Current recession could be worse
Most of us college kids weren’t alive then, but things were a whole lot worse in the mid to late 1970s. Our nation was just a few years removed from the Vietnam War, arguably the first war we ever lost. Our president had recently resigned due to the Watergate scandal. Additionally, there were long lines at the gas pump caused by a shortage of gas due to the Arab oil embargo. The Soviet Union was invading Afghanistan in an attempt to become an imperialist power. Economically it was the worst as unemployment was at 11.3 percent, interest rates were at 21 percent and inflation was a ridiculously high 13.5 percent. For the first time in our nation’s history we were facing the economic paradox of stagflation, which is when inflation and economic stagnation are occurring simultaneously.
If you consider our current economic numbers with unemployment at just 8.1 percent, and inflation at just .03 percent as of January of this year, the late 1970s certainly have us beat in the crisis department.
By the late 1980s, America was wrapping up the Cold War with the Soviet Union. This signified the first time a super power was defeated without engaging directly in a battle. Our economy in the late 1980s was so good that some people were complaining that it had become “a decade of greed.” In addition, oil was plentiful and cheap, and our top national concern was who shot J.R.?
How did the U.S. go from multiple national crises in the 1970s to a rather peaceful 1980s? The answer is surprisingly simple; the federal government did extremely little. As President, Jimmy Carter avoided war at all costs both with the Soviet Union and with Iran over the hostage crisis. An aggressive confrontation with Iran, which geographically is dangerously close to the Soviet Union could have triggered a hot war between the two Cold War rivals. Emboldening the Soviet Union this way would have likely prolonged their demise by years or potentially changed the outcome of the Cold War entirely. The other great thing Jimmy Carter did was not overspending. If many of the current Congressional Republicans and Democrats were put in Carter’s position then, they probably would have used the opportunity to balloon the federal budget and the deficit. President Carter may have been one of our most liberal Presidents, but his fiscal conservatism and respectful foreign policy cleared the way for President Reagan to end the crises.
How did President Reagan end the crises of the 1970s? He didn’t do much either. He cut government size, saying “government isn’t the solution to the problem, government is the problem.” He also lowered taxes on all working Americans so that instead of investing in the government, people could invest more in themselves and the economy. Most amazingly President Reagan won the Cold War without firing a single bullet. The way he did this was by proposing ridiculous defense enhancements like the Strategic Defense Initiative (nicknamed Star Wars by critics), which would militarize satellites with missiles that could serve both a defensive and offensive purpose. The Soviet Union saw him proposing these militarization plans and they felt they needed to keep up. What they didn’t realize was that a communist economy can never be as productive as a capitalist economy. Their attempts at militarization crippled their economy leading to widespread protest and eventual political reform.
There may have been a few other minor things done by Presidents Carter and Reagan that history will quickly forget. But throughout their years in office the word nationalization was not thrown around, especially in terms of financial institutions and health care. Companies were failing left and right, but neither president ever considered offering them a bailout. Labor unions frequently requested more rights, but Presidents Carter and Reagan had the foresight to see that it doesn’t help the economy to give into labor unions during a recession. Both presidents understood that the economy fluctuates in cycles, it expands and retracts. President Reagan understood the crisis wasn’t caused by a failure in capitalism, but instead because of too much government intervention in what should be a capitalist economy.
Our nation has gone through many economic downturns, including a depression. And they all have one thing in common: as a nation we survived each of them. It wasn’t always easy, but the innate independent spirit of the American people to make our own way without government help has made us the people we are today. This might be the first real crisis of our generation, but our nation has survived much harder crises. And our nation survived those crises on our own, without government bailouts and near trillion dollar pork laden “stimulus” packages. There might be tough times now, but no matter what the statistics say; we will survive. After all, the one thing that statistics don’t measure is the spirit of the American people.
Posted by Colonnade Archives
on Apr 3 2009. Filed under Opinion.
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