Is history repeating itself again?

In doing research for a book about a member of the Greatest Generation, I’ve found some fascinating parallels between what was happening to America’s economy in the late 1930s and now.  As a result, I have come to the conclusion that we may well be doing the same thing all over again and, yet again, expecting a different outcome.

According to Amity Shlaes’s 2007 book, The Forgotten Man, then, as now, “[t]he new Fed law had created stricter reserve requirements for banks. Forced to keep more cash, banks cut back on loans. ... By the month of [Andrew] Mellon’s death [August, 1937], more than a billion dollars had thus been extinguished.”  Under current Treasury secretary Yellen, much the same thing is happening now.

Then, too, there were payments into the new (1935) Social Security program, “also taking money out of circulation.”  In the same year, the Wagner Act, allowing workers in the private sector to vote for their own collective bargaining units, also radically impacted the cost to business employers nationwide.  Shlaes notes that “in the first six months of 1937 alone, wages rose 11 percent. In the steel industry the rate was higher, 33 percent from October to May[.] ... One did not have to be an economist to do the math: when wages moved ahead, profits narrowed and shareholders lost.”  Sure sounds a lot like an Obama recovery to me.

As Hillary Clinton and Bernie Sanders continue to push for increasing the minimum wage in both the private and public sectors, all this seems familiar.  The only things missing in the 1930s scenario are Obamacare and Bernie Sanders’s plans to replace it with Medicare and give everybody free college tuition.

Then, from 1933 to 1939, there was the accelerating threat from Hitler’s and Mussolini’s invasions in Europe and North Africa and Japan’s aggressive moves in the Pacific.  Today’s Islamic terrorism – so far – pales in comparison to the global horrors of World War II.

Although he had been secretary of the Navy in the 1920s, throughout his first two terms in office (1933 to 1941), President Roosevelt concentrated exclusively on funding such domestic entitlement programs as subsidies for fallow fields and the Works Progress Administration (WPA) to make sure America’s farmers and labor unions would remain loyal to FDR’s progressive agenda.  This inward focus also appealed to America’s African-American community, who were then avid followers of Father Divine, a determined isolationist.

It is during the months leading up to the election of 1940, however, where we see the most striking parallels between American politics then and now.  Roosevelt was running for an unprecedented third term, just as Hillary Clinton (as has often been noted by some of today’s most imaginative pundits) is running as the surrogate for Obama’s third term.

When Wendell Wilkie won the Republican Party nomination for president in 1940, his acceptance speech expressed a core conservative principle: “I say that we must substitute for the philosophy of distributed scarcity the philosophy of unlimited productivity.  I stand for the restoration of full production and employment by private enterprise in America.”  This is pretty much the same as what Senator Cruz and Governor Kasich have recently been saying.  In speaking of both the United States and Europe, Wilkie also argued that it was “from weakness that people reach for dictators and concentrated government power[.]”

Paradoxically, as it turned out, FDR still had the advantage over Wilkie on the compelling issue of national defense.  “What the Depression had been to the Roosevelt candidacy in 1932,” Shlaes astutely observes, “the war was to the Roosevelt candidacy in 1940[.] ... Though unemployment was heading down now, it was still over one in ten. A war, however, would hand to Roosevelt the thing he had always lacked – a chance, quite literally, to provide jobs to the remaining unemployed.”  Nothing like a war to turn around an economy.

As today’s Democrats would probably claim, no one is better prepared to conduct America’s next big war than former secretary of state Hillary Clinton.  Anyway, that’s what they would say, and Obama and Valerie Jarrett would undoubtedly agree.

Who knows? Maybe even Donald Trump will agree. No one ever really knows with that guy.

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