Two days have passed since the 2009 election cycle ended and the second-guessing and arm-chair quarterbacking has quite predictably arrived. Everyone has a theory or a unique explanation and each is in the camp of either imminent demise or nonchalant shrugs. I suppose I lean much more to the latter than to the former. I have no alarmist, chilling words of caution to impart to any Democratic candidate up for re-election or election in a year's time. When some are questioning whether we should let up on the gas pedal, I advocate strongly for pressing down firmly and keeping it there. We have a right to push our agenda just as strongly as Republicans pushed theirs when they were the majority, and skittish popular opinion will always exist in times where discomfort reigns and its end is not clearly visible. That's how humans are, particularly when they have been led to believe that good times are a birthright.
It annoys me a little to observe how quickly some in the party are inclined to push the panic button and in so doing, simplify the legislative agenda by stripping it of everything except the most pressing matters. What has been floated as a reason why Democrats lost the Governor's mansion in both New Jersey and Virginia is Obama's strategy of pushing a wide variety of transformational reforms too soon. I suppose focusing on jobs, jobs, jobs might have placated a few independents and moderates, but what I never forget is that our complex economic system usually turns itself around with time and that even with good legislation, it still takes months, if not years to arrive at recovery. Recessions do not build to a rousingly demoralizing crescendo overnight and recovery is an incremental matter that cannot be punctuated by fanfare and pomp. We still have a chance to put in place progressive reforms that this country has needed for decades and the sad reality is that it may not be possible to accomplish them without shedding a few seats in the process. I agree it's not fair, but Progressivism in the United States has an ignoble history of being totally disregarded altogether when substantial majorities do not exist to facilitate its implementation.
To make a historical comparison, I thought I might examine the political currents and results of the 1934 election cycle. The first mid-Congressional election after the New Deal resulted, quite surprisingly, in a net gain of nine Democratic seats in the House and an additional six seats in the Senate. Noted moderate Republican Senator Robert M. La Follette of Wisconsin left the Republican Party to join the Progressive Party. This is certainly an interesting parallel to our times, when moderate Republicans are increasingly told by party brass that their services are not wanted. One wonders if the trend at play now whereby the GOP exists almost exclusively of its grassroots conservative base will be persist long enough that it encourages more moderates in the party to form their own party or to join forces with Democrats. Returning to 1934, one can observe that the Democratic party actually picked up seats in both chambers. Even more incredibly, this transpired after putting into place a swath of measures designed to drag the nation out of the Great Depression.
The 1934 elections can be seen as a referendum on New Deal policies. While conservatives and people among the middle class who did not bear the brunt of the depression saw New Deal programs as radical, ordinary people overwhelmingly voting in this election cycle to continue implementation of Roosevelt's agenda.
Still, considering only a small sliver of the historical record provides an incomplete rendering of the truth and weakens one's overall point. Though the first part of the New Deal was a success, it did contain one disquieting bump in the road, the Recession of 1937-1938, also dubbed the "Roosevelt Recession" by opponents.
By the spring of 1937, economic indicators had regained the production, profits, and wage levels of 1929, except for unemployment, which remained high, although it was considerably lower than the 25% unemployment rate seen in 1933. In June 1937 some of Roosevelt's advisors urged spending cuts to balance the budget. WPA rolls were drastically cut and PWA projects were slowed to a standstill. The American economy took a sharp downturn in mid-1937, lasting for 13 months through most of 1938. Industrial production declined almost 30 per cent and production of durable goods fell even faster.
FDR's style of governance vacillated between a desire for sweeping social reform on one hand and an unyielding sense of strict fiscal conservatism on the other. Here, evidence that balancing the budget and focusing too heavily upon decreasing deficit spending proved disastrous. Today's Republican Party continues to push fiscal discipline and against what it calls "out-of-control: government spending when such measures might worsen an economy slowly but surely headed back to health.
Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938. Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels. Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors, hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production.
Our grandparents and parents dealt with 10% plus unemployment for years, not months, and shouldered the burden with a minimum of griping. That any party out of power would appeal to the dual forces of impatience and entitlement does not surprise me. That's an easy strategy that requires no competence or particular political skill. Furthermore, examining these statistics puts things in perspective, particularly our over-reliance at unemployment numbers as though they alone are far more important and revealing than any other metric. In my own life, I myself have been out of work for a long time and I'd be lying to you if I didn't find it a constant source of discouragement and frustration. With far more people seeking employment than jobs available to employ everyone looking, even getting a single interview is a rarity for myself and many others. Yet, as I stated earlier in this post, I know that it will take a long time for us to reach the status quo antebellum. The reality, in my estimation, is that it may be a full eighteen months before there is any indication that unemployment is even remotely back to normality.
Regarding the mini-recession within a depression of 1937-1938, which is the basis upon the infamous double dip recession that purveyors of doom cite in hushed tones in newspaper columns and cable news network interviews, it found its resolution relatively quickly.
The Roosevelt Administration reacted by launching a rhetorical campaign against monopoly power, which was cast as the cause of the depression, and appointing Thurman Arnold in the anti-trust division of the U.S. Department of Justice to act, but Arnold was not effective. In February 1938, Congress passed a new AAA bill which authorized crop loans, crop insurance against natural disasters, and large subsidies to farmers who cut back production. On April 2, 1938, Roosevelt sent a new large-scale spending program to Congress, and received $3.75 billion which was split between PWA, WPA, and various relief agencies. Other appropriations raised the total to $5 billion in the spring of 1938. The economy then recovered.
Business-oriented observers explained the recession and recovery in very different terms from the Keynesians. They argued that the New Deal had been hostile to business expansion in 1935–37 and had encouraged massive strikes.
Although the American economy recovered in mid-1938, employment did not regain the 1937 level until the war began in late 1941.
Of course, most know that the major reason the Depression ended was the beginning of World War II and the corresponding demand for raw materials and industrial products of warfare. Unlike then, we can't expect salvation in the form of a foreign war, or for that matter, an entanglement among highly advanced nations to rescue us from economic misery. Some have assumed unilateral war and imperialism would kick start a faltering economy, only to find that it further drained the country's coffers in the process. Benefiting from someone else's war was what made us both a world power and a massive economic force in the first place, and now we've discovered that it can be lonely at the top. If I fault politicians and average citizens for anything, it is in their refusal or inability to realize that though this country has been number one for the past several decades, we still halfway think we're some glorious underdog with a chip on our shoulders. Growing into a more accurate idea of who we are is the greatest challenge facing us, since that will dictate the country we seek to be. We are no longer the nation we mythologize.