After reading Wikipedia’s entry on the causes of the Great Depression I was to say the least: interested in churning through the philosophical differences between varying views. I’d love to write whole essays on the subjects, but for now I’ll delve into the first bits and then if interest shows up I’ll write more. Here’s the first quote from Wikipedia that grabbed me:
Those who believe in a large role for governments in the economy believe it was mostly a failure of the free markets and those who believe in free markets believe it was mostly a failure of government that compounded the problem.
This is a false dichotomy. There is a need for us to recognize the two conceptual entities, but they operate like conjoined twins with the same heart: the people that make them up. In the United States that is the voters and the consumers, who are not one-and-the-same, but very nearly one-and-the-same. We elect leaders and while we don’t vote on every issue ourselves, we have an impact as a corporate group. And as consumers we impact the buying and selling trends. Peter of Bible Money Matters tweeted earlier today, “Does it seem like a major component of the current financial crisis is fear? Maybe things wouldn’t be so bad if everyone didn’t panic.” The problem is that emotion controls the market to a certain degree. I’ve written before that emotions cost me a huge amount of money. Huge. All because of emotions. But I am not about to make the false assessment that the consumer and the government are only related superficially and really operate separately. Its a simple assertion that shifts blame, but the reality is that we’re in this together.
In the Wikipedia section that talks about Debt it is interesting to see how they assert that over-bearing debt leads to a downward spiral of financial catastrophe. There has been a common mindset in the last several decades that debt lubricates the system and keeps the machine of industry going. While I will agree that it can help facilitate in some situations, it doesn’t keep the industry going indefinitely and debt that is unchecked clearly leads to collapse or major, major turmoil. This is true in the American household and also proves out in business and government. Germany after World War I was so financially beaten down by war debts that their money was hyper-inflated. The debt killed their economy. Our current United States dollar is flailing in the water due to its being produced ‘cheaply’ and flooding the market. Our debt is costing us.
Money Supply is next on the list at Wikipedia. Interestingly enough the philosophy held by at least some is that the central bank controls the supply of money and that during the great depression the supply of money available on the market was trickled down to a fraction of what was available earlier in the decade. The problem is that inflation is happening by ‘over-supplying’ the money. So if over-supply stops the economy from slowing down, but causes inflation, which causes other economic issue you still have to answer the question of why supply of money being more liberal (by which I mean more readily available and am not talking about politics) is overall a better thing? I imagine that like many things this comes down to moderation. If the Federal Reserve had loosened things up back in the 30’s it might have been beneficial, but not as loose as they are now, in which case we’ve seen an extreme pendulum swing.
My Own Personal Philosophy
I had a boss at a Christian Book Store in College who made a statement that has set in my mind as an axiom of truth: Good businessmen pay their employees wages that respect the needs of the employee. This is to say that if the employee needs $1,000.00 a month to live and provide for his family, then that’s what the business person pays the employee. The business person knows that its better to take moral comfort in knowing that you provided for your employees, and the employees know it, than to drive an insanely expensive vehicle, to live in a mansion, or to die rich, but still be dead. This is not anti-capitalist. It is not anti-wealth, it is just encouraging fiscal responsibility.
Furthermore, employees should be willing to work dilligently to make the business profitable or more profitable and not just do the least amount of work possible. This respects the business person’s leadership and provision. I work as a contractor for a group of four men who own and operate a company with roughly 50 employees and contractors. Their respect and care for employees is stunning. Part of why I have chosen to continue my relationship with them for more than 8 years is because they take care of me. I work hard to take care of them as well. They have earned my respect and so I work hard to make sure that their needs are met or exceeded where possible.
The crash of 1929 and the following great depression have some similarities. Government doesn’t deserve all of the blame, neither do the masses of consumers, or the big businesses. Instead we all own this responsibility. We all fail, or we all succeed together. If this is a recession, a depression or any other financial scenario it is something that we work through as a global community, a nation, a state, a county, a city and a neighborhood. We work on it together and we grow – that’s something that we need no matter the time.
