Wednesday, October 19, 2011

Why Hollywood Types Should STFU

My cousin sent me a link to a video featuring actor Jon Voight, in which he makes certain assertions in defense of the Tea Party.

Primarily, he asserts that government should not spend the people's money in an economic crisis.

I'd be willing to agree with Voight - if his assertions weren't completely flawed.

I draw your attention to the US Gross Domestic Product (GDP) as it was in late 1932. It was in negative numbers, meaning that there was no growth, period, and millions were unemployed with zero safety net at all for them. Roosevelt (Franklin, not Teddy) was inaugurated in March 1933 and decided that Hoover was wrong: Private industry wasn't doing anything to restart the economy. To be plainly honest, private industry was hiding in a corner waiting for things to get better.

So the Federal Government started spending what private industry didn't have - money.

It threw money at a variety of programs - the Works Progress Administration, the Civilian Conservation Corps, the Tennessee Valley Authority, etc. - that put Americans back to work, paying them wages and allowing them to spend money to get the economy going again. Coupled with these programs were laws and regulations designed to make certain that banks can't gamble with our money again. And guess what happened?

The national GDP went up!

After the 1936 elections, FDR tacked to the right under pressure from the Republicans and conservative Democrats, and started a series of austerity measures to curb the deficit. Result? The Recession of 1937, where GDP fell again. This caused the Federal Government to start spending money again - and I'll concede that the rise of Fascism in Europe helped FDR persuade the Congress to allow the money to be spent.

Fast forward to the past 20 years. One of the key bits of the FDR regulatory machinery - the Glass-Steagall Act - was repealed by the GOP in a veto-proof majority over Clinton's objections. Banks and other financial institutions were free to start gambling with our money again, and invented the so-called mortgage derivative. Housing boomed, and (just as in 1929) it was widely assumed that we'd never see an economic downturn ever again. Until 2007.

Moral: Sometimes, government spending and government regulation are Good, if not Necessary.

As for Voight's career in Hollywood, his portrayal of FDR in "Pearl Harbor" was his cinematic obituary. That movie stunk.


Blogger dukuhead said...

good point. de-regulation and leave-it-to-free market forces policies from circa 80s until 2007 directly led to our predicament today. Govt spending on useful infrastructural projects and public works should always be encouraged, but printing money to buy up govt bonds and hand out more money to the bankers who don't lend to SMEs anyway, well, i don't agree. Actors and actresses including Ms Susan Sarandon ("the current pope is a nazi" comment) should just stfu.

10:42 PM EDT  

Post a Comment

<< Home