Business, Economics, Political Commentary

Is It 1993 Again?

5 Comments

…or 1938?

Democrats lost 80 seats in the 1938 election, after gaining seats in 1930, 1932, 1934 and 1936.

How did this happen? As Amity Shlaes notes in her history of the Depression, “The Forgotten Man,” Roosevelt believed less competition and high wages would heal the economy. Aided by Congress, he went about engineering those two things with a vengeance, trebling the size of the federal government in less than a decade.

At the time, such drastic action may have seemed warranted. Within three years of the 1929 crash, GDP had fallen nearly a third and a fourth of the U.S. work force was idle. Even so, the economy appeared to stabilize in 1934 and 1935, and in 1936, Democrats won landslides in both Congress and the presidency.

What happened next is a tale of overreach and hubris — one that holds lessons for today’s Democrats.

But they seem determined not to learn them. Because to do so would negate their entire world view.

5 thoughts on “Is It 1993 Again?”

  2. Brock, so you’re saying it’s more like 1934 or 1936 than 1938? That observation does bring up the point that the Democrat party isn’t the only political party dallying in a bit of monumental hubris.

  3. The big mistake in 1937 was tightening the money supply, and cutting spending and raising taxes in an attempt to reduce the budget deficit. I don’t expect Bernanke and Obama to do any of those things.

  4. Jim’s right. There’s no way in hell that Obama is going to do shit about the deficit.

    He could “not cut spending” by leaving Entitlement and Defense spending just like it is and cutting taxes to zero for a couple years, but there’s so much less opportunity for graft there that it just doesn’t make any sense.

  5. The big mistake in 1937 was tightening the money supply, and cutting spending and raising taxes in an attempt to reduce the budget deficit.

    I’m sure there’s another way, a way that wouldn’t have been a mistake, to reduce the budget deficit. But that would have required FDR to avoid the situation where he had to harm the US economic in order to reduce a large budget deficit. Obama is positioning himself to repeat that mistake.

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