Posts Tagged ‘Hoover’

There is a saying that goes, “Those who do not learn from history are doomed to repeat it.”  Clearly, one of the things that the Tea Party, the Republican Party, and conservative American organizations like the CATO Institute have not learned is that their policies with respect to Social Security are diametrically opposed to the lessons of history. These people conveniently forget the origins of Social Security, the reason it was created, and why it is necessary now and for the foreseeable future. A good history of Social Security can be found at the Social Security website.  In brief, while Republican President Herbert Hoover stood by helplessly at the beginning of the Great Depression, millions of Americans lost their jobs, their savings, their homes – everything. Among the hardest hit were senior citizens. Some of these might have had some sort of private pension, but it went up in smoke along with the rest of the economy.  Many of the seniors lost all of their savings because of the collapse of the stock market and the failure of the banks. It was only when Franklin Roosevelt, a Democrat, became President that our Social Security system was created – and it saved thousands upon thousands of senior citizens from becoming homeless and from facing the very real prospect of starvation.

Now we hear the newest “words of wisdom” from the CATO Institute and other right-wing organizations: Privatize Social Security.  These people are either fools or they take us for fools – or both.  If you would like to know how Social Security would be if it were privatized, just take a look at your 401k account. That is a privatized pension plan – a gift from that “great” Republican economic genius Ronald Reagan – the man who drove us trillions of dollars into debt with his foolhardy concepts of Reaganomics. The problem is that Republicans think he did a great job, even while he drove the U.S. debt to historic levels. Another foolhardy concept that came to fruition during the Reagan era was the 401k Plan. Until then, people had employer pension plans; however, the creation of 401k plans let the employer off the hook i.e. the employer’s responsibility ended when the employee retired – the employee would then obtain his retirement income from his 401k investments. Most employers terminated their retirement plans and their employees were told to invest in the stock market in order to create a nest egg that would fund their privatized pension. So, how’s that working out for everyone out there? All set to retire?

The privatization of Social Security is nothing more than yet another Republican scam designed to force people to invest in the stock market.  If this happened it would create another stock bubble similar to the one created by the 401k investments that began in the Reagan years. And what would happen the next time the stock market gets overheated and crashes, like we have seen just recently? You guessed it. You can kiss your privatized Social Security account goodbye – but don’t worry, the government will save the banks. So that’s good.

It is truly amazing that Republicans, Tea Party people, and conservative “thinkers”, like the CATO dudes are actually advocating this. One can only conclude that they feel pretty smug about their own situation. They have plenty of money themselves so they don’t need Social Security anyway. I’m sure that’s true for all the wealthy Republican bankers – but the poor Tea Party people? What are they thinking? Do they really think they don’t need Social Security?

As for those CATO guys, I wouldn’t buy a used car from any one of them.

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There are a couple of interesting sayings about history. One of them is: “History repeats itself”.  Another one, closely related and penned by George Santayana,  is: “Those who do not learn from history are doomed to repeat it.” The economic history of the United States is now in one such process of repetition as our economy and stock market continue to melt.  Ben Bernanke, a student of the Great Depression and Chairman of the Federal Reserve, has taken significant steps to try to avert a repetition of the Great Depression that followed in the wake of the stock market crash of 1929.  He has already drastically reduced interest rates. With rates now close to zero, this is little more that he can do.  Treasury Secretary Paulson has also advocated taking major economic actions and has quickly acted to save the investment banks (which are now bank holding companies). It seems that he has also learned something from history, although probably not nearly enough.

If there is one person who history has blamed for the depression it is the Republican President at the time, Herbert Hoover.  Hoover is blamed, not so much for what he did, but for what he did not do. He sat back and watched as the stock market slid and the banks collapsed, over a period of about three years.  The stock market fell to an eventual value less than 10% of what it had been at its peak, and over 10,000 banks failed.  Unemployment went up to 25%.  Many businesses ceased to exist.  Unemployed people were standing in bread lines to get food.  Hoover did nothing because he believed that the capital markets were self-regulating and that no-rules capitalism would always correct itself.  Despite his own record in his earlier years of being a government interventionist, when he became President he had come to believe that a hands-off policy would be the best for the economy.  History has shown him to tragically wrong, and by the time he left office the United States was deeply mired in economic chaos and hardship.

We are at a point now in our economic history that, in many ways, is similar to where we were in 1931- our stock market is now about halfway to the bottom. We have an ineffectual, conservative, government, steeped in the Republican, feudalistic philosophy of trickle down economics. Our government believes that if we can just repair the damage to our big businesses and banks then everything will be OK.  George Bush and his wealthy advisers stubbornly cling to their self-serving, failed, economic beliefs and have no effective plan to restart the economy that for the past several years had been surviving only by the economic churning of a real estate Ponzi scheme.

Despite the catastrophic failure of Republican feudalism,  John McCain still deeply believes that the correct order of things is for the United States to have a small, ultra-wealthy class from which all things trickle down to the ordinary man (should I say peasant?).  He is a man who, if elected to be President, would do absolutely nothing to correct the imbalance of our tax system that so greatly, and catastrophically, favors the ultra-rich.  He is fundamentally a stingy man who would cut taxes even more for the rich if he could. He would tax the health care benefits of the middle class, and he would drastically cut Medicare which provides the sole source of medical insurance for many of America’s elderly.  A cold and uncaring man, given more to fighting wars than reaching out and helping people in need, he is certainly the Herbert Hoover of today.

On the other hand, Barack Obama has come forward with a new vision – a New Deal, so to speak. He will spend massive amounts of money to create a high technology effort to produce modern forms of energy that will make us self reliant and in the process he will create millions of new jobs for the middle class.  He will provide better health insurance for all and work toward greatly improving our schools – a critical step if America is ever to succeed in today’s economiy. He will pay for this by revising our tax code so that the wealthy and the ultra-wealthy will once again pay their fair share of taxes. He will eliminate wasteful and corrupt spending, (like the Iraq War), and he will impose new regulations on Wall Street that will prevent the greediest of the greedy from ever again recreating a state of economic deregulation such as we have had, that, in the past, resulted in the stock market crash of 1929 and now has resulted in the stock market crash of 2008. Barack Obama is essentially the Franklin Delano Roosevelt of our day.

It now up to us to choose who shall lead this country out of this economic quagmire.  Will we learn history’s harsh economic lesson or ignore it?  Will we choose the ghost of Herbert Hoover or the spirit of FDR to lead us out of economic ruin?  History has already clearly shown which of these is the right man for the task – all we have to do now is vote.

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