding-heart pinko spending bill down their throats. This came from a dude who never blinked in backing the former prez’s relentless fear-mongering campaign to persuade us that invading Iraq was somehow necessary for our safety. (I might also point out here that Oby’s shamelessly “wasteful” stimulus package is well over $200 billion shy of the still accumulating costs of that foolhardy profligate venture whose end is, regrettably, still not in sight.) This episode, along with an excellent recent discussion with friends about whether O.B.’s inaugural oration could have benefited from some FDR-style, Happy-Days-Are-Here-Again optimism, got me to thinking about an earlier post here concerning the similarities between Oby’s and Roosevelt’s first speeches as president. In that post, I tried to suggest that even the Great Persuader himself didn’t really offer that much upbeat material, save for his assertion that the only thing we have to “’fee-uh’ is ‘fee-uh’ itself.” I’ll grant you that Oby seems a bit wanting in the ebullience gene that was dominant in FDR, whose proclamation of a “Bank Holiday” made his announcement that he was closing all the banks sound more like one of those “customer appreciation” days when banks offer cotton candy and pony rides for the kids and offer toasters and microwaves as door prizes. Still, as I also tried to suggest earlier, having seen himself transformed into a veritable cult figure of Elvisian proportions, B.O. probably felt he had to let everybody know that he couldn’t simply raise his uplifted palms and make it all go away. Finally, there is still plenty in the behavior of the corporate, financial, and political polecats to suggest that they ain’t got “inkling one,” as an old friend used to say, about what a mess they have helped us get into. Frank Rich makes a good point when he writes, "Obama’s toughest political problem may not be coping with the increasingly marginalized G.O.P. but with an America-in-denial that must hear warning signs repeatedly, for months and sometimes years, before believing the wolf is actually at the door."
The key here for Oby, as it was for FDR, is to find the right balance between fear and hope because most presidents ultimately find that the fear factor definitely cuts both ways. Near the outset of the Cold War, Harry Truman announced he intended to “scare the hell out of the American people” about the communist threat, and he wound up setting the table for Joe McCarthy. Likewise, inducing a moderate level of popular fear may be necessary to dispelling any illusions about the severity of an economic crisis, but, in larger doses fear is seldom conducive to economic recovery. For example, one of the many similarities that I have encountered between the Great Depression and whatever the hell it is that we‘re in or about to be in right now is the savings paradox. Margin buying and that great innovation of the 1920s, the installment plan, along with the fact that wages had been deliberately suppressed meant that 80 percent of American families had no savings whatsoever when the bottom fell out in 1929. Although we’re not in quite that bad a situation savings-wise right now, it ain’t exactly great, either. Prior to last year, we had a couple of years when the savings rate was actually negative, and researchers claim that 70 percent of American families now have less in savings than they would need to tide them over for three months. Once the Great Depression hit, Americans who had anything at all held onto it as tightly as they could and even FDR’s cajoling and efforts to convince them that the banking system had been shorn up availed but little. The New Deal’s famed Civilian Conservation Corps directly targeted single young men who were expected to spend the dollar they earned every day as quickly as they could. It took a while, but CCC officials eventually discovered that a large percentage of the boys were sending most of their paychecks back home to Mama who was dutifully stuffing as much of the money as she could under the mattress. Our current crisis, which was also, in part at least, the result of our trying to spend everything we had and way more besides, has had something of a similar effect in that we have recently seen a noticeable rise in savings rates at a time when a little more spending surely would be nice.
There is also the comparable condition of income inequality. On the domestic side of the ledger, the biggest contributing factor to the Great Depression was the growing disparity of incomes and wealth. I’m not saying that income maldistribution is necessarily as severe today as in the 1920s, but it has been steadily intensifying since the 1970s..
As the foregoing graph shows, in 1928-1929, the top 1 percent of individual earners raked in roughly 24 percent of all personal income in the U.S., as compared to about 22 percent in 2005. Although worker output rose by 32 percent between 1923 and 1929, wages rose by only 8 percent while corporate profits shot up by 62 percent and dividends by 65 percent. As a result, as the nation careened toward economic disaster, the share of total personal income going to the top one-tenth of one percent of Americans equalled that trickling down to the bottom 42 percent. Workers and middle-class Americans tried to keep up by installment buying as long as they could, but when they finally tapped out even though the rich spent liberally, a family with an income of $100,000 simply couldn’t buy forty times as many cars, houses, and radios as the family earning $2,500 or less, which in 1929, meant three-fourths of all American families.* The resulting slump in consumer demand might have been less severe had we enjoyed a booming export trade at that point, but, then, as now, the eonomic crisis was more globla than national. Throughout the 1920s, much of Europe was still struggling to recover from World Rumble #1, thanks in some measure to our insistence on the repayment of $10 billion in war debts ( much of which, as the Europeanos pointed out, had actually been used as credits to purchase American goods during the nearly three years that they were fighting while we were still making up our minds as to whether it was worth our time to head on “over there.”) Even more critical to Europe’s woes—and ultimately to our own as well—were the incredibly short-sighted protectionist tariff policies in an era when, as the laconic Cal Coolidge put it, “the business of America is business.” Even in 1930, with the Great Depression already under way, we threw up a damn near impenetrable trade barrier around ourselves with the Hawley-Smoot Tariff, which raised import duties to their highest level in U.S. history. This made it extremely difficult for European nations to sell anything to us, and thereby further reduced both their capacity and inclination to purchase any of the stuff we produced but couldn’t--or were afraid to—buy ourselves. The Hawley Smoot Tariff, by the way, was immortalized in “Fast Times at Ridgemont High,” a true cinematic classic bested in the Ol’ Bloviator’s humble estimate only by the exalted and untouchable “Blame it On Rio.” (Eat your heart out, “Slumdog Millionaire”!) This reminds the O.B. that tonight is Oscar night, and he has better things to do than continue a commentary that has doubtless dispatched even his longest- suffering readers into the arms of the Sand Man several pontifications ago. Unfortunately, there is more where this came from, so perhaps you should think twice next time before clicking on the link on the porn site that sent you here.
P.S. Just to show that the O.B. ain't got too big to admit a mistake, he wants to share this exceedingly polite correction from Evan: I hate to dither over an otherwise good blog entry, but it is _Ferris Bueller's Day Off_ that has the wonderful scene of Ben Stein teaching the Hawley-Smoot Tariff. The O.B. stands appreciatively corrected on getting his high school history class movie scenes jumbled up, but he holds to his humble estimate of "Fast Times..." as the second greatest film ever made.
*In the interest of full disclosure, I should point out that in the immediately preceding discussion, I have drawn heavily on an essay by one Mr. Paul A. Gusmorino, apparently composed while Mr. G. was still in high school. I have already checked its accuracy to my satisfaction and I regularly assign it to my students as well. Lest any of you harbor doubts about this precocious essay, however, let me simply say that it was attacked last year by none other than ol’ Rush “Better Living Through Chemistry” Limbaugh himself, who advised Mr. Gusmorino, to “check Karl Marx and see if you plagiarized him in putting this piece together.”
