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.