Look to past for keys to economic recovery

From the Everett Herald:

John Burbank, Executive Director

With unemployment hovering close to ten percent, and foreclosures on the rise, it may be helpful to think back eighty years ago, and consider the path our country took out of the Great Depression, and then into war, and then into a peacetime economic boom.

In 1933, 25% of all American workers and 37% of all nonfarm workers were unemployed.  In 1940, unemployment was still close to 15%.  President Franklin Delano Roosevelt had spent eight years inspiring our nation, searching for a way out of poverty and unemployment, and confounded by the great fear, insecurity, and poverty that Americans were facing.

FDR put together the New Deal.  It wasn’t easy.  We didn’t understand Keynesian economics, which held the key to recovery.  That key was the necessity for the government to step into the void left by the freefall in private economic activity.  The government developed public programs for jobs, such as the Works Progress Administration and the Civilian Conservation Corps.  And yet, unemployment remained in the double digits.

The federal government needed to show an unflinching willingness to run a large federal deficit to jumpstart the private economy.  But the budget deficits only ranged between one-tenth of a percent of gross domestic product (GDP) and six percent of GDP.  Unemployment remained stuck between fourteen percent and twenty-five percent.  In fact, unemployment increased as soon as the federal government pulled back spending, causing increased economic misery in the 1937 recession-within-the-great-depression.

It wasn’t until we were fully engaged in World War II and running deficits of up to thirty percent of GDP that unemployment fell, all the way to one percent.  This federal spending laid the foundation for the post-war boom lasting 30 years, in which the private economy flourished, we paid down the federal debt, and unemployment hovered at around five percent.

In 1944, in the midst of the war, FDR proposed a second Bill of Rights.  These rights included:  the right to a useful and remunerative job; the right to earn enough to provide adequate food and clothing and recreation; the right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad; the right of every family to a decent home; the right to adequate medical care; the right to adequate protection from the economic fears of old age, sickness, accident, and unemployment; and the right to a good education.

So how are we doing?  In the decades after World War II, more and more workers gained Social Security coverage, particularly those traditionally excluded from social protections, such as domestic household and non-profit employees, the self-employed, and hotel workers, laundry workers, and agricultural workers.  The GI Bill enabled millions of veterans to go to college.  In the mid-1960’s, President Lyndon Johnson pushed through Medicare for retirees.  In the 1960’s and 1970’s our state greatly expanded our community college system and insured that tuition for higher education presented no barrier for enrollment.

But for the last thirty years, these rights have been eroded, and with this great recession, they are imperiled.  Unemployment and foreclosures threaten our rights to a useful job, adequate income, and a decent home.  State budget cuts threaten the right to a good education.  With our unthinking mantra of free trade and globalization, local businesses are getting clobbered by multinational corporations, whether based in our country or elsewhere.

Social Security?  Now the inside-the-beltway wizards are seriously discussing how to cut Social Security benefits.  About the only right that has been strengthened is health care, and across the country we elected people to take that apart!

So perhaps FDR was a bit idealistic with the second Bill of Rights.  That is no reason to abandon the work to realize these rights.  Especially in this great recession, the public policy components of these rights are essential for our long-term well-being.  A world without Social Security, Medicare, unemployment insurance, public education, public higher education, and health coverage for all workers would be a world of growing desperation, want, fear, and greed.

Roosevelt had it right in 1944.  It rings true today.  The second Bill of Rights put forward ideals toward which we have made progress, and for which we must continue to strive.  They are ideals to instruct our Thanksgiving.

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