Why the Radical Right is Responsible for the Duration of the Current Recession
Many people have been blaming President Obama both for the current recession and for not be able to turn it around. Blaming him for the recession itself is either deliberately disingenuous or genuinely stupid, so I’ll leave that aside. It’s true that the downturn is lasting for rather a long time into Mr. Obama’s presidency, and it sure seems like he ought to have been able to do something about it by now, doesn’t it? Except he’s not only struggling against an economic downturn. He’s also struggling against the Radical Right, who are doing their best to ensure that the recession lasts. How are they doing this? Let me explain.
Don't You Believe It!
Set the Wayback Machine to 1938
Wait, 1938? Yes. Indulge me in a bit of history.
Many people believe that World War Two pulled the US out of its depression. It did, but not for the reason most folks think.
When the US finally got into WWII in '41, suddenly a nation which had its people standing in bread lines was able to raise an incredibly powerful army and navy, train, equip, and feed its servicemen, send them to fight across the globe, and triumph against aggressive expansionist regimes that had a huge head start. The resources to do this did not just magically appear. They were already there in 1938, but were not being used. Why? Because people weren't confident that their efforts to get those resources and refine/make products out of them would pay off.
There was a depression, remember? Most people had very little money. Most of the folks who had any extra weren’t spending it; they were saving it for fear that they’d lose their jobs. Where were they saving it? Not in a bank; a lot of folks’ savings accounts vanished when the stock market crashed about a decade ago. Nobody trusted banks. So folks kept their spare money at home: in a jar, or in the mattress, or wherever. They weren’t banking their money, that is, they weren’t making their money available to folks who needed loans. They weren’t investing their money, that is, providing it as capital to businessmen who might have wanted to expand their businesses. The people weren’t confident that their invested or banked money wouldn’t simply vanish.
Then Pearl Harbor happened and the US got into WWII.
The war effort made it so that anyone who made machinery, clothing, food, you name it, would have a customer (the US government) who needed to buy their stuff. That gave people the confidence to risk their money to expand their own businesses or help someone else expand theirs. The government needed to buy uniforms, machinery, weapons, vehicles, and food for our soldiers. Those things are made out of raw materials: cotton, steel, rubber, copper, petroleum, wheat, milk, you name it. So manufacturers of finished goods had a customer (the government) they could count on. Producers of raw materials had customers (manufacturers) who needed their products. All of the above needed workers to either get the resources or turn them into finished products. These needs would continue to exist for as long as the war dragged on. That is, a businessman could be confident that as long as the US was fighting Nazi Germany and Imperial Japan, someone will buy his products. And that, combined with the fact that the US escaped any major war destruction at home, is why WWII drove an economic recovery for the US.
Confidence is what makes recovery possible.
Where the Money Came From
But Why Wasn’t There Another Crash After the War?
Well, the US was undamaged, as I mentioned, but Europe and Japan were in shambles. Those markets still needed stuff: stuff to rebuild with, and stuff to eat, wear, and enjoy while they were rebuilding. The US still had its manufacturing base. All it had to do was re-tool for consumer goods instead of war materiel, and the US became the suppliers to a newly stable world.
There was also a huge postwar public works program that employed thousands of Americans all across the continent. It was big government at its finest, and it, too, was paid for in large part with money from government bonds. I bet you're very familiar with it. It's called the interstate highway system.
Plus, the US did not disarm after WWII as it did after WWI. It still had the Red Menace of Communism to stave off. So not only is most of the world buying US-made consumer goods, the government is still buying weapons of war (though not as quickly). Couple those two factors together, and investors can be very confident that their investments will pay off: there are customers both at home and abroad who will buy their products.
There was also a deliberate effort to get people to consume more than they needed after the war, and boy did it work!
Buy, Baby, Buy!
So Where Did Our Confidence Go?
We sure had a lot of it back in the 90s, remember? It seemed like there was no place to go but up. The government even had a budget surplus for the first time in a really long time! It was a lot like the 1920s, in fact.
The economy started to stall toward the end of the 1990s, when investors started to realize that many of the stocks that had climbed so quickly were over-valued. The market was starting to correct itself when the 9/11 attacks happened. Which was a lot like another attack, in 1941.
Well, Where’s My Wartime Economic Expansion, Darnit!?
Why didn’t the war that the 9/11 attacks provoked usher in a new age of economic expansion? Wow, what a complicated question. One reason might be that it will, but it hasn’t happened yet. The war isn’t over after all, and the US didn’t really start enjoying its new era of peace and prosperity until the world stabilized after V-J Day. So the duration of the war (and concurrent global instability) is one factor. Another reason might be that when the US was attacked, the US didn’t go to war. Or perhaps I should say, “The US didn’t go to war.”
The US Marines went to war. The US went to the mall.
This is What We do When Faced with a Real ThreatClick thumbnail to view full-size
Rather than call on Americans to do something crazy like making sacrifices to help the war effort, our President encouraged us to go shopping: to continue with our lives as if nothing had changed. And sure, that seems logical. To change my behavior because of the terrorists would be to hand the terrorists a victory, right? Except the activities of the terrorists provoked a war, and to win a war, the country needs to focus its resources on winning that war. During WWII, the government rationed gasoline and other essential resources. The government encouraged everyone to grow Victory Gardens and not to travel unnecessarily. The government encouraged meatless days, and implemented recycling programs to conserve resources. But during the war in Afghanistan, the government did none of the above, and our President actually called on us to do our duty by continuing to use up resources like there’s no tomorrow.
I Thought Dissent Was Patriotic?
When the Center and the Left object to the Radical Right's scare tactics, the Radical Right often throws a slogan from the Bush years back at them. "We thought that dissent was patriotic," they say, trying to make it look as if the Center and the Left were trying to suppress honest political debate.
Of course dissent is patriotic. Absolutely it is. If our government is doing something wrong, it is our duty as citizens to speak out and try to correct the government's course. The government is meant to work for us, right? But I want to draw a distinction between dissent and sedition.
Of course, the Radical Right will say, "I see: it's dissent when you disagree with us, and sedition when we disagree with you. Typical." Nothing could be farther from the truth.
Dissent looks like this: "What the President is proposing will be bad for America, and that's why you should vote against him in the next election."
Sedition looks like this: "The President hates America and is deliberately trying to destroy it, and that's why you should prepare for armed resistance against the government."
See the difference? One attacks the president's policies and advocates replacing the President by Constitutional means: by voting him out of office. The other maligns the President's character, incites fear, and advocates a more violent means of regime change.
Next time you see a sign, bumper sticker, or t-shirt that says, "It's time to water the tree," ask the person behind that slogan which tree they mean to water, and what they mean to water it with.
You’d think that continued economic activity would drive a recovery, right? Except long about 2006/07, we realized that many of the (completely unregulated) investments that had created our current wealth were actually worthless after all. This caused a downturn big enough to take with it not only many people’s investments but also some pretty huge corporations. What did the government do in response? Well, after the 1929 crash, the government created the Securities and Exchange Commission and the FDIC to make sure such a crash wouldn’t happen again. After the housing bubble burst, the government basically rewarded the folks who created the bubble in the first place, and did absolutely nothing to ensure another similar crisis would not happen in the future.
Now practically nobody has any cash, practically nobody can get a loan, and absolutely nobody has the confidence that if they invest their money, they will see a payoff.
So, How is This the Right’s Fault, Again?
Yes, I’m coming to that. I’ve drawn a lot of parallels between the War on Terror and WWII for a reason. During WWII, we all agreed that the combined threat of Imperial Japan and Nazi Germany was an existential threat to the US; that is, if Germany and Japan won the war, that would be the end of the US as we knew it. Our leaders understood that, and in spite of many rancorous political disagreements (and yes, there were many rancorous political disagreements even during WWII) were able to make hard choices to get the war won as quickly as possible.
But as for this current conflict, nobody in power really believes that Al Qaida poses an existential threat to the US. Oh, they’re a threat to our peace of mind and to our individual lives, no question. But they’re not going to be able to invade the US and take over. Nobody in their right mind thinks that. Understanding that Al Qaida isn’t an existential threat, our leaders capitalized on the people’s fear of Al Qaida to further their own agenda rather than encourage the people to be brave, make sacrifices, and triumph over the threat. And then the term limits ran out and a new President took office.
Obama won the presidency by a large margin both in the Electoral College and in the popular vote. He inherited a lot of problems, but what president doesn’t? From the beginning, President Obama started work to solve some of them, and to restore the confidence of the American people (confidence, remember, is key to recovery).
But there are forces working against him.
Wait…Is This Going to be Some Kind of Conspiracy Theory Rant?
No, not at all. The forces arrayed against President Obama’s efforts to restore America’s confidence aren’t operating in secret. They’re right out in the open. They’re the Birthers, who are trying to get people to think the President was born in a foreign country (Hawaii is US state, folks) and be afraid of some undefined plot to destroy America. They’re the Death Panelers, who are trying to frighten Americans with lies about government operatives coming around to euthanize their grandparents. They’re the bigots who are trying to dupe us into believing that the President is a Muslim (as if it mattered one way or the other), and scare us into thinking he wants to implement Sharia law in the US. They're the fools who argue that President Obama wants the terrorists to win. They’re the members of Congress who vow to undo every one of President Obama’s economic initiatives—even those that have already become law by act of congress. Everyone who has parroted the rhetoric that President Obama wants to destroy America is complicit in this campaign to undermine the confidence of the American people.
How can an entrepreneur be confident that he can take a government contract to rebuild a road, repair a bridge, or create new infrastructure if he fears that the next Congress will take away the funds that were going to pay him? How can in investor be confident enough to buy stock in that entrepreneur’s company if he fears that the company will go under when the government reneges on its contract? How can a consumer (or a pension manager) feel confident investing in a mutual fund if there’s nothing to stop the big banks from making their portfolios vanish into thin air (again)? And how can anyone feel confident that anything is safe if they believe the right-wing pundits’ fearmongering rhetoric that Obama wants to take all their stuff? More to the point, how can the GOP hope to win the next election unless they make people frightened of what will (but actually won't) happen if they lose?
It’s Not About Reality; It’s About Our Perception of Reality
The Right is deliberately trying to undermine the American people’s confidence in the future. Without confidence, recovery is impossible. The Right understands this, and so they have been seizing on everything that could be made to seem a little bit scary, twisting it to seem truly terrifying, inflating its importance, and trying to make it the President’s fault. Further, the Right is also distancing itself from its own responsibility in creating the downturn in the first place, hoping that we’ll all forget how we got to where we are, and decide that we ought to go back to more of the same. They’re trying to scare us into trusting them, just as they tried (with success, I might add) to scare us into letting them do pretty much anything they wanted to under the last President. But the most important thing to take away from this article is this: the Right wants the downturn to last, at least until November. The Right wants for you to stay unemployed, and they want to scare you into blaming the Left. It’s already working. We’re collectively scared to invest or to loan out what money we have, which is keeping the economy from seeing any real recovery. Until we can regain our confidence in ourselves (and ignore the people who are trying to frighten us), we will not see a real recovery. And that suits the Right-wing fearmongers just fine.
But the Right-wing fearmongers have forgotten something: "The only thing we have to fear is fear itself." Don’t be afraid.