The Intercollegiate Studies Institute is a local Delaware gem with national and international reach. You can find more about ISI here at its website. It publishes a lot of conservative research. In the most recent issue of The Intercollegiate Review there is a great essay on the depression of 1920-21. You know, a depression like the Great Depression — only not great because the government’s response didn’t add to the economic problems. The government’s response allowed the economic problems to self-correct rapidly leading to the 1920’s boom. Some detail, in 1920, unemployment had reached nearly 12% (increasing by 4% that year). GNP had declined 17% (versus our current decline of ~5%). After the depression, unemployment declined by 1923 to 2.4% (versus today where there is lots of reporting about the “new normal” of unemployment only reaching 6% for years to come).
The essay quotes from President Harding’s nomination acceptance speech from the Republican Party’s 1920 convention, and the quote speaks as accurately today as it did then:
We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.
Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn’t been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.
Harding’s recipe for success was simple — reduce spending and work hard — both for the government and for the individual. Average Americans get this and are doing this. The government does not get this and is damaging our future. I disagreed with George Bush when his recipe for fighting in Afghanistan and Iraq was to “go shopping”. I disagreed with Paulson and the TARP. I certainly disagree with President Obama’s recipe for too much spending — spend 4 times more. The answer was simple in 1921, and it is still simple today.
What a gem Charlie! I hadn’t read up on who Warren G. Harding was or what he did during his years. It’s refreshing to see that during some of the hardest times our nation ever faced there was a perfect example of our Founders Values being displayed. Fiscal responsibility in the face of economic crisis is certainly necessary.
You know what, I wouldn’t argue in the slightest if the money being spent was going to things like infrastructure and job stimulation. I’m in favor of public works programs to jumpstart the economy. Some people say there’s nothing left to build but I say different.
Our smaller cities (like Wilmington) ought to be looking into alternative and higher tech transportation systems (like a Monorail/Highspeed rail instead of a subway), community revitalization programs and road repair (we’ve got PLENTY to keep them busy). These won’t be cheap programs but they’ll start the job creation process, they’re sustainable programs and they serve a purpose.
Instead our money is going to fund “starving artists” at the National Endowment for the Arts and to ACORN (don’t be fooled by the defunding which ends November 1st). The giveaways to liberal leaning non-profits and union buddies is the problem. There are few if any jobs created or saved with the billions going in this direction. That is why this stimulus is failing.
As any good business leader knows you have to spend money “WISELY” to make money. People often forget the quoted word when they use that phrase. If you dump a few million bucks into something that doesn’t help your business grow, you’ve simply wasted your money. The Federal Governments “business” is protecting America and assisting the citizens in prospering. Sending money to the “farm teams” of ACORN, SEIU and the NEA is throwing money away.
I wonder how President Obama could translate the simple Harding message in today’s complex world?
He was not confronted with collapse of the financial system. Harding was not facing bankruptcy among the nation’s leading industrial manufacturers and financial institutions. There was no home foreclosure crisis. Harding did not inherit debt and deficit. We did not import oil. Our stores were not stocked with Chinese goods. We were not a debtor nation. Women did not compete for jobs in the commercial workplace. Blacks were excluded from mainstream commerce. There was no Center For Disease Control. No FCC managing public airways. No food inspections. We had no FAA, no airplanes, no highway system. Lots of horse manure in the street, chicken pox, child labor, polio, TB.
I still like Lincoln “The dogmas of the quiet past, are inadequate to the stormy present”. There is not much about our past that is relevant to the road ahead.
Ahhh yes. The world was a much simpler place back then. Too simple for centralized planning to work. But now, in the great complicated world, only centralized planning will work.
“Contrariwise,” continued Tweedledee, “if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.” (Louis Carroll Through the Looking-Glass)
I guess that means you don’t think the world is complicated?
Ever think we would have to find money for DNA analysts not to mention all those fancy danged expensive computer machines? Whatever happened to simple justice? Now we need to look into a person DNA? Got any ideas on how we should manage all those geosynchronous satellites powering the global positioning system with some simple decentralized organization? Ain’t nothing simple about about today, except the need for big complex institutions to keep things humming along.
Central planning is the holy grail of most successful mega organizations like Wallmart, MacDonalds’s, Microsoft, Intel, and DuPont. That’s why they have CEO’s.
The Federal Government by definition is central. Proposing it be something less is not logical. We do live in the “computer age”. That means we can efficiently manage on a previously unimaginable scale with far better results.
Some tasks are intuitively best accomplished when they are both public and central. President Harding knew as much. He is cited as first to propose central regulation of radio and communication cables.
Hereio-phobia is the fear of deviating from established dogma. We have to overcome that. Look, up in the sky, it’s not Socialism, it’s not Capitalism, it’s Americanism. A simple central single payer health insurance system will do wonders for us. Next thing you the Red Chinese well be putting our stuff in their Walmarts.
Ahhh, the “Central Planning is good” argument. Fortunately, we have the 2009 Nobel prize for Economics that shows the fallacy of the corporate analogy.
Oliver Williiamson of UC-Berkeley won 1/2 for the prize for his research on why some decisions are left to competitive markets and others are internalized into corporations. The basic reason is cost. Standard economic theory posits that hierarchical decision making is less efficient than markets. If this is always true, then why have corporations at all? Mr. Williamson won his prize by showing that under the right conditions, it does cost less for a corporation to make decisions through rules and authority versus competitive markets.
For example, when an electricity generator can decide among many nearby coal mines, it tends to use a competitive market. However, if there is only 1 nearby mine, it will buy the mine. Similarly, an auto manufacturer might choose to make its own door handle versus bid it out to multiple suppliers because of the overall cost to the firm of integration versus pure purchase cost (and W. Edward Deming’s use a statistical process control was a major driving force in reducing the costs of a single supplier and/or internal integration).
So, your use of corporate decision making versus government central planning is really a false analogy that isn’t backed by any data other than your opinion.
I think that the term for your mistake might be “hereio-phobia”.
Charlie, you are mistakenly offering economic theory as some sort of scientific fact. Do I have to Google a few economist jokes? The fact remains central planning is the method by which all mega organizations operate. They differ only by degree.
No I’m not making a “central planning is good” argument. Obviously central planning is indeed good. Ask Starbucks Home Depot or the US Marines. Central planning is not just good, it is the coin of the realm in the global economy. I’m mainly making the “central planning is reality” argument.
The Federal government is by purpose our “central government”. There is nothing inherently wrong with “central” or “planning” or “central planning”. What’s to disagree with?
It seems the aversion to central planning stems from anti-government sentiment and that all is sort of a hangover from fighting Communism during the Cold War. Eventually we will move on from that.
Maybe you were thinking of some Soviet five year central planning thing that went sour in the 1970’s? Or something Mao did in China? America does central planning quite well.
[…] he must consider variations of historical success. In the 1921, we were in a depression under Harding, most people never heard of it, it only lasted a year. Why? Because he cut spending, he fail… Obama on the other hand, is taking the lead from a fellow progressive, FDR, massive government […]
And here we are 2 years later after following Obama’s ideals, deeper in debt, still spending, sliding into a double dip, with him still blaming Bush. Pathetic..
[…] President Warren Harding struck tones of a virtuous government living within its means in his acceptance speech for the Republican nomination. He indicated that government needed to axe spending, even during a […]
[…] President Warren Harding struck tones of a virtuous government living within its means in his acceptance speech for the Republican nomination. He indicated that government needed to axe spending, even during a […]