jdlech This is in response to a post by Joshua Holland, entitled “Some Dems Brain-Dead on Deficits; Others Breaking Out Some Political Jiu-Jistu”. One would do well to read his post before returning to read the rest of this one.
During the Great Depression, John Maynard Keynes wrote a series of letters to then president Roosevelt, councilling him on matters of the economy. In all his letters, the theme was to spend far more than he already had. But being a politician, Roosevelt was more concerned of the possible backlash of greater spending. Already, corporations were organizing a propaganda campaign against his new deal social programs and would take any increased spending as an opportunity to turn public opinion against it. Roosevelt was already walking a political tightrope without a net.
But economics is a science of hard, cold numbers. X amount becomes self sustaining, anything less is not. Thus, the new deal programs only prevented the worst of poverty’s rapaciousness without actually pulling us out of the depression. Nor does economics care for the politics of the times. X amount becomes self sustaining regardless of public opinion. Anything less will not; again, regardless of public opinion.
Keynes was made aware of this situation, so in his frustration and in an effort to help counter the propaganda organized against the new deal, he published his final letter – a scathing criticism of the moderated policies Roosevelt was pursuing – openly in the New York Times. There, for all to read, was the worlds pre-eminent economist telling all of America how to lift themselves out of poverty and depression, and the fallacy of moderation for the sake of political expediency.
You can still read his nearly prophetic letter here . In fact, this letter seems so relevant to our times that if one were to remove all references to names and dates, it seems as if it could be an open letter to the Obama Administration, written and published just yesterday. But I remind the reader that this letter was published on December 16, 1933.
Here is where conservatives claim that Keynesian economics failed to pull us out of the depression. They claim that it was the war – not the policies that did the job. But they are misrepresenting the truth for their own agenda. Some go so far as to claim that this represents the failure of Keynesian economics. Nothing could be farther from the truth. And every reader here must know this to counter the conservatives’ lies and half truths. The letter proves that Keynes was right all along; that government spending must be absolutely enormous for the economic stimulus to become self sustaining.
The conservatives are wrong because it was their own opposition to the new deal that prevented it from working in the first place. It was their opposition that Roosevelt feared when he moderated his spending. It was their own opposition that prevented the recovery. It took a Japanese attack on Pearl Harbor to sweep away conservative opposition to the proper levels of government spending necessary for recovery.   Only once we entered into war did conservatives abandon their “sky is falling” rhetoric about government spending. Only then did they accept spending levels equal to what Keynes was calling for all along. It was not the war itself, but the political will (to spend appropriately) that the war enabled, that brought us out of the depression. Had we spent the same amount without a war, we would have had the same economic recovery without all the bloodshed and wasted resources.
This is the hard lesson for us during the Obama administration. Once again, we are faced with a depression, with conservatives organizing in opposition to the proper levels of government spending required to pull us out of it. And yet, we still accept moderation for political expedience rather than looking to the hard, cold numbers that tell us what we must do. Once again, we fear the “sky is falling” rhetoric of conservative opposition and let them paralyze us in poverty and depression until some overriding event unites us to sweep conservatives aside and do what needs to be done.
I wonder what that event will be this time? Or will we continue like this for decades?
The main difference today is that our conservative predecessors have attempted to prevent us from having this option. Remember, Keynes said we should accumulate a surplus during good times to ameliorate the cost of deficit spending during bad times. Bill Clinton followed this advice to good effect; turning a flagging economy with deficit spending into a booming economy with projected surpluses. Unlike Clinton, our conservative leaders have spent like drunken sailors with no limit credit cards during the best of times. Of course, nobody can prove it, but I’ve seen evidence that this was their intent all along. This being the only means they could find to get the American people to accept cuts in social security, disability, and other hated social programs. This is an agenda called “starve the beast” exemplified by the likes of Grover Norquist, Ronald Reagan, Newt Gingrich, George W. Bush, and other prominent conservatives. Their intent was literally to drive America to the brink of default to force cuts in social services. And then they can blame Democrats for causing the default if they don’t go along with it. It’s both ingenious and insidious at the same time. They would rather see an America in financial ruin than to see it continue to extend a helping hand to the sick, disabled, unemployed, retired, poor and dispossessed; all the “unworthy” people in their opinion, I’m sure.
Through this lens, one can plainly see the logic of calling for both cuts in social programs as a means of balancing the budget while also calling for tax cuts. It’s all part of the same “drive America to the brink” agenda we have seen for the past 30 years. First, we’ve seen them undermine social programs and federal revenue streams. Now they call for cuts in both even after they presided over unprecedented spending increases at most economically inappropriate times. If successful, they will then call for kicking out from under us, the very social contract we have with our government (thus with each other), that prevents us from complete dependence upon the corporation for our very lives and livelihoods. The consequence of their success is clear; the re-imposition of a two tiered socio-economic structure upon us. The haves and have nots; the masters and the slaves; the rich and the rest; whatever you want to call it, it’s all the same result. A population depending solely upon employment for survival. Just like it was with the “anything goes” capitalism of the late 1800s before the advent of unionization, labor laws, social, economic and environmental regulation, child labor laws, banning ‘company store’ policies…
I’m sure you get the gist of the intent.
