Now is the time to confront the economic crisis

“Let us pray,” financial historian John Steele Gordon said when he was asked by an Associated Press reporter to comment on the current global financial crisis. He went on to opine that “... it’s probably going to be the worst postwar recession …”

The same AP story included a litany of dismal statistics comparing the current troubles to the recession of 1982. The list includes:

 

• In January, reports showed 207,000 manufacturing jobs vanished in the largest one-month drop since October 1982;

• Major automakers’ U.S. sales extended their deep slump in February, putting the industry on track for its worst sales month in more than 27 years;

• Struggling homebuilders have just completed the worst year for new home sales since 1982; and

• There are 12.5 million people out of work today, topping the number of jobless in 1982.

I remember seeing a tent city in Phoenix during the last recession.

Hundreds of unemployed and homeless were in a rag-tag assortment of tent-like structures — most of them with shopping carts holding all of their worldly possessions. Many had migrated from the states where steel mills, auto plants and logging had paid the bills. In the face of staggering numbers of job losses, frustrated workers sought a new start in the Southwest. Phoenix was overwhelmed by the sheer numbers. I took pictures and sent them to my mother here in Danville, appalled that this was happening in America.

Ronald Reagan presided during that recession — and not even the “Teflon” president could avoid comparisons to Herbert Hoover when he visited a beleaguered Pittsburgh.

What he faced pales in comparison to President Barack Obama’s challenge. In Reagan’s era, the problem was pretty much an in-house situation which responded to some changes in monetary policy to curb inflation. The situation we face today is global in scope and it is only the icing on layers of inattention to the fundamental problems that are faced by our own economic system.

Although I do not agree with President Obama on every jot and tittle — he could have gone further by reforming the tax code — I stand firmly behind him on the direction in which he is taking this country. It’s time to pay the piper.

President Obama’s budget is right on target. He is making us face what has been hidden by political smoke and mirrors — the actual cost of running this country if we are to adhere to the ideals on which this country was founded. Funding understaffed agencies like the Veterans Administration and Social Security, aggressively pursuing energy independence, providing access to quality health care for every American, refurbishing the country’s crumbling infrastructure and the list goes on.

President Obama’s detractors — most of them proponents of what they would call “limited government” — are screaming at the price tag on his initial budget. They warn that he is creating a socialist state, that he is set to destroy the world’s greatest monument to capitalism.

Some quote noted economist, Adam Smith, who defended the market economy so eloquently when he said, “Speak to a man of his own self-interest.” What they ignore is that Smith did not stop there. To quote Amartya Sen from “Capitalism Beyond the Crisis”:

Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions — including public services such as schools — values other than pure profit seeking, and second, they needed restraint and correction by still other institutions — e.g., well-devised financial regulations and state assistance to the poor — for preventing instability, inequity and injustice. If we were to look for a new approach to the organization of economic activity that included a pragmatic choice of a variety of public services and well-considered legislation, we would be following rather than departing from the agenda of reform that Smith outlined as he both defended and criticized capitalism.
President Obama has chosen not to deal in “half measures.” He is attacking on a myriad of fronts, taking possession of the mandate he was dealt in the November election. He and his staff, most notably, Secretary of State Hilary Rodham Clinton and Treasury Secretary Timothy Geitner, are moving in a calculated but expeditious way to change the direction of American policy, both domestically and around the world. He called for change. We said yes — and change he is giving us.

The beauty of the American system has been and continues to be the rule of law. We accomplished regime change of monumental proportions in November in a deliberate and peaceful manner. The Bush administration graciously offered all possible cooperation to the incoming president, handing over power in way which is the envy of the civilized world.

We have much to be thankful for.

It is noteworthy that President Obama last week welcomed England’s Prime Minister Gordon Brown to the White House for substantive talks. England and America remain the staunchest of allies.

Also, Great Britain’s membership in the European Union makes Brown something of an emissary to that struggling confederation.

President Obama is taking full advantage of our unique position and I applaud his efforts. These are critical times and they call for drastic measures.

I agree that we need to pray, but to that prayer we must add action. God helps those who help themselves.

• Carolyn LaViscount lives in Danville.