He missed the main point of his own argument! When I started reading a recent Paul Krugman Op-Ed in New York Times…‘1938 in 2010’…I had great hopes that his historical points about the Great Depression would bring much-needed clarity to our current policy dilemmas, particularly those concerning short-term deficits and long-term debt. And…he came so close! It does appear that the economic and political climate in 2010 is very similar to that of 1938…the similarities are striking. But…he failed to completely analyze the role of World War Two (WW2) in the recovery from the Great Depression. Recovery wasn’t the outcome of economic or political decisions…it resulted from the total focus of the American people on a clear and tangible goal…the winning of WW2. Similarly, our recovery from the Great Recession of 2008 will continue to elude us, no matter how much political spin we apply…until we identify and decide on our next, great national ambition.
It took WW2 to get us out of the Great Depression. Krugman is right…the political climate in 1938 proved toxic for the New Deal of President Franklin D. Roosevelt. Faint signs of recovery were evident…so politicians and the public turned away from the policies that would have continued to bring a slow, steady recovery. The 1938 mid-term elections focused on reducing the deficit and cutting taxes. (Sound familiar?) Sure enough…the 1938 election was a disaster for Democrats, reversing the actions that had started to turn the economy around. Krugman correctly proposes that WW2 intervened in American economic history to bring a sustained burst of deficit-financed, government spending on a massive scale. And…he’s correct in seeing this surge in full-employment as the primary cause of not only economic recovery but also an unprecedented age of prosperity. What he doesn’t include, however, is the total focus of the whole of American society on the war effort. Americans were in total agreement…the war must be won…and they were willing to do whatever it took to make that goal a reality.
A lot changed between 1938 and 1942…a nation decided it had a strong, common purpose. In 1938, there wasn’t a pervasive, shared goal in America…normal political differences made consensus impossible. Millions of people were trapped in misery…and politicians shared a wide range of strategies to lift people from their suffering. But…in 1942, the public was completely on the same page…and previous political limits were irrelevant. Of course, the economic limits had vanished as well. While economic recovery was no longer the primary concern, it was an absolute certainty. But…it was the total focus of the American people on a common purpose that really made the difference…not a partisan decision on a stimulus package.
All the economic and political pundits these days are trying to figure out why businesses aren’t hiring again. Duh! What direction will businesses need to pursue? Well…they aren’t sure, so they’re still waiting for some kind of trustworthy indication. What’s pretty certain is this…we won’t be simply replicating the most recent economic model of personal consumption with no personal responsibility. The next national direction hasn’t emerged yet…so we’re not yet convinced that we know how to best apply our ingenuity, passion and resources. Conservative voices in 1938 resonated with people then…don’t go into debt to invest without a clear view of your objects. Don’t wander aimlessly in the economic wilderness…wait for a purpose and a direction. Conservative voices in 2010 are sharing the same message: don’t wander around in public policy…wait for more certainty about the investment opportunities that will shape the economy of the next 50 years.
So…here’s the challenge as I see it: to discover through dialogue and deliberation what our next, great national ambition can be…for the betterment of us all. We dare not wait for another global catastrophe like WW2 to redirect our attention and investment. We need to ask…and question…and inquire…and discuss what we should to be doing as a fitting investment with what’s left of our inheritance. The key is not massive government spending for its own sake…the key is highly-focused spending by government, focused investment by corporations, and focused partnerships with citizens in local communities across our country.
Our task…we who believe in deliberative discernment and decision-making…is to use our existing skills and methods in identifying the foundational values on which sound and sustainable public policy can be built. This process was started in the AmericaSpeaks event last June…but now it’s time to dig deeper to discover a new, 21st century eagerness and passion for life in a newly complex world. This task will not happen by itself…we need to be pro-active and we need to start now.