The newspapers all had stories today about how on this day in history President Hoover foolishly froze government salaries as private sector wages were falling during the recession that followed the burst of real estate bubble of the 1920s. This drove the country into the Great Depression, but they screwed up the headline and put Obama’s name in place of Hoover. Obama would never do anything that stupid, it made Hoover a one term President. Sigh…
People always excused Hoover (he really seemed to be a nice guy) they excused him for not understanding economics. I’m not so sure, he was an engineer so he should have been able to do the math. Obama is a lawyer so maybe he can’t do the math but he has all kinds of people working for him who can, of course their advice seems to favor the billionaires they all plan to work for in the private sector making seven figure salaries. (after all they need to make up for the hardship of having Obama freeze their government salaries)
It’s common sense that when times are hard that you cut back. Just as it’s common sense that the earth is flat and unmoving, we couldn‘t possibly be revolving at a 1000 mph, that‘s just crazy. In simple terms it is wages that create demand for goods and services and this makes the economy run like a well oiled machine. Cutting wages is like draining oil from the crankcase, the machine will slow and stop. Reagan also de-criminalized the practice of stealing the gears from the machine and selling them to China.
Ireland is the latest victim of the Wall Street bankers as it is having its economy wrecked in the name of saving it. Portugal is next in line and there is little they can do about it. But the very same tactics the World Bank and IMF use to reduce vulnerable third world countries to corporate serfdom are playing out here. When the rightwing says that we are the next Greece they happen to be right, just for all the wrong reasons.
The right constantly tells us that Kenyan/socialist/ fascist Obama is taking us the way of the Soviet Union. They are right, he is. The Soviet Union was really organized with huge state owned corporations and the country was run by the managerial class. Socialism was a way to keep the workers content with low wages. The same process has been on going here for the last thirty years as wages have declined while the corporate domination of the state has grown.