A Word To The Wise: FDR Screwed us in Depression I and Obama will do it in Depression II
I’d like to take the words from President Barack Obama himself: one of the problems that caused this crash was that investors were only looking at short term gains and not long term viability.
A lot of people don’t know this, or perhaps don’t care to remember, but FDR’s plan for revamping the American economy after the Stock Market Crash of 1929 and subsequent Depression that carried into the 1930’s was an upward spiral. His aim was for big businesses to form cartels, true to the predictions of Marx and later Mussolini, by removing competition and regulations from big business so that they could drive up prices by forming monopolies on the market. At the same time, FDR encouraged the growth of unions to keep wages high; therefore, forming his unorthodox ‘upward spiral’ of high wages and high prices. And his planned worked, due largely in thanks to armaments and munition development of WWII, the subsequent role America would assume as a world exporter and manufacturer of weapons and technology, and an inflow of gold or real wealth. However, few people care to look at the ramifications of his upwards spiral to today’s woes and they are plentiful, especially when considering the state of the auto industry today.
The ‘Big Three’ or, the detroit-based, Ford Motor Co, GM, and Chrysler LLC have lived the past decade virtually free of competition from start-ups or rival American companies and have suffered because of it. The shortage of competition has meant a lack of innovation to build more sustainable vehicles and a deaf-ear to new methods of production, such as a switch from the outdated vertical in-house production style of Henry Ford’s assembly line to finding different start-up suppliers that compete to provide the most cost and quality efficient parts. Today these companies are quite simply not viable against their foreign competitors; the ‘Big Three’ are inefficient, spread too thin with dealerships that don’t bring in profits, costly, and have tainted the image of the American auto industry. The result has been widely seen since the recession of late 2007, where now two of these once behemoth companies have declared Chapter 11 bankruptcy and the last, Ford Motor Co. will soon follow. It is important to note, however, that the problems that plague the auto industry do not rest solely on their chief executives but also on the vicious labor unions that have prevented necessary trimmings in the company to remain viable. In this example, and I can argue a few others but for time’s sake will refrain, one can see that FDR’s ‘upward spiral’ certainly had negative long term effects both psychologically and economically on our the health of our nation.
Similarly, Barack Obama, ironically coined the next FDR by many publications Time magazine among them, has followed in the same reckless manner. In order to ‘save’ the auto industry he has funneled billions of taxpayer money into the Big Three with some very disappointing results. Looking at just GM, the government has given over $40 B to help raise capital and save the company only for it to declare Chapter 11 bankruptcy, basically flushing those taxpayer dollars down the drain. Additionally, GM has just revealed that in order to make itself into a profitable publicly traded company, once again, it will need another infusion of $30B in return for 60% of its common stocks to the government. This is two negatives, that’s a total of 70B American taxpayer dollars gone to a company cutting expenses i.e. employees and dealerships and giving ownership of the company to the government or nationalizing it. Does this ring a bell, because it should; it’s the same thing that’s happening to the majority of the banks right now after the government stress tests revealed that 11 out of 19 of our national banks will require additional capital to remain solvent. Moreover, for those who may not realize, nationalizing private industries is bad because it undermines free market trade and breeds protectionism and xenophobia. Barack Obama’s idea that a company could somehow be ‘too big to fail’ is absurd and because of his cabinet’s quantitative easing-printing money that we don’t have- the American taxpayer will suffer and we already have.
The TARP bill or Stimulus Package has given a total of $3.5T to the bailing out of the financial and auto industries; almost all of these infusions have been failures. That is money that could have been spent on trickle-up or WPA projects for a much needed infrastructure overhaul-step towards sustainability and a green economy-that is now gone. And for the critics who would say $100B was set aside in the TARP bill for infrastructure building, look into the details because that money was allocated to failing state governments like California not the metropolitan areas that require it and would make the most use of it. Actually, I did the math and if Obama would have distributed the Stimulus Package evenly among all men, women, and children in the U.S. everyone would’ve received $300,000; so think about that when you’re thanking the president for your ‘tax cuts’. As for long term disasters, forget about deflation and its effects: growing unemployment reaching 10%, shrinking costs and the subsequent mitigation of our economic output, which is down 6% while our national deficit grows to 12% of our annual GDP. Lets look to the near future and the heavy if not hyper inflation, the likes of current day Zimbabwe or the past Weimar Republic in Germany, that the treasury and Federal Reserve are going to cause. In final notes, FDR’s policies set the foundation of today’s economic upheaval and if were not careful Barack Obama’s policies may be much worse.
