As we head to the polls to elect our president, members of Congress and decide countless other decisions, history will be in the back of our minds as we check off the ballot boxes. Regardless of who is elected, this election will parallel some period in our country’s history, and our decision will illustrate which period we want to see again.
In the 1920s, the United States saw an economic boom. The country exploded with wealth and consumption, leading to the acquisition of huge fortunes for many individuals. But as we all know, the ride didn’t last for long. As the stock market crashed in 1929, the world fell into the worst economic depression in human history. This wasn’t an accident, and perhaps could have even been prevented. Rampant speculation and easy credit led people to gamble and over-invest, while the government had little regulation in place and virtually no capital requirements when it came to financial dealings within banks. The bottom fell out, and the whole system collapsed. The same thing happened with the housing market in 2008, and we’ve been dealing with the repercussions ever since.
In the 40 or so years following the Great Depression, the federal government introduced tight economic restrictions on banks, industry and individuals. Economically, the United States was the most successful nation in the world during those years, benefiting from our own ingenuity and government-imposed fiscal responsibility. We may not have seen a boom like the 1920s, but economically speaking, life was pretty good in the 50s, 60s and early 70s.
As government control of major industries waned in the late 70s, the country began to see unemployment and energy costs rise. Inflation hit the economy hard, leading to stagflation — a combination of inflation and high rates of unemployment never before thought to be possible. Then, in stepped President Ronald Reagan.
Reagan proposed slashing taxes, deregulating businesses and letting the free market take over again. Even the man who would eventually become his running mate, George H.W. Bush, called his policies “voodoo economics” when he ran against Reagan in the 1980 Republican primaries. Bush was right.
As the economy boomed in the 80s — just as it did in the 20s — a time bomb began to tick. There were plenty of warning signs: a stock market crash in 1987, an early-90s recession and another crash in 2000 followed by a recession. Then, the explosion: the housing meltdown of 2008 and the worst economic situation since the Depression.
For almost 30 years our country went back to the economic prosperity of the 1920s. If Republican presidential nominee Mitt Romney is elected and his economic policies are put into place, we will be setting ourselves up for another visit from our ugly past.
I’m not saying Obama will be the next Franklin D. Roosevelt — though I wish he would. Heck, I even wish Mitt Romney would be. Frankly, we need another president to tame our country’s economy, as FDR did in the 1930s. The White House needs to stop banks from betting vast amounts and providing their workers with an unlivable wage. The government can’t allow people to take out expensive mortgages they’ll almost certainly default on. These situations could lead us to a double dip recession and destroy plenty of lives, squandering the hard work of millions of people trying to claw their way out.
I’m not saying Obama will do all of these things. What I’m saying, instead, is that Romney certainly won’t. The Romney-Ryan economic plan is the same one Republicans have been pushing since the Reagan era. They want less regulation, less government in all aspects of the economy and lower taxes — meaning less money to fund the necessary agencies to regulate businesses and individuals.
More government, I’ll admit, isn’t always the answer. Sometimes, regulation and over-taxation stifle growth and prevent innovation. I want to be clear that this isn’t an attack on capitalism or the free market — our freedom to develop business and technology is what makes our economy run better and more efficiently than any other in the history of the world. Government regulation will mean that the booms from the 20s and the 80s will be essentially unachievable. But what we will get in return is stability: fewer recessions that are less severe, a more even spread of wealth and a stronger middle class. A Romney economy may produce a bigger boom, but it won’t last. When it runs out, history will repeat itself, and we’ll be right back where we started.
James Brennan can be reached at jmbthree@umich.edu.