Tue, 20 Jan 2009 10:29:19 +0000 – By Liz PeekFinancial Columnist
Whoa there America-- take a deep breath. As impressed as we all are with the significance of this moment -- we are about to inaugurate the first African American President of the United States -- it is possible that our collective giddiness will lead to the worst kind of disappointment. President-elect Barack Obama is being breathlessly compared to FDR, JFK, Abraham Lincoln and George Washington. So far -- he has won an election.
Even Obama is hyperventilating. In Sunday's speech, he said "I stand here today as hopeful as ever that the United States will endure." Endure? Did he think the country might actually go out of business? Merge with France? Sell out to Wal-Mart? That we might decide that Citigroup was too frail, Iraq too complex and our waistlines too bulging to carry on? What did he mean?
Take the reports on unemployment. The press emphasizes the 11.1 million Americans out of work, which is indeed higher than it has ever been (and lamentable). At the same time, the number of Americans -- that is, the population -- is also at an all-time high. The percentage of workers unemployed, which has traditionally been the way we looked at the jobs picture, is nowhere near a record level.
At the height of the Great Depression, unemployment was 25% of the workforce. Today it is 7.2%, compared to 10.8% in 1982, for instance. Unemployment will doubtless increase, but it is not at crisis levels.
This is not the Great Depression. Moreover, there is no reason that this recession should approach that terrible time in our history. It is hardly ever mentioned that during the 1930s the nation, still an agrarian country by and large, suffered a terrible drought, causing massive failures of farms across the land. That act of nature, combined with wrong-headed tax, monetary and tariff decisions, caused the economy to wither.
Today, we have boosted the money supply and placed government backstops behind the financial system, avoiding systemic meltdown. Other nations around the world have done the same, providing liquidity and mutually beneficial supports to demand. At the same time, the price of oil has plummeted, comforting consumers.
We are certainly not out of the woods. However, we must not use this economic downturn as an excuse to usher in an era of enduring Big Government. The current malaise is the strongest argument possible against allowing politicians to steer the economy. This recession began with a collapse in the subprime mortgage market, which had been inflated by Congress' insistence that low-income Americans be welcomed into the ranks of happy homeowners. That well-intentioned but uneconomic notion brought down Fannie Mae and Freddie Mac -- institutions caught trying to serve shareholders and social engineers. And yes, greedy Wall Streeters compounded the problem.
My message is not that we are without challenges, Mr. Obama. It is that this country has overcome much, much harsher times than these. Go take a look at the videos of the Kent State shootings, or the race riots in Watts, or the assassination of JFK. Consider the Vietnam war - a conflict that in terms of alienation, anger and, sadly, body count, dwarfs our incursion into Iraq. We have been in darker times than these. You are, possibly, too young to remember.
The United States is energetic, ambitious, open-hearted, fair-minded and resourceful. It is bigger than me and, with all due respect, bigger than you, Mr. Obama. This country will not only endure, I am sure it will prosper, by allowing individuals like you to pursue their dreams. Oh, and good luck, Mr. President. We are all rooting for you.