EXHIBIT #10
When it comes to our foreign policy, you seem to want to import the
foreign policies of the 1980s, just like the social policies of the 1950s and
the economic policies of the 1920s,? President Obama told Mitt Romney in their
final debate.
Obama got sloppy here. Presumably, the president was suggesting the 1920s represent economic failure. The decade represents just the opposite, as measured by the very goals on which the Democrats base their 2012 presidential campaign.
Growth: Obama has spoken often and forcefully about economic growth. In
just one debate, the second one, the president used the term ?grow? when
discussing the economy 13 times, whereas Romney said ?grow? or ?growth? eight
times. The 1920s had strong growth: Real gross domestic product increased an
average of 4 percent per annum.
Higher wages for skilled workers: ?I want high-wage, high-skill jobs,?
Obama has said. Weekly wages increased in the 1920s, especially in the
president?s preferred area ? higher-skilled jobs. Overcoming joblessness, Obama
has said, matters hugely to our future.
?We?ve seen 30 consecutive, 31 consecutive months of job growth, 5.2
million new jobs created,? the president said in the second debate. The actual
unemployment rate currently sits at 7.8%, and the Obama case remains that more
stimulus and support are necessary. Contrast that with the 1920s. Confronting a
jobless rate of 11.7% in 1921, policymakers acted by cutting the federal budget.
Unemployment slipped to 6.7% and then to 2.4% by 1923, according to the
Historical Statistics of the United States.
Innovation is important to Obama. As he said earlier this year: ?We are
inventors. We are builders. We?re the makers of things. We?re Thomas Edison and
the Wright brothers and Steve Jobs.? In the 1920s, patent applications for
inventions, the barometer for innovation, averaged more than 80,000 a year, a
level they didn?t reach again until the 1960s. Such newer inventions made
Edison?s light bulb and the Wright brothers? airplanes common in our society.
The 1920s roar was loud and real.
Overall, the 1920s data are estimable. Americans got telephones, fans and
Model T?s and A?s. Even income distribution relative to taxes, a favored
Democratic metric, became more favorable: The rich paid a greater share of the
income tax by the end of the decade.
One can hazard two guesses as to why Obama slams the 1920s. The first is
that the 1920s were followed by the 1930s, a decade of high unemployment when
policies of federal intervention were closer to his own. The easiest way to
protect the 1930s programs from criticism is to argue that the 1930s Depression
was caused by 1920s policies.
This argument is a stretch; to hang a whole decade of trouble on, say,
President Calvin Coolidge, or the 1929 crash, is hard to do. Economists
themselves have long since concluded that the troubles of the 1930s had many
causes. The stock-market crash of 1929 could have been like those of 1987 or
2000 ? rough but quick. Other factors, including foreign monetary policy, did
damage.
Additional domestic programs, mostly the responsibility of Herbert Hoover
and Franklin Roosevelt, the presidents from the 1930s, made the Depression
deeper, as well. Especially damaging, as the scholar Lee Ohanian has shown, was
a then-new policy of placing upward pressures on wages through either
presidential exhortation (Herbert Hoover) or law: the Davis-Bacon Act (Hoover),
the Wagner Act, the Fair Labor Standards Act (Franklin D. Roosevelt).
The second reason the president might want to slam the 1920s is that the
policies responsible for such strong performance in that decade are ones of
which Obama, Fed Chairman Ben S. Bernanke and perhaps Romney disapprove. Today,
all politicians avoid recession at all cost. The Fed and Treasury raised
interest rates sharply after World War I, even though everyone knew a recession
would result.
Combating inflation and stabilizing the dollar seemed more important than
avoiding a recession. Today, politicians like stimulus. Back then, over a matter
of just a few years, the federal government cut its size in half. In the 1920s,
presidents and Congress cut tax rates often. The top rate on the income tax,
which Obama would like to raise, was cut to 25% from more than 50%.
Why not allow the president his cheap conceit? For the same reason we want
to call Romney on his lazy argument that Chinese currency manipulation, rather
than our own lack of relative competitiveness, causes US troubles.
The 1920s are crucial. If we don?t know what really happened then, then we
can?t know what is possible now. Recently Romney produced a commercial
announcing that he and Obama saw ?two very different paths for the country.? In
the coming days, Americans must choose between those paths. That?s especially
hard to do when the country?s past ? the paths behind ? are kept in the dark.
Submitted by : Claire gooski
Submitted by : Claire gooski
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