THEN AND NOW: THE GREAT DEPRESSION AND THE CURRENT GREAT RECESSION

(*Apologies for no new postings for over a week – spending four days in the hospital threw my schedule all to hell*)

Both economic and social liberals, following 2008, expected greater political gains by the Democratic Party in the year 2010, and they were stunned when the Republicans made a dramatic political resurgence in the elections of 2010, gaining a dominant majority in the House of Representatives and a near majority in the U.S. Senate. 

Those who remembered the great Democratic Party victories that followed the onset of The Great Depression, generally tagged to Black Tuesday of October 29, 1929, were left scratching their heads, trying to understand exactly what happened to allow the return of The Republican Party to considerable power in the governance of our nation.  Why was the 2010 election not a repeat of the elections of 1930 and 1932, when The Republican Party was told by the American electorate to go sit in the corner?

After giving the matter considerable thought (while trying hard not to become bogged down in the mind-boggling details of economic theory) and again doing some historical research, the simple answer to the question is that the early 1930s and the time of 2008/2010 simply were different times.

How so?  Well, in the first place, there is the matter of TIMING.  When the Stock Market Crash of October 29, 1929 took place, Herbert Hoover, the Republican President of the time, would remain in office until January, 1933.  The importance of this is that the American public, which blames the party in power for economic setbacks, had better than two years to point the finger of blame at Herbert Hoover and the Republican Party.  With a full two years of devastating economic decline resulting in huge drops in manufacturing and the creation of massive unemployment (going as high as 25%), there was plenty of time for the American public to come to the view that it was time to “throw the bums out”, and the bums of the moment were Herbert Hoover and The Republican Party.

The impact of The Great Depression was so quick and so severe, that in the by-election of 1930 the Democratic Party, long a minority Party of no major consequence in opposition to the wants and desires of The Establishment backed Republican Party, picked up 52 seats in the House of Representatives, with the House then being split 217-217 and eight seats in the Senate, resulting in the Republicans holding onto a majority in the Senate by one seat.  For the Democrats of the time, this was a HUGE gain (consider that prior to the that election the Republicans had a 270-164 majority in the House and a 56-39 majority in the Senate). 

As economic conditions did not significantly improve in the next two years, the election of 1932 proved to be a disaster for the Republicans, with FDR being elected to the Presidency and the Democrats taking a 313-117 (with five seats to the Farmer-Labor Party) majority in the House, and a 59-36 majority in the Senate, gaining a super majority in the Senate. 

The Republicans and Herbert Hoover, utilizing the economic theories of the time (Classical Economics) moved (for them) heaven and earth to improve economic conditions, but they were handicapped by the special problem of Classical Economics – that it did not recognize economic depression as being possible – though history and study for years on the matter of depressions clearly showed that indeed, depressions were all too possible).  Classical Economics simply held that depressions were not possible, but did allow that certain steps could be taken to “lessen” economic downturn.  The thought essentially was that “the market would naturally return to good times – and ignored the problem as to how long it would take for “the market” to regain its feet.

(*Aside:  Herbert Hoover is by many unfairly blamed for The Great Depression – he had been in office only a year and a half when Black Tuesday happened;  he was an intelligent and caring man who happened to be President when the roof caved in – and he did what he could to alleviate the problem – the problem was that he did not have the economic theory tools to be able to do anything effective – this was compounded by the fact that the depth of The Great Depression was far greater than people, even “the smart guys”, were capable of realizing; they knew they had a disaster on their hands, but simply could not comprehend the depth of that disaster.  It simply did not occur to them that the disaster was so great that it would take a minimum of ten years (and WWII) to climb out of the hole they created.*)

In any event, the Republican Party and Herbert Hoover were stuck with three years of leadership (stewing in their own juices, so to speak) that to the voting public, was ineffective.  It was thus that the angry (and hungry) American Public turned out the Republicans in landslide numbers in 1932.  The brand of failure was to be visible on the political forehead of the Republican Party for over ten years (as to matters after the election of 1940, WWII made sure FDR would remain in office during war years – Americans traditionally had been disinclined to change Presidents in a time of war). 

Coming up to the years 2008 and 2010, we see that in 2008 the Republican ticket was double-handicapped – the current recession was clearly underway by the time of the elections of 2008 and up to that point it had been the Republicans in control of the White House (though the Dems gained control of both the House and the Senate in 2006) and the Republican ticket, featuring John McCain and Sarah Palin, was essentially sacrificial in nature – many Republicans did not like John McCain enough to actually vote for him.  Such being the case, the Democrats in 2008 not only won the White House with an unprecedented black candidate, but swept to majorities in both the House and the Senate by an American electorate angry with the economic hard-times brought upon the country (and the world) by both the policies of the Republican Party and the often fraudulent financial activities of The Establishment that is represented by The Republican Party.

 (*Aside:  the idea of a Democratic “Super majority” in the Senate is, in practical terms, a Republican created myth – Independent Lieberman, though caucusing with the Democrats, consistently voted with the Republicans, and there were always two or three “Blue-Dog Democrats” who would vote against Democratic leadership on major issues – in short, the Democrats lacked the means to shut down Republican filibusters in the Senate – which resulted in the rather odd situation where the Minority Party in the Senate actually called the shots – were able to block Democratic legislation and appointees – in the great majority of cases*).

The Great Recession of 2008, unlike The Great Depression, did not make itself known with a sudden bang like the shock of Black Tuesday; rather, economic problems which had been growing for some time (while the National Bureau of Economic Research declared that the recession actually began in December 2007 the impact of the recession was not strongly felt by the American populace – other than those who lost their homes through bank re-possessions) became more and more obvious over an extended period of time in 2008  even if, as always, the politicians in power and the gurus of finance denied any serious problems (this is standard operating procedure for the Party in power and the powers of Wall Street when economic problems loom large).  

The Great Depression became evident by a sudden shock (Black Tuesday) while The Great Recession slowly became evident to the American populace in a creeping manner, and did not have great visibility as nobody was jumping out of windows on Wall Street.  In the Great Recession, the poor remained poor, the Middle Class lost jobs, and the non-wealthy lost their homes while the wealthy suffered far less…. they simply did not buy a new yacht.

Finally by September, 2008 the obvious could no longer be denied and President Bush and Congress began to take serious action to stave off what was seen as a situation with all the potential of The Great Depression of the 1930s.   Bush, following the lead (quietly) of new Federal Reserve Chief Bernanke, allowed Federal Reserve Interest rates (for loans to banks) to be dropped and then dropped again, in an desperate attempt to shove more money into the economy.  The sad fact of the matter is that many Americans simply did not wake up to the fact of the presence of The Great Recession until mid-2008, right before a national Presidential and Congressional election.

Having finally woken up, the American voters did what they always do in times of economic hard times – they effectively voted one political power out of office and voted the other political party into power.

Now. Pay attention to the TIMING.  Most Americans did not wake up to the reality (trusting the politicians and Finance gurus for far too long) until mid-2008.  Less than five months later Obama, the first black Presidential Candidate in American History was elected President, along with the Democrats gaining a strong majority in the House of Representatives and a strong majority (but not Super-Majority) in the Senate.

The importance of this is that the sort period of time between the awareness of the recession and the election left the American little time to fully understand that Republican policies and agendas not only caused the recession, but that their economic policies (the same old and tawdry Classic Economics of Herbert Hoover, et al) were incapable of pulling us out of this recession in anything less that five to seven years (at a minimum).  In point, the Republican policies, while causing the recession, did not have time to be shown as being incapable of pulling us out of the recession, as had been abundantly clear under Herbert Hoover, who had three years to deal with The Great Depression before the election of 1932.  As I pointed out above, following Black Tuesday the Republicans had a full three years to stew in their own juices of their failures – but in 2008 they stewed in their own juices for less than four months (as Sarah Palin successfully diverted American attention from the economic disaster to alleged short-comings of the Democrats and Obama by outrageously ‘red-meat” rhetoric, which the MSM happily put on the Six O’clock news every evening).

Enough time had passed between 1929 and 2008 that the nation had time to forget the lessons of The Great Depression: how Republican economic policies caused that depression, and, more importantly, how Republican economic policies failed to pull us out of the depression, and to forget just how difficult it is to turn around a deep recession/depression. 

The Republicans, immediately following the election of 2008, told the American public:  (1) The Great Recession was now in the hands of Barack Obama and the Democratic Party, and (2) that Obama and the Democrats were doomed to failure as regards turning things around. 

This, of course, was a self-fulfilling prophesy, as the Republicans immediately used Senate Rules to block almost all Democratic programs to deal with The Great Recession.  The Republican Party aired a message 24/7 that if Obama and the Democrats did not pull us out of The Great Recession (always simply referred to as ‘the recession” by the GOP) by 2010, then this meant that Democratic economic theory was all wrong and doomed to failure – and more importantly, that any continuation of the recession past 2010 would be the fault of Obama and the Democrats.  The Republicans made every effort to play down the SEVERITY of the recession in order to give the impression that it could be turned around in a mere two years.

Alas, with malice and aforethought, the Republican Party elected to throw governance into gridlock rather than meaningfully deal with trying to turn around the recession.  They made it clear that they want power and are willing to have the majority of American citizens undergo misery in order to regain the power they had lost.

The Republican messaging prior to 2010, blared over the MSM, was effective (if dishonest – to the point of claiming they would promote a program for job creation – something they have completely ignored since the election of 2010) and Democrats, mostly those who had replaced Republicans in 2006 and 2008, took it on the chin.  The road to governmental gridlock was now paved in concrete.

Well, this particular commentary has now run long enough, so I will continue this matter in a day or two, bringing up such matters as MESSAGING, THE MEDIA YESTERDAY AND TODAY,  THE GOP EFFECTIVENESS OF PRESENTING WEDGE/DISTRACTION ISSUES, THE SOLID (REPUBLICAN) SOUTH, and yes, RACE AS A FACTOR,  and lastly, THE MATTER OF CONCERN ABOUT DEFICIT v. JOB CREATION.

Have a good day.