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Wednesday, February 1, 2012

America's Great Depression, Then Versus Now.& Solutions

     Most people acknowledge we are in a recession and many will even say a bad one.  They say history repeats itself.  I see it as being more and more like the Great Depression.  Even the way it is being reacted to.  There have been several cycles in American history.  I hope to show you how the one leading up to the Great Depression happened and I am sure you will be smart enough to figure out where we are headed.
     At the turn of the century the automobile and the airplane revolutionized travel and industry.  It was growing and changing world markets at the start of World War I.  By the end of the war much of American farming was switching to tractors instead of horses and plows.  Suddenly things were changing on the farm.  A tractor put many horses out of business.  The guy who was farming forty acres with a mule could not keep up.  Land prices fell sharply in the late teens and early twenties.  Also demand for saddles, buggies and horses dried up. Some of the saddle and buggy makers adapted and moved into the automotive industry.  However as the demand for horses dried up so did the demand for grain to feed them. Which put more grain on the markets pushing down prices. Suddenly with the increased production from tractors the commodity prices fell off.  The collapse hit the rural areas first.  Rural land prices fell sharply in the early twenties.
     This was all masked by the increase in automobile manufacturing and aviation growth.  As things moved into the twenties people were investing in stocks and all seemed rosy in the cities.  The stock market was growing based on blind optimism and not on the reality of what was happening in the rest of the country. Much like today.  When the market did finally collapse the Hoover administration passed it off as a fluke and did not want to get the government involved in private industry problems.  Much like today.  The fed did not feel the unemployment problem was a government issue.  However as the downturn continued attitudes changed, but it was too little, too late.  From Oct 1929 till May of 1932 unemployment rose to over 25 % and in some big cities and certain groups like minorities the rate hit over 50%.  With national tax revenues falling almost 40% governments both state and national were having difficulties.  Much like today.  Cities like Detroit that had been boom towns turned in to poverty stricken areas when auto sales dried up. Much like today.
     Remember at the same time all this was happening the revenue from liquor taxes was also drying up.  All the people who had worked in alcohol related industries were put out of work.  Sort of like the automotive industries today. Much like today. Bootlegging became an underground empire for people who wanted to party and those who needed jobs.  Much like drugs today which is where criminal money went when prohibition was repealed.  The attempt to legislate morality was a big part of what tipped the nation into depression.  It failed and supposedly in some cities more people were being arrested for public intoxication than had been the case before prohibition.  The program was a failure just like the drug war.  Eventually they got smart and repealed prohibition and taxed those who wanted to party.  Supposedly at the turn of the century alcohol taxes had made up 70% of the Feds income.  Remember that was before the income tax. Which was passed so supposedly the government could get by without alcohol taxes. Alcohol taxes started as a revenue making system during the Civil War and by 1864 supposedly 30% of government income was from alcohol taxes.  The difference now is that they are not taxing drugs.  They are spending billions and billions to fight a war they will never win.  The irony is when prohibition ended the alcohol tax was restored and the government kept collecting income taxes.  So the only winner was the government.
     With the incoming of the Roosevelt Administration an attitude change took place and the government got involved.  With people starving all over the country the government adopted a plan to raise prices by destroying excess crops and products.  They slaughtered cattle, dumped milk and burnt grain in an attempt to push up prices. All while Americans were starving all over the country. With all that failing they finally started some works projects like the Hoover Dam and the TVA  plan to provide electricity to rural areas.  Roads, bridges, damns, memorials and roads were built.  Youth were sent to plant trees and reforest areas in national parks.  These programs seemed to help as jobs and work started picking up some.  The government decided in early 1937 to scale back government spending and triggered another dip in employment.   The situation never really recovered till World War II started and America started building things for the countries already at war.
     So how is this like now. Everyone knows about the housing crisis.  The problem is it keeps dragging on.  It was a series of things starting back in the late nineties that led to the 08 Crash.  There were the fuel shortages not to mention the Internet Bubble.  Just as computers were becoming popular they put companies out of business like typewriter and carbon copy manufacturers to name a few.  Yes many jobs went overseas, but a big part of the collapse was caused by innovations in manufacturing.  Computerized inventory and shipping not to mention robotic machines replacing workers on assembly lines.  Many of the jobs that left will never come back.  They do not exist anymore. They were eliminated by the increased productivity of robotics and computers.  As many of the long term unemployed slide off of the unemployment rolls their houses will go into the abyss of the housing market.  The government is doing everything but creating jobs.  They do not want social welfare programs.
     Creating a program to rebuild infrastructure and put people to work is not a social welfare program.  It is creating a program that should have been in place for the last two hundred years.  When the Founding Fathers created the government one of the first things they did was establish infrastructure programs building the Capitol and the White House.  They did not hesitate to spend on America.  When the British burnt the Capitol and the White House in the War of 1812 they rebuilt them.  They spent more money to keep up the infrastructure they had created.  Investing in America is not social welfare, it creates jobs that pay taxes to keep the government growing.  Which is not what the food stamp and unemployment programs do.  They just dig the hole deeper and deeper.
     If we are not in a full blown depression I can guarantee one thing.  If Congress does not get off its ass and do something.  America will not survive four more years of anybody.  It will not matter if it is Obama,  Gingrich or Romney.  None of them are proposing programs to get America working.  My blog of 4/16/11 offers Seven Radical Solutions to Americas problems.  They would all help get America moving in the right direction.  They also can all be done with existing technology. If something is not done soon there will be no saving the situation.  Yes taxes need to be raised and spending needs to be cut, but if America does not start working nothing will help.  The debt ceiling is a moot point if Americans are working.  It can be turned around.  If it continues the way it is, no amount of cuts will save the situation.
    Here is one simple solution which would help and could be done by private enterprise not government Power plants do not maximize their energy usage.   If they built greenhouses in proximity of their facilities it would create jobs. The heat that goes up their stacks could heat steam to heat green houses. They would not have to use more energy, they would use what they do  use better.  Tomatoes would not have to be hauled from California to New York.  Give the Energy Plants a major break on taxes for investing in America.  Private enterprise can run it.  It moves America toward energy independence.  It puts people to work and all the government does is the paperwork to improve and promote it.  There are tons of solutions and somebody better convince Congress to start pushing some of them.  Obama needs to invite all the energy and power company operators to Washington and lay out the plan for them.  Ask them what help they need to get it moving and start it moving.  It could create hundreds of thousands of jobs almost overnight, but it takes someone or a bunch of someones sending this to Washington and the White House  Saying get off your ass and do something besides lining your pockets at taxpayers expense.
     Increased productivity means increased wealth for the rich.  It is time for them to get off their asses and do something for America besides their trickle down economics.  Which is nothing more the the rich, peeing on the poor in America.  If the poor did not work for them and purchase their goods.  They would not have their wealth.  There are not enough rich people for them to keep each other rich.
     If you agree with me get off your ass and kick this to your Congress, Your President, Your local Power
Company.  Stand up and be part of the solution.  In the Army we always said, "You are either part of the Solution, or part of the Problem." Which are you?  Bitching and doing nothing makes you part of the problem.  Get off your ass and make a difference.  Will this make a difference.  Don't know but I am putting it out there.  I can send it to my politicians but if hundreds or thousands send it, Maybe they will get the message.  It worked with Bank of America.  There is power in making your voice heard especially in unison.

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