January 2009

Commentary

It's the Equality, Stupid

The financial crisis.
by Robert S. McElvaine

... that quaint period, the thirties, when the huge middle class of America was matriculating in a school for the blind. Their eyes had failed them, or they had failed their eyes, and so they were having their fingers pressed forcibly down on the fiery Braille alphabet of a dissolving economy. —Tennessee Williams, The Glass Menagerie (1945)

Have we learned the lessons of the Great Depression now?

We are once again, in Tennessee Williams’ memorable image, having our “fingers pressed forcibly down on the fiery Braille alphabet of a dissolving economy.” And the reason is that many of us have, once again, “failed our eyes.”

The lessons taught to the socially and economically sight-impaired in the 1930s have been forgotten or willfully denied, producing conditions in the present decade very much like those in the 1920s that led to the Great Depression. In the ’20s, as in recent years, tax cuts for the rich, in combination with anti-union practices and a lack of regulation of markets, yielded increasing wealth inequality. The extreme gap between rich and poor meant that more money went into speculation (by the rich) rather than consumption (by everyone); consumption is what keeps the economy healthy. Mass consumption and the economy were propped up, but only temporarily, with an unsustainable amount of consumer credit—until the speculation bubble burst and the credit ran out in 1929.

Who most completely failed their eyes? Who are those responsible for creating the conditions that led to the economic meltdown that began in September?

Fundamentalists.

Not religious fundamentalists, but the other side of the conservative coalition that has been an uneasy alliance inside the Republican Party in recent decades: economic fundamentalists. These worshippers place blind faith in the false god of the market, assuming that whatever market forces do must be accepted. This misplaced belief holds that governmental checks and balances—which are in fact necessary to counter the bad that inevitably comes with the good of capitalism—are evil, and that the very rich should be allowed to accumulate as much as they can.

THE ECONOMIC collapse of 1929 and ensuing Great Depression discredited faith in an omnipotent and beneficent market god for several decades. However, since about 1980, true believers in that false creed have been born again, and economic fundamentalists have been singing “Give Me That Old Time Economic Religion.” For example, Amity Shlaes, in her 2007 social-Darwinist tract The Forgotten Man, argued that Calvin Coolidge was right and Franklin Roosevelt was somehow responsible for the Depression.

She and other evangelists found people on Wall Street and Pennsylvania Avenue who were eager to be “saved.” Baptism in the born-again old-time economic religion consists, in the memorable image of market-god missionary Grover Norquist, of full immersion of the government in a bathtub until death do the government and the people part. Such economic fundamentalism has resulted today, as it did in the 1920s, in an extraordinarily top-heavy society that could not avoid collapse.

It is high time for economic sanity to return. “Spreading the wealth around” is both better morality and better economics than is concentrating it at the top. Jesus is not only a better moralist than are the economic fundamentalists, he is also a better economist.

His teachings should have a seat at the table when President Obama’s economic advisers develop plans for getting us out of the mess that the econ-fundamentalists got us into. Those plans must include economic stimulus, but great care must be taken to ensure that the benefits are widely distributed and are not just a bailout for bankers and rich speculators. The new administration should move toward restoring the traditional value that morality should be part of our economic calculus. That means adopting policies that fight inequality—policies including universal health care, progressive taxation, a fair climate for unions, and sensible regulation.

Historian Robert S. McElvaine teaches at Millsaps College. He is the author of The Great Depression; Down and Out in the Great Depression; and, most recently, Grand Theft Jesus: The Hijacking of Religion in America.