Read Online The Next Decade by George Friedman - Free Book Online Page B
Authors: George Friedman
Tags: Non-Fiction
Ads: Link
power amid economic crises. Roosevelt, of course, faced the Great Depression. Reagan faced the stagflation that overtook the economy in the 1970s—high unemployment combined with high inflation and high interest rates. The economic problems both presidents encountered were part of global economic dislocations, and both posed a profound crisis of confidence in the United States. The crisis in the 1930s prompted Roosevelt’s famous line, “We have nothing to fear but fear itself.”
Roosevelt and Reagan both understood the psychological element in financial crises. The anticipation of economic hardship causes people to rein in their buying in order to protect themselves. The more they cut back, the worse the economic problems become. As an economic crisis deepens, it calls into question the integrity and leadership of elites, which can create political instability and destabilize society itself. That social uncertainty can in turn make it impossible for a country to act decisively in the world. Roosevelt faced the rise of fascism; Reagan came to power facing what was generally believed to be the growing power of the Soviet Union. Neither could afford the destabilizing consequences of a severe economic crisis, yet neither knew with any certainty how to solve the problem through economic policy. Both attacked the psychology of the problem, trying to create the sense that, most of all, something was being done.
In retrospect, Roosevelt’s frantic one hundred days of legislation had little effect on the Depression, which was ended by World War II rather than by his economic policies. Reagan also promised actions, although in the end the solution rested not with the president but with the Federal Reserve. Nonetheless, describing the times as being “Morning in America,” a phrase that was part of his 1984 campaign, Reagan, like Roosevelt before him, tried to change the expectations of the public, stabilizing the political situation and buying time for the economy to heal without weakening the state.
Both Roosevelt and Reagan understood that the real threat of an economic crisis would be its political impact, with the misery that piled up wrecking the entire system. They understood that their job as leader was not to solve the problem—the president really has little control over the economy—but to convince the public not only that he has a plan but that he is altogether confident of that plan’s success, and that only a cynic or someone indifferent to the public’s well-being would dare to question him on the details. This is not an easy thing to pull off; it takes a master politician, which is to say a master of illusion. Roosevelt certainly saved the country from serious instability and, in spite of the lack of recovery, positioned it to fight World War II. Reagan saved the country from the sense of malaise that the Carter administration was known for and set the stage for the reversal of fortunes with the Soviets.
Roosevelt and Reagan did one other thing that was in their power to deal with the crisis. They shifted the boundary between public and private, state and the market. Roosevelt dramatically increased the power of the federal government. Reagan decreased it. The problem they were addressing wasn’t the economic crisis itself, but a fundamental political crisis. In the 1929 depression, the financial elite had lost the confidence of the public. They appeared not so much corrupt as incompetent. Under Hoover, they were permitted to play out their hand, but then the situation got worse. Roosevelt intervened, shifting some of the power that had been in the hands of the financial elite to the political elite. Had he not done so, the sense that all the country’s elites had failed might have prevailed, a sentiment that led to fascism in places such as Italy and Germany.
The reverse happened under Reagan. In the 1980s, the political elite was perceived to be behind the economic crisis, and the public blamed the
Roosevelt and Reagan both understood the psychological element in financial crises. The anticipation of economic hardship causes people to rein in their buying in order to protect themselves. The more they cut back, the worse the economic problems become. As an economic crisis deepens, it calls into question the integrity and leadership of elites, which can create political instability and destabilize society itself. That social uncertainty can in turn make it impossible for a country to act decisively in the world. Roosevelt faced the rise of fascism; Reagan came to power facing what was generally believed to be the growing power of the Soviet Union. Neither could afford the destabilizing consequences of a severe economic crisis, yet neither knew with any certainty how to solve the problem through economic policy. Both attacked the psychology of the problem, trying to create the sense that, most of all, something was being done.
In retrospect, Roosevelt’s frantic one hundred days of legislation had little effect on the Depression, which was ended by World War II rather than by his economic policies. Reagan also promised actions, although in the end the solution rested not with the president but with the Federal Reserve. Nonetheless, describing the times as being “Morning in America,” a phrase that was part of his 1984 campaign, Reagan, like Roosevelt before him, tried to change the expectations of the public, stabilizing the political situation and buying time for the economy to heal without weakening the state.
Both Roosevelt and Reagan understood that the real threat of an economic crisis would be its political impact, with the misery that piled up wrecking the entire system. They understood that their job as leader was not to solve the problem—the president really has little control over the economy—but to convince the public not only that he has a plan but that he is altogether confident of that plan’s success, and that only a cynic or someone indifferent to the public’s well-being would dare to question him on the details. This is not an easy thing to pull off; it takes a master politician, which is to say a master of illusion. Roosevelt certainly saved the country from serious instability and, in spite of the lack of recovery, positioned it to fight World War II. Reagan saved the country from the sense of malaise that the Carter administration was known for and set the stage for the reversal of fortunes with the Soviets.
Roosevelt and Reagan did one other thing that was in their power to deal with the crisis. They shifted the boundary between public and private, state and the market. Roosevelt dramatically increased the power of the federal government. Reagan decreased it. The problem they were addressing wasn’t the economic crisis itself, but a fundamental political crisis. In the 1929 depression, the financial elite had lost the confidence of the public. They appeared not so much corrupt as incompetent. Under Hoover, they were permitted to play out their hand, but then the situation got worse. Roosevelt intervened, shifting some of the power that had been in the hands of the financial elite to the political elite. Had he not done so, the sense that all the country’s elites had failed might have prevailed, a sentiment that led to fascism in places such as Italy and Germany.
The reverse happened under Reagan. In the 1980s, the political elite was perceived to be behind the economic crisis, and the public blamed the
Similar Books
