There have been many instances where a child is curious about a hot stove and touches it. In pain, the child learns immediately to never touch the hot stove again.
As college students, we (should) learn that procrastinating is never a great idea. We should constantly be learning from mistakes we’ve made in the past, and move on with our lives.
I believe we must also learn from past mistakes and refrain from making the same mistakes pertaining to our economy.
There was a depression in 1920-1921 that isn’t mentioned in history very much. Unemployment rates went up, and the economy was not looking too good. But when I think of the Roaring 20s, I think of economic prosperity and low unemployment rates.
Something had to have happened to transition the economy from a depression to instant stability. The answer lies with the policies and decisions of Former President Harding.
Realizing that there was a depression, he simply limited government spending and cut taxes. Author Thomas E. Woods Jr. writes in an article that by 1922, “unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.”
The Great Depression happened under Hoover’s presidency. According to the Bureau of Labor Statistics, unemployment was at 8.9 percent at the end of 1930. Hoover began laying the foundation for Roosevelt’s New Deal by increasing government spending and intervention.
The New Deal was a massive government spending mechanism put in place to fix the effects of the Great Depression. Roosevelt believed that increased spending was the best way to stabilize the economy.
Instead, the unemployment rate was at a staggering 24.9 percent by the end of 1933. Americans rioted in the streets because a lot of people couldn’t even afford food. It became such a problem for police that tear gas was even used in some instances.
The New Deal and actions of President Roosevelt have much relevance to today. I believe that President Obama’s stimulus packages are precisely what the New Deal was. History is the best way to know what does and doesn’t work. Massive government spending did not, and will not, help the economy.
Last Wednesday, President Obama gave a speech to the city of Cleveland about the shape of our economy. After reading his text, I was shocked at how many distortions were in it. One of his distortions was that “job growth between 2000 and 2008 was slower than it had been in any economic expansion since World War II.”
Just like Harding, Bush cut taxes and didn’t increase government spending as much as President Obama has. The unemployment rate during this time never went above 7 percent. Jobs were actually being created.
With increased government spending, there is less money for the private sector to spend. Consequently, this increases the prices of movies, food at the underground, or even buying underwear. We need our government officials to stop touching the stove!