Saturday, March 16, 2013

Riding the Rails and Ryan's Return to Failed Policies of the Past

by Nomad

While scouring the Internet for anything and everything, I found this extraordinary PBS documentary online called Riding the Rails. Here's a description of this independently produced feature length film.

At the height of the Great Depression, more than a quarter million teenagers were living on the road in America, many criss-crossing the country by illegally hopping freight trains. This film tells the story of ten of these teenage hobos -- from the reasons they left home to what they experienced -- all within the context of depression-era America.
If you have some free time, I invite you to watch. I haven't finished the whole thing yet but just listening to these stories of people at their lowest points (but who somehow survived) is truly inspiring.

Watch Riding the Rails on PBS. See more from American Experience.

Forgetting the Lessons of the Past
On October 4 1932, when national unemployment peaked at a staggering 24.1%, Herbert Hoover spoke at the Coliseum in Des Moines, Iowa. In that lengthy speech he explained to his audience in detail the economic problems and its causes. More importantly, he assured them that his administration had already succeeded in overcoming the worst.
Now, we won this great battle to protect out people at home...The world today has a chance  It is growing in strength. Let that man who complains that this could not be worse thank God for this victory. 
By 1932, few Americans were witnessing any victories and few were thanking God. (If anything, they had begun to feel muchmore like the long-suffering Job of the Old Testament.) 

Just like the Republican party of today Hoover advocated the need for a balanced budget through austerity. One by reducing government spending could the nation's economy get back on its feet.
Before his Iowa audience, he blamed the Democratic Party for wasteful spending.
At a time when the most vital need was for the reduction of expenditure and the balance of the the budget to preserve the stability of the Federal Government as the keystone of all stability, [the Democratic Party] produced a program of pork-barrel legislation in the sum of $1,200 million for non-productive and unnecessary works at the expense of the American taxpayer.
Yet, reducing government spending during a recession, economists tell us, is an excellent way to exacerbate the problem, especially for those whose savings have been wiped out, who have incurred too much personal debt or who were already living hand to mouth even in the good times. 
..severe austerity tends to turn recessions into depressions, consign millions to the dole or under-employment and lead to frightening political turbulence.
And despite Hoover's confidence that the worst was over, in 1933, the Depression only deepened.  US Gross Domestic Product reached its lowest point and unemployment remained at 25%.  Hoover's austerity solution had been a painful mistake and he could not seem to recognize it. He once declared:
Nobody is actually starving. The hoboes are better fed than they have ever been."
Hoover's detachment from the realities of the Depression was mocked when across the country shanty-towns, where the homeless barely survived, were renamed Hoovervilles and a newspaper was called a "Hoover blanket." 
On the other hand, the wealthiest class would barely feel the pinch at all. Meanwhile African-Americans (for whom unemployment rate was at 50% or more) and women, particularly single, divorced or widowed, were hardest hit. For obvious economic reasons, marriage and divorce rates fell but rate for desertion- the most economic solution- climbed. As a result of the meltdown, about 250,000 young people were homeless in the early years of the Depression.
A source gives us this poignant quote by one of the Depression's victim. 
"It took me twenty years to figure out what happened,..I always figured there was some kind of logic I didn't understand. Maybe it was some kind of lack in me. 'Cause I was brought up in a middle-class family: all the privileges, the house with the servant—all of a sudden, one day it's all gone."
Ignoring the evidence, ever-optimistic Hoover refused to believe that industry would not recover without government help. As the book The Hoover Presidency: A Reappraisal, notes:
Hoover never relented in his quest for a balanced budget. It had become a potent weapon in his political arsenal. With it, he could courageously veto any public-works relief bill not to his like and expect to benefit politically by standing on an economic principle against congress' political expedience.
The problem with this political strategy was simple. The principle was wrong. The Depression wasn't lifting. It was getting worse. Investment by the private sector, the key to re-growth, failed to magically appear, as Hoover predicted.
Between the end of 1929 and the end of 1930, in fact, gross domestic investment by the private sector declined from $35 billion to $23.6 billion and would fall to a low of $3.9 billion by the end of 1932—a drop of more than 88.6 percent in just three years.
His blindness and stubbornness would end up costing him the election in 1932, just a month after his Iowa speech. Time had run out. 

Amazingly, the failure of Hoover's policies was demonstrated not once but twice. According to the book,  A New View of its Causes and Consequences: Rethinking the Great Depression.:
In 1936, main economic indicators (except unemployment) regained the levels of the late 1920s...but after the federal government cut spending with the expectation that the private sector would step in, the economy took another sharp downturn until WWII.
*    *    *    *

It's important to remember this history the next time you hear a Washington politician talk about the joys of austerity and how we must cut social programs to the bone. For example, Paul Ryan's recently proposed budget, which slashes government spending to its lowest level since 1948, is just another attempt to revive Hoover's disastrous economic policies.
Ironically, Candidate Mitt Romney last year casually told reporters that he was not particularly worried about the poor. We have safety nets and if they need repairing, as president I will do it.
Now, with the proposed budget, his former running mate is busily slashing precisely those safety nets in the name of responsible governance. 

But if Ryan's ignorance of history is the problem then he simply needs to turn to Europe. As an article in Huffington Post observes:

..[T]here's real-world evidence indicating that Ryan's approach could hurt economic growth. Eurozone countries such as Spain, Portugal, Italy, Ireland and Greece have been slashing government spending. The Eurozone economy is shrinking and unemployment rates are at a record high.
Unless we wish to see our children and our grandchildren back to riding the railroads,  then the Ryan's Hoover-based austerity "solution" must be rejected with a firm, "No thanks, Mr. Ryan."  
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