Ok, ok, ok, welcome to Economics 101, I will be your professor. I know the economy may be a dry subject but I will try to make it as interesting as possible for such a short attention span audience. Since it is our first day, I figured we would have a little bit of a discussion about the current state of our country’s economy and what principles may be used to improve our situation.
Unless you dwell with the earthworms, you know that it is rough out there. Unemployment has skyrocketed while our country’s debt is steadily rising as well. The global financial crisis has led us to the worst economic performance since the Great Depression so I was wondering if anyone in the class had any ideas about what we could do to help rectify this situation…..anybody?
Senator Charles Schumer, what say you?
“Well, it seems if we are in a situation similar to that of the Great Depression and we came out of that, why shouldn’t we try to do some of the same things that they did back then?”
That is a much more of a coherent and logical thought than I would have expected out of this group. It is obvious you have just been re-elected for 6 years and do not have to worry about a campaign. Well, what FDR implemented during the Great Depression is known as The New Deal.
“Um, what is an FDR?”
Sarah Palin? How did you get in here?
“I have a knack of getting into things that don’t concern me, it’s the Maverick in me.”
Is there something wrong with your left eye? You seem to be winking at me like we are playing a trick on someone. Anyway, I digress. Franklin Delano Roosevelt instituted The New Deal in his first term as president from 1933-1937…Sarah, I don’t have time to explain to you what a presidential term is, please see me after class…preferably in a school girl uniform.
Anyway, the New Deal was the programs that were in response to the Great Depression which focused on the three R’s: relief, recovery, and reform. In his first ‘hundred days,’ FDR proposed, and Congress enacted, a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes, and reform, especially through the establishment of the Tennessee Valley Authority. By 1935 the Nation had achieved some measure of recovery, but businessmen and bankers (the haves) were turning more and more against Roosevelt's New Deal program.
They feared his experiments, were appalled because he had taken the Nation off the gold standard and allowed deficits in the budget, and disliked the concessions to labor (the have-nots). Roosevelt responded with a new program of reform: Social Security, heavier taxes on the wealthy, new controls over banks and public utilities, and an enormous work relief program for the unemployed. This method of deficit spending was first created by the famous economist John Maynard Keynes. He said that the best way to get out of a recession or depression was to increase spending by the government which creates real jobs allowing unemployment to decrease. This led to increased consumer spending, which ultimately got the economy back on track. Well, it worked. In 1933 unemployment was at an astounding 25% and Gross Domestic Product (the standard measure of an economy) was close to $500 billion and by 1943 unemployment was at 2% and GDP was $2 trillion.
Since the late 1970’s a good portion of these programs and principles have given way to a trickle-down theory. The trickle-down effect theory cuts taxes, especially for the top tax brackets, and deregulates businesses causing the rich to get richer which by this theory would lead them to create more wealth in the lower classes.
It has led to the biggest wealth gap SINCE the Great Depression. It has essentially created two America’s, the haves and the have-nots. The middle class is all but dead and the economy is now showing the effects of the trickle down.
Alright, let’s see what you’ve learned. Do any of you have any ideas on how we can solve this problem? Mr. Boehner, now that you have wiped the tears from your eyes, what do you think we should do?
"I think we should cut taxes, especially for the rich and the corporations. Then we should slash spending programs for the less fortunate to reduce the deficit. If rich people have more money, they will create more jobs and give a boost to our economy.”
Mr. Boehner, first of all you obviously have not been listening to me tell you WHAT ACTUALLY HAPPENED IN HISTORY. Secondly, I thoroughly disagree with your notion. You tell us you want to reduce the deficit by cutting spending but at the same time by giving tax cuts, you are cutting our revenue. You are essentially cancelling out both sides of the debt equation leaving us in the same situation we are in now. Furthermore, you are pretty much saying we are going to steal from the poor, and give to the rich because rich people are assumed to always do the right thing. Does this sum up your argument?
“Um, well…yeah.”
Mitt Romney do you agree with Mr. Boehner?
“Well I think the economy is going to be a tough, we have a lot of problems that need solutions.”
Ok, you definitely did not answer my question; therefore I am going to assume you are running for president in 2012.
President Obama, what do you think?
“My fellow Americans: We are in a rough patch right now, but we can get out of it. I will reach across the aisle; try to unite Democrats AND Republicans so we can come to some sort of consensus. I don’t know what the answers may be, but I do know we can solve the equations.”
Alllllllright, you seem to be in election mode as well.
Mr. Donald Trump, do you or your hair piece have anything to say about this issue?
“Celebrity Apprentice is on NBC Sundays at 9pm. Also, You’re fired!!!!”
You are supposed to be our leaders????????????.... Class dismissed. I need a drink.
Sources:
“Movers and Shakers” from Economics 1326 written by yours truly in 2002
Whitehouse.gov
Wikipedia
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