We have begun to hear the drumbeat that we may be on the verge of another 2008. Truth is, if you really want to better understand where we may be heading, you may want to look back even earlier; it’s time to party like it’s 1937.
The stock market has started 2016 with its worst performance ever. This has provoked a bandwagon of prognosticators to come out to foretell why this is the next recession. My question is, what took them so long?
Donald Trump is correct that our country is disappearing, he just misses the mark as to why and understanding that it cannot be fixed by his ego. Pundits and politicians add fuel to the problems and benefit from the chaos and instability. People like George Soros and Andrew Roberts from the Royal Bank of Scotland feed the narrative to feed their wallets but don’t see past the next collapse.
If you want to understand what may be coming and learn from history we need to first look at 1937, after the Great Depression that engulfed our economy. The recovery in the four years after Franklin Roosevelt took office in 1933 was incredibly rapid. Annual real GDP growth averaged over 9 percent. Unemployment fell from 25 percent to 14 percent. By the spring of 1937, production and wages had regained their pre-Depression levels.
Then the economy faltered in spring 1937 and tanked in autumn. Unemployment jumped from 14.3 percent to 19 percent. Manufacturing output fell by 37 percent. Real GDP fell 11 percent, and industrial production fell 32 percent. Producers reduced their expenditures on durable goods, and inventories declined, making it one of the worst U.S. recessions in the 20th century.
At the time of that recession there were large imbalances of power and indifference was rampant. Liberties deteriorated not because of FDR but because of a culture that accepted it. The period started with a major economic collapse; the disaster elicited a mix of apathy and anger kept at bay by paralysis. There began the general feeling that the culture was heading into peril and things built to an ultimate climax in 1941.
The actual lessons of Roosevelt’s Recession are much different than many of the history books. The 1937 dip was not the product of tight fiscal and monetary policy, but of excessive government regulation and loose monetary policy. More importantly, it was a reflection of the culture, people and attitudes of that time.
Perhaps they could have looked 82 years earlier to the Panic of 1857 in a time that the nation was in uncertainty and government was driving policies that led to the apex of disaster in the 1861 Civil War — a war that was the bloodiest conflict in U.S. history that claimed over two percent of the population.
Perhaps they would have seen similarities 85 years prior with the credit crisis of 1772. The majority were not taking arms against the crown but instead were uninterested, angry or paralyzed with fear and subordinate to power. Ultimately the times saw a foreign government that over-regulated and drove social and economic conditions that finalized in 1773 with the shot heard around the world and the Revolutionary War.
We can go back over 400 years and see this same pattern play out every 80 to 85 years. In 1937 the culture in the U.S. and the world were prime for social, economic and geopolitical problems. Not because it would be a repeat of eight years prior but because liberties and the individual continued shrinking and centralized power and apathy were growing. The climax was the years that enveloped us into World War II that claimed over 400,000 U.S. casualties.
Almost 82 years later, we wake up to a culture shift and attitudes that are repeating history. Unfortunately we have already paved the “road to serfdom.” As many fight to change policies and institutions to preserve liberty, one fears — and facts are beginning to support — that the cycle has progressed too far and is beyond repair.
Eric Wilson of Georgetown, heavily involved in the Tea Party and the executive director for Kentucky 9/12 Project, is co-author of, “We Surround Them; Our Journey From Apathy to Action.”