Budget Battle in Wisconsin
The U.S. economy is at a critical moment in history. Social and political unrest arising in Wisconsin offers a clue to what’s happening. Barack Obama is failing the nation with his incompetent handling of a momentous problem observed in the economy.
Manias, Panics, and Crashes in History
But it’s a problem that’s familiar to those with some knowledge of economic history. American workers have displayed worse behavior than that observed in Wisconsin. Deadly riots swept through America a few years after the financial crisis of 1873, when President Rutherford B. Hayes led the nation through the violence of its first Great Depression.
The good news is that it’s not too late to learn from the past in handling the economy.
In addition to both sharing the four phases – speculation, expansion, distress, and panic – characteristic of a typical financial crisis, another noteworthy similarity can be observed with the railroad and sub-prime mortgage crises of 1873 and 2008, respectively: both occurred at times of major transitions in skills demanded of America’s workforce supply.
“This rescue effort is not aimed at preserving any individual company or industry — it is aimed at preserving America’s overall economy,” President George W. Bush said in September 2008. He emphasized the priority of helping American workers earn more money after the sub-prime-mortgage panic. “It will help American consumers and businesses get credit to meet their daily needs and create jobs.”
From the time of Barack Obama’s inauguration in January 2009, he has shown his incompetence handling the economy while the priority has remained the same. The U.S. economy has needed a president focusing not on health-spending legislation but on job creation.
Manufacturing American Knowledge
Skills now demanded of American workers in the expanding knowledge economy are not the same as what they were able to supply a manufacturing economy, now declining in advanced economies after maturing last millennium.
Looking to prevent the type of unrest that swept the nation during its first Great Depression, Americans in 2012 again need to elect a volunteer for chief executive who understands how economic history can suggest the right priorities – such as focusing time and other resources to guarantee American workers can supply the skills demanded in the growing knowledge economy to succeed.
Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1989).