(Editorial) In his first Inaugural Address, President Franklin D. Roosevelt (D) remarked that the money changers had “fled from their high seats in the temple of our civilization”. Shortly thereafter, New Dealers began to establish a new regime which would endure through the early 1970s. This regime proved remarkably stable, and it delivered prosperity to so many on a scale few in 1933 would have believed possible. This regime was overturned during the late 1970s through the ’90s. What followed was economic disaster, similar to what had preceded the New Deal regime – what most would have predicted for the US economy prior to the so-called golden economic age in the post-war decades.
The recession of 2008-9 produced a similar flight from the temple, only this flight has been followed by a restoration of the money changers without meaningful reforms. The temple is rather left corrupted and decaying, so to speak. It need not have been this way, but unfortunately political leadership proved unequal to the task of reconstructing a more stable and prosperous regime.
Complete and utter failure by the private sector to allocate resources in a manner consistent with stable, equitable growth went untreated in the immediate aftermath of the economy’s implosion in 2007-8. This was the opportune time to accurately diagnose the existing regime’s failings, and to prescribe helpful changes. A brief moment when change was entirely possible – the private sector had clearly crashed the economy – passed, and we will not see such a potent moment again until the next economic crisis.
The next crisis might not prove as manageable for the now very much weakened regime, however. With a far from equitable or strong recovery from the recession taking hold now, how far do elites expect workers to let themselves fall in the next economic downturn? One very perceptive observation about President Franklin D. Roosevelt (FDR) is that he saved capitalism – in spite of itself. The emphasis should be on the second part, for during FDR’s presidency there was a sizable and wealthy minority that never acquiesced to any of his reforms and policies.
From the distance of many decades, it is safe to say that democracy proved equal to the task of taming markets in the 1930s. It is a very unsure thing if future generations will be able to say the same about our democracy. From outright corruption of politics by corporate money, to abdication of responsibility by policymakers to conduct politics in a pragmatic manner that eschews ideology, our democracy is proving decidedly unequal to the task of taming market excesses.
There can be do denying today that the current regime of unrestricted markets, in which all people are assumed to be completely rational, such that markets are everywhere and always efficient, has failed. New ideas are necessary, but today’s leaders seem incapable of either recognizing this fact, or identifying what those new ideas should be. A quick study of the depression in the 1930s and the resulting New Deal might pay large dividends to any well-meaning policymaker who is confused about the private sector’s failure to deliver stable, equitable economic growth.