Meridian Star

New Today

November 20, 2012

2013 looks a lot like 1937 in 4 fearsome ways

(Continued)

NEW YORK —

In all three cases, the full effects of the laws weren't felt until after the election. It was only in 1937 that Americans had to pay into Social Security, diverting cash from the economy. And it was only in 1937 that John L. Lewis, the labor leader, pushed his hardest for wage increases and strikes, forcing companies to pay higher wages than they could afford. In 1936 and 1937, the Fed increased reserve requirements, effectively doubling them. The consequence of these laws was reduced available cash, increased uncertainty and lower business confidence.

The obvious question is why an announcement by Obama or Roosevelt to cut back just after the election doesn't reassure those who dislike government expansion.

The answer is that the markets, which observe a giant march forward and then a step backward, don't believe the step back is permanent. Giants are giants. Expansionists tend to revert to expanding government, as FDR did, most drastically, in World War II. The mandate matters more than the austerity chatter.

Benjamin Anderson, the chief economist at Chase National Bank in the 1930s, tried to capture the problem of the big- government president by titling one of his books "When Government Plays God." His advisers warned him to suppress the title, arguing it might offend. Anderson shifted to the more banal: "Economics and the Public Welfare." But Anderson's phrase still reverberates: A government that "plays God," or at least "plays powerhouse," can spook markets and employers, whatever the decade.

Amity Shlaes, a Bloomberg View columnist, is the author of the forthcoming "Coolidge" and the director of the Four Percent Growth Project at the Bush Institute.

Text Only
New Today
Biz Marquee
New Today
Poll

Do you think the city of Meridian gave residents adequate notice before beginning to drain Long Creek Reservoir?

Yes
No
     View Results
Facebook
Facebook
Twitter Updates
Follow us on twitter
AP Video
Kerry: Humanitarian Cease-fire Efforts Continue Raw: Corruption Trial Begins for Former Va Gov. The Carbon Trap: US Exports Global Warming UN Security Council Calls for Gaza Cease-fire Traditional African Dishes Teach Healthy Eating 13 Struck by Lightning on Calif. Beach Baseball Hall of Famers Inducted Israel, Hamas Trade Fire Despite Truce in Gaza Italy's Nibali Set to Win First Tour De France Raw: Shipwrecked Concordia Completes Last Voyage Raw: Sea Turtle Hatchlings Emerge From Nest Raw: Massive Dust Storm Covers Phoenix 12-hour Cease-fire in Gaza Fighting Begins Raw: Bolivian Dancers Attempt to Break Record Raw: Israel, Palestine Supporters Rally in US Raw: Air Algerie Flight 5017 Wreckage Virginia Governor Tours Tornado Aftermath Judge Faces Heat Over Offer to Help Migrant Kids Kangaroo Goes Missing in Oklahoma More M17 Bodies Return, Sanctions on Russia Grow
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide