More History Woes

There were some excellent back and forth pieces on the revisionist history displayed in the Washington Post this week. The opening salvo of the piece, regarding Bush’s State of the Union speech was fired by Tom Shales of the Post.

Whether George W. Bush is, at best, the worst president since Herbert Hoover -- as a seemingly sizable number of Americans appear to believe -- he acquitted himself fairly well and came off as basically competent when he delivered his fifth State of the Union speech last night.

Gary Hall and Tim Graham over at Newsbusters did a really fine job disassembling this premise. How quickly we forget or choose to remain ignorant of even our most recent history. It takes little or no effort to find qualified economists to dispute Shales’ statement, but there it is right there in the Washington Post. This is not the Tehran Times or the pages of Pravda. This is the paper most commonly published in our nation’s capitol. And yet, the historical retelling of the previous decade is ridiculously skewed.

It’s easily argued, I think, that most of us paying attention to politics today lived through the 90’s and the early part of this century. I would think it is just as easily argued that we remember the dot com bust in 2000. I do. I was employed in the tech industry at the time. All the promise of the last few years seemed like so much vapor. We wondered just how we’d been duped and spent the next few years finding out just how badly we’d been had. The tech sector exploded, rightly so, with the innovations and “peace dividend” forged in and as a result of the last few years of the Cold War. The economy would’ve done well regardless and our tech sector certainly blossomed as a potential new manufacturing base for the country. Speculative ventures and over capitalization of anything with a .com after its name should’ve warned us, but we didn’t pay attention. Many thought we’d all get rich, which probably is what the investors in 1929 thought as well. The market then burst as it readjusted to a more realistic and sustainable level. This was just a matter of time.

By 2001, the recession was well under way and threatening to last the better part of the decade. The whole tech industry shook out badly and several peripheral industries like energy trading proved to be just as unviable. A lack of responsibility and overwatch by the government during the mid to late 90’s, most the fault of the executive branch at the time, caused rampant fraud and corporate theft to further ruin the economy.

Miraculously, after taxes were cut, the economy showed small signs of stabilizing, then started to grow again at quite an accelerated rate. It has mostly stayed in that vein ever since. In addition, those who committed the corporate fraud of the 90’s are slowly being brought to trial for their crimes. Why don’t we hear this drumbeat in the papers or on the news? Because a Republican is in office, that’s why. The history books may show it in forty or fifty years, but I wouldn’t count on seeing it in the Washington Post anytime soon. Should a Democrat get back in power in 2008, look for the economy to miraculously improve in the papers, homelessness to vanish as it did after the first day of the Clinton administration and, some Aquarian age where we all wear hippie vests, sing kumbaya and trash Republicans. So perhaps the Hoover comparison is just partisan bashing over willful ignorance? Somewhat, yes.

I’ll leave you with a much better analysis than mine, Dean Baker’s of the Center for Economic and Policy Research, courtesy of Gary Hall. Bear in mind, this man is hardly a fan of the current president.

On March 16, 2000, Mr Baker noted:

"The main feature of the 'new economy' is a stock market bubble of unprecedented magnitude. When the bubble bursts, the new economy will just be a bad memory. The inflated stock market has created enormous distortions in the economy, the ramifications of which will only be apparent when stock prices return to more normal levels. If the market falls 50 percent and loses $10 trillion of wealth in a correction, it's going to be very hard to avoid a recession. A lot of these dot.coms are worth a corner lemonade stand and are putting real companies out of business. What are you going to tell people who lose much of their retirement savings in their 401K when there's a downturn?" Today, Baker said: "The decline in the stock market was an entirely predictable event for anyone familiar with basic arithmetic, even if the exact timing could not be known in advance. The nation's political leaders chose to ignore the stock market bubble and instead focused their attention on distant and relatively minor problems like potential shortfalls in the Social Security trust fund in 30 or 40 years or the reappearance of budget deficits in a decade or two. As a result, millions of families have seen their dreams of a secure retirement or their children's college education vanish with the stock market bubble. The level of negligence of the nation's political leaders in ignoring the stock bubble exceeds anything since the days of Herbert Hoover."

So…I guess that sort of puts paid to the whole worst administration since Hoover. And let’s not forget kids. Hoover in dealing with a similar recession chose to go protectionist and tried to institute fledgling policies that FDR’s staff adopted, refined, and turned into the mega-socialist New Deal. One could argue that programs like the steel tariffs and Medicare Prescription Drug Benefit are a step in that direction, but Bush is not attempting full-scale economic control as Hoover did. Hoover panicked and tried to take charge, ignoring the lessons of Calvin Coolidge who let the market work itself out. Our market may be a bit more complex these days, but in general it still works itself out, because, surprisingly enough, capitalism works. Bush doesn’t really fit the Hoover mold at all, and if that’s a comparison the Left wants to stick with, I’d hate to see the FDR clone they’re bringing to the party in ’08. God help us if that’s the case.