Our Depression Obsession

Almost all the errors of the 1930s were rooted in the economic orthodoxies of the time. Could the same be true today?

By Robert J. Samuelson | NEWSWEEK
Published Apr 18, 2009
From the magazine issue dated Apr 27, 2009

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  • Posted By: Arbiter @ 04/22/2009 11:32:50 AM

    To those who advocate nothing be done to the recession; This downturn in the economy is far from cyclical; I might even venture to say it???s not natural. The financial institutions, mainly the banks, have tore themselves a huge hole in their books, through avarice and the skirting of financial regulations, in terms of trillions of dollars in losses due to bad assets and the credit crunch that is caused by it. Recently the IMF reported that the credit crunch loses of banks could be as high as $4 trillion, which would damage the financial system for years to come. Letting the business cycle plays itself out thinking that a Depression will only last a few years is a high risk bet that no sane person will want to make.

    To those who advocate for tax-cuts to be the main solution to the recession; The lifeline of the free-market has always been the banks. Banks provide and circulate capital to businesses that needs them to invest in their venture. With the banking system severely debilitated from their poor choices, they will not be an effective part of this age-old system. So giving businesses more of their money will not solve the problem of this economic crisis because businesses will do what the average person will do when given more money during hard economic times; they will not spend that money and hold on to it out of fear of the uncertainty that is prevailing in the financial atmosphere.

    Save the banks, save the economy.

  • Posted By: rho1953 @ 04/21/2009 11:07:18 PM

    The spending that is going on now will hamstring us for decades. When cap and trade get started the resulting job losses will send us into the deepest financial chasm in history. It is as if there are no adults to say no the infants in the candy store.

  • Posted By: rramjet @ 04/21/2009 9:14:55 AM

    Maybe Obama is following the FDR model? Should we then prepare for WW 3 that will get us out of the Obama Depression?

    • Posted By: Dave in NM @ 04/21/2009 10:41:01 AM

      Seriously - the "Obama Depression?" Just wow. When do you think this thing started? President Obama inherited this mess from his predecessor and his cronies.

      How is it that the comments for such a supposedly "liberal elitist lefty college ***-loving blah blah" publication have been totally hijacked by right-wing trolls?

      • Posted By: bighappy @ 04/21/2009 9:08:13 PM

        Obama inherited recession only,. It required his special talant to cause investors' panic and pessimism, which already converted recession into depression. Give him time - it will be new Great Depression soon.

      • Posted By: rramjet @ 04/21/2009 12:23:54 PM

        You really want to know where all this started or are you such an ultra liberal the facts don't matter? This all began with LBJ and his War on Poverty , which despite the massive amount of government money given, they never won. He tried also to fight a war ( which he had no intention of winning ) while this "War on Poverty "had begun. Here starts your deficits and all presidents since have hopped on board like white on rice.
        Obama is just the final nail in the coffin to what once was a Great Nation.

        • Posted By: markmier @ 04/21/2009 1:52:25 PM

          "This all began with LBJ and his War on Poverty , which despite the massive amount of government money given, they never won."

          This all began with Nixon and his War on Drugs , which despite the massive amount of government money given, they never won.

          Just sayin'.

  • Posted By: Froward69 @ 04/21/2009 1:56:16 PM

    economic recovery depends upon re-regulation of financial markets, Capital investment and stiff penalties for greed.

    • Posted By: bighappy @ 04/21/2009 9:01:58 PM

      "stiff penalties for greed": if Obama and Bush left markt alone, no "stiff penalties wold be required. Bancruptcy is the best cure. Unfortunately now the same greedy idiots will still control our banking system.

  • Posted By: Torichtolive @ 04/21/2009 12:41:08 PM

    Guess who.. What about higher cig tax, Gas tax, Our state income tax is going up because of the rise in unemployment. Not to mention our Property taxes. When you give tax cuts to those who own business they create jobs and more revenue is created keeping the need to raise taxes in the areas menitioned to a minumim so as you can see we did benifit from the Bush tax cuts but of course that is never mentioned by some people. Also as far as not much taxes taken out I have you to know that they take over 200 dollers out of my check alone for taxes. I only make 10.00 an hour. They used to take almost 30 percent of my husbands salary. Did I mention we don't have any children. I can fax you pay records if you don't belive me. At least under Bush my husband had a job. Now with Obama's promise to roll back the Bush tax cuts for businesses he dosn't however my property taxes are rising every year to cover lost revenue. Before you make a statement about how much taxes I'm paying come walk in my shoes for a while and find out.

    • Posted By: marley07 @ 04/21/2009 1:13:48 PM

      the top 10% of income earners pay currently 70% of the tax burden. That will go up to 75% very soon. So you have to ask, what do these people and Obama want? The top 10% to pay it all or 90%? in 2001, those at the bottom, which is 60% of the country, paid a tiny 3% of the burden. By 2005, almost all of that 60% did not even have to pay income tax. So this myth that Bush only cut taxes for the wealthy is rediculous. How can you say that when that group which makes about 26% of all the income only pays 0.6% of the taxes? Obama wants the wealthy to pay more so he can redistribute that to those who do not even pay taxes. By the way, $92,400 is included in that top 10%. Does that sound "rich" to you? The so called rich pay much more than their fair share.

      • Posted By: bighappy @ 04/21/2009 8:57:48 PM

        75% ? No way. Soon half of those 10% will chose another. frienflier countries to pay taxes to.

      • Posted By: americaduff @ 04/21/2009 2:08:04 PM

        90% sounds good only if we can increase it to 100%. When are capitalists going to get it. Soon money will have no meaning. Just look at the model for capitalism. It advocates "Free Trade" policies. In another words, SLAVERY! Capitalism seemed kinda cool when the Industrial Revolution began in 1780. Why the sky was the limit! You should thank your lucky stars that we still kind of have a democracy in America. It is the only way to keep Capitalists in line.
        A good example I always use is the introduction of "Human Resources" in the corporate sphere. It used to be "Personel". To use "Human" with "Resources" indicates how corporations view employees, just like any other expense, get it as cheap as possible.

      • Posted By: americaduff @ 04/21/2009 2:07:20 PM

        90% sounds good only if we can increase it to 100%. When are capitalists going to get it. Soon money will have no meaning. Just look at the model for capitalism. It advocates "Free Trade" policies. In another words, SLAVERY! Capitalism seemed kinda cool when the Industrial Revolution began in 1780. Why the sky was the limit! You should thank your lucky stars that we still kind of have a democracy in America. It is the only way to keep Capitalists in line.
        A good example I always use is the introduction of "Human Resources" in the corporate sphere. It used to be "Personel". To use "Human" with "Resources" indicates how corporations view employees, just like any other expense, get it as cheap as possible.

  • Posted By: The Messiah @ 04/21/2009 1:59:30 PM

    ScumBama has tried to SPEND his way out of th greatest economic depression in history and failed. Now his is trying to TALK his way out and it too is failing.

    When enough American workers are jobless, homeless and hungry, ScumBama will be impeached and a bunch of the other criminals on Corruption Hill will be booted out. Until then, America is going down with the loss of 700,000 U.S. jobs every month. States are going bankrupt just trying to pay unemployment benefits and the economic depression has just started. By the end of '09 tens of millions of people will have lost their job and their unemployment benefits.

    We will have class warfare in America.

    • Posted By: bighappy @ 04/21/2009 8:48:57 PM

      Be realistic, OMama will never be impeached, GOP will not be able to get back enough Senate seats in 2010. He will seat full 4 years and will be kicked out of White House in disgrace.

    • Posted By: lvbartman @ 04/21/2009 2:35:00 PM

      We already have class warfare, since the rich capitalists declared war on the working class. So bring it on!

  • Posted By: marley07 @ 04/21/2009 1:20:24 PM

    Why is that liberals never have any substance when TRYING to make a point. There are never facts with numbers or anything to support their claims...other than "the last 8 years"....blah blah blah. What about what is going on now? Going forward? Obama is spending as much in 1 year as all the presidents in history put together.

    • Posted By: rzamfirache @ 04/21/2009 2:53:58 PM

      Hmm! Obama's spending? Numbers?
      Here is some of both:
      Obama only plans to spend in a year what W. spent in the last 4 months he had in office. If you factor in the Irak fiasco and the economic disaster he presided over for 8 years (even if not by his making, but nonetheless his baby, since he did all the wrong things to make it.. well... a true and genuine disaster), not even projected spending by Obama can reach the devastating $4 trillion ($1.3T in Irak plus the $2.7T in the "ghost" securities free market) that W. and the republican establishment can put under their pillow. Now, that's an "accomplishment".
      And... some more number talk: For a family of two working people (with an infant and no "stay at home", "hardest job in the world" soccer-mom), Obama put in the paychecks $120/month (2 people x 2 paychecks/month x $120/paycheck). Now, that's a nice piece of change. It can actually pay for TV, Internet and phone for the whole family. On the other hand... let's see what W got going his way: one $600 check in 2003 (only 2 people back then and no kids) and one $1500 in '08 (2 people+kid). That makes for $2100. Now, some math, to see just how much is that for W's tenure: $2100/(8yrs x 12mths/yr)=$21.87/month!!!!!!! Bravo!!!!! Any other cheers????? What??? no one enthusiastic?
      Ts!, Ts!, Ts!, to paraphrase the immortal Mark Twain: numbers, damn numbers.

      • Posted By: bighappy @ 04/21/2009 8:42:57 PM

        "Obama only plans to spend in a year what W. spent in the last 4 months he had in office": Yeah, $3 trillion (Obama budget) is less than something like $500 billion - are you still larning math in Kindergarten?

    • Posted By: rzamfirache @ 04/21/2009 2:30:41 PM

      Hmm. Numbers? Spends more? Here are some numbers and spending considerations for one to reflect on. Actually Obama's only spending in a year as much as W did in the last 4 months in office. And you know what? I see the money in my paycheck. For a family of two working people, it actually pays for the phone, TV and Internet (2 people x $30/paycheck x 2paychecks/month =$120) each month. Or... you pick what the $120 can pay for. So. Here, I just gave you some numbers that mean something. What did I see under W? Oh... don't start with the paltry $2100 ($1500+$600) I got in 8 yrs. in one time "rebate" checks from my own money. That amounts to... let's see: $2100/(8yrs x12 mths/yr)=$21.87/month.
      To paraphrase the immortal Mark Twain: numbers, damn numbers.

  • Posted By: Froward69 @ 04/21/2009 1:54:15 PM

    economic recovery depends upon re-regulation of financial markets, Capital investment and stiff penalties for greed.

  • Posted By: One Opinion @ 04/21/2009 1:20:18 PM

    I think the author missed the point. The gold standard DID NOT screw up the economy back in the 1930s. The massive DEBT incurred in WWI did, just like today we are in trouble because of bad debt. Debt was back then, is now, and will always be the enemy of financial independence and security. Taking us off the gold standard also allowed for a myriad of other problems, including inflation and money that is essentially worthless paper if anything should ever go wrong.

  • Posted By: The Messiah @ 04/21/2009 1:02:14 PM

    Not to worry...

    Life is LAVISH on Corruption Hill. No matter how much pain the working class suffers, the criminals on Corruption Hill will live high on the hog and you're paying for it all - if you still have a job.

    When enough American workers are jobless, homeless and hungry, ScumBama will be impeached and a bunch of the other criminals on Corruption Hill will be booted out. Until then, America is going down with the loss of 700,000 U.S. jobs every month. States are going bankrupt just trying to pay unemployment benefits and the economic depression has just started. By the end of '09 tens of millions of people will have lost their job and their unemployment benefits.

    We will have class warfare in America.

  • Posted By: marley07 @ 04/21/2009 12:40:03 PM

    You have to love the humor of Obama's recent $100M press plan. I hope he was joking anyway. Can anyone tell me what $100M over his expected $3.9 TRILLION in spending is? What a joke this guy is. Like saying if you spend $60k a year why don't you go ahead and save 6 bucks. Wow there Obama don't challenge the government departments so hard so fast. The government spends $100M in about 10 minutes and now he is challenging to save that in 90 days? Seriously people, if you support this guy, take another look please. He is going to bankrupt this country.

  • Posted By: Torichtolive @ 04/21/2009 11:37:21 AM

    I don't know why everyone thinks the Bush tax cuts were only for the rich. My husband and I benifited by them and we are far from rich. We have never made more that 70 thousand a year together and now my husband is out of work bringing our family income down to 20 thousand. We have seen our taxes raise significtely since January. When you cut taxes everyone benifits when you raise taxes it is always those such as us who stayed married and didn't have more children than we could afford and pay our bills who are taxed to death. My husbands unemployment will run out in 2 months and finding a job is almost impossiable since he is a welder. Hardest hit industry. Since we don't have any children at home we don't qualify for government assistance so I'm not sure what we will do at that point. Sure looks like a depression in my house. Thanks Obama for the so called change. This kind of change I don't need.

    • Posted By: GuessWho @ 04/21/2009 11:59:19 AM

      I'm sorry, but what you say is completely false. There were NO significant tax cits for people in the income range that you mention during the Bush Years and there have been NO tax increases in that range during the Obama Months. In fact, the only tax cut was inplemented recently by the Democrats. Considering the income you mention, very little taxes are taken out so I would not expect to see much of a change. Please note I am not talking about medicare or Social Security as they have not changed, only federal income tax.

  • Posted By: The Messiah @ 04/21/2009 11:48:24 AM

    In a year or so when tens of millions of unemployed lose their benefits, then we'll start to see the real pain of the greatest economic depression in history. What we failed to learn from the depression of the 30's is that financial greed can destroy the world.

  • Posted By: Torichtolive @ 04/21/2009 11:28:45 AM

    I don't understand how so many can believe that the Bush tax cuts were only for the rich. My husband and I benifited by them and we are hardly rich. We have never made more than 70 thousand a year together. But we have seen our taxes go up significately since January and my husband is now out of work putting our household income at 20 thousand my salary alone. When you cut taxes you cut them accross the board and everybody benifits. When you raise taxes it is us who stay married and didn't have more children than we can afford to raise and pay our bills who suffer. Who is going to help us when my husbands unemployment runs out in 2 months and we can no longer live on just what I make. Since we don't have children we don't qualify for any government assistance I quess were to rich to live in America anymore.

  • Posted By: olderwiser @ 04/20/2009 8:37:27 PM

    If the cause of this economic crisis is known, then why is it not clear how to fix it? It seems that very large measures have been taken by both administrations, past and present, and by major economies around the world, but there are still majority opinions that we could come out of it or go into the depths of depression. Could it be that only postmortem will tell us as it just did in this article how we crashed in 1929? Sometimes it feels that the experts are rowing in the dark but don't know if we are headed out to sea or toward shore, but singing all the while to keep the crew from panicking.

    • Posted By: bighappy @ 04/21/2009 1:26:14 AM

      Before Hoover increase taxes, it was only a recession in 1929. When Great Depression has burned itself in 1933 - FDR started spending - and prolonged recession till WWII. Rough Goverment intervention was always futile.
      The best remedee always was to leave economy alone. now it is too late, damage was done (Bush/Democrats bailout and Obama spendings), depression will be over only in 2013.

  • Posted By: Apolitical @ 04/20/2009 2:12:33 PM

    It is really difficult to see the Republican don't spend and tax cut for the rich as solutions to this economic crisis. It is not proven and discredited by history when Hoover worsen the depression by choking off government spending. Now the Republicans are proposing the same failed policy. I would suspect because of devious political reasons so that Obama will fail and they'll get elected in 2010.

    • Posted By: bighappy @ 04/21/2009 1:15:14 AM

      Where did you read that Hoover cut spending? In act, he increased taxes, mostly on reach (most of poors did not pay taxes anyway), exactly what your dear Obama is going to do. Lowering taxes (or at least not increasing them) is still the universal anti-depression recepee.
      Another bad analogy is that if Hoover had started uncontrollable spending, like FDR did later - it would have helped. First, the FDR spending spree only prolonged recession, and second USA as the biggest world creditor in 1930s had money to spend, unlike current situation. Now it is good for China, not USA.
      Obama iinherited recession (not-s0-bad reports prove that it was not so bad before Democrats started crying disaster), like Hoover did, and like 80 years ago he is going to convert iy in Obama Great Depression (plus stagflaion), unfortunately it is inavitable.

  • Posted By: LG Jaramillo @ 04/19/2009 1:32:38 PM

    I firmly believe the exercise of management, whether public or private, models and molds the economy, as well as politics.

    As public manager Mr Obama should be a Five Star Manager and his success only will be supported in their abilities as public administrator, someone highly trained to make important decisions every second.

    His success must be supported in six basic areas: 1-ethics and transparency throughout his administration, 2-thorough knowledge of each problem to solve, 3-a tactical plan for each issue, 4-have a high-performance team, 5-adequate day to day control for each plan and finally 6-unbeatable relationships and communications with all stakeholders.
    The cabinet must speak the same language. I suggest one MBS adapted for public management. All nation problems belong to public and private business and both should consider unifying language and try to speak MBS in their fields.
    MBS in Five Star Manager, available at the web

    • Posted By: olderwiser @ 04/20/2009 8:38:44 PM

      Well, you could sure say that the management of AIG was moldy.

  • Posted By: Lange @ 04/19/2009 8:30:22 PM

    Who will feed and house those unfortunate enough not to be able to find work? Who? Or will it be necessary for some in order to survive to resort to crime or just lay down and die this drags on for years and years?

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