If at First You Don't Succeed...

Saw an interesting poster in my daughter's ethics classroom last night. It was captioned: "If at First You Don't Succeed...You're in Good Company." The poster went on to detail the failures of some pretty notable people-four presidents of the United States. Consider that:

• Abraham Lincoln's first try at business was a dry goods store that went belly-up. He was later appointed postmaster of a small town, but on his watch it was the most inefficient in the county. His final federal job would end more successfully, albeit tragically: saving the Union as president of the United States.
• Franklin D. Roosevelt flunked out of law school, later turning to public service as assistant secretary of the Navy, governor of New York and president of the United States.
• Dwight D. Eisenhower was rejected three times for command positions in the Army. In 1942 he finally got a command appointment: Supreme Allied Commander. He was the man in charge of the D-Day Invasion. In 1953 voters gave him the ultimate command appointment: president of the United States.
• Harry Truman at age 35 saw his haberdashery plunge into bankruptcy. In a foreshadowing of the plucky character he would later demonstrate in Washington, he spent the next 15 years doggedly paying off his debts. In 1945 he brought World War II in for a safe landing. As president of the United States.

Success is not final and failure is not fatal, said Churchill. These four presidents who knew both were part of the two most enduring quests for freedom: the American Civil War and World War II. All were lightly regarded at one time or another, yet all four today are deeply admired and respected. Their failures, as Churchill said, were not fatal. And their successes indeed live on today.

Just thought you might like to know.

The Great Depression Revisited?

While there are some similarities to the Great Depression of the 1930s and our current economic problems, there are also some significant differences. [For a good understanding of the economic policies that contributed to and helped prolong the Great Depression, see Amity Shlaes' "The Forgotten Man," published by HarperCollins in 2007].


A previous post discussed some of the similarities. But here are some of the signal differences that make the two events quite dissimilar:

1. Unemployment in October 1929, the start of the Depression, stood at 5%. Within five years the unemployment rate was 23.2%. A staggering 364% increase in joblessness. We've not seen anything to even suggest we're in for that kind of job loss.


2. In October 1929, the Dow Jones Industrial Average was 343. By November 1934 it closed at 93--a long, precipitous 73% drop. Free markets will periodically reset and correct themselves. But a confluence of events during the Great Depression put the economy into a free falling death spiral from which it took years to recover.


3. In 1929 the Federal Reserve System was still in its infancy and its eventual role in managing the nation's money supply was yet to be defined. Today, the Fed has significant experience as a central bank and money manager, and has played a key role in stopping the bleeding in the current recession.


4. The government's answer to the Great Depression was the New Deal--public policy that combined central economic planning, government largesse, and massive government public works spending. Currently, the government's response has been largely to intervene in the financial and industrial sectors but only for the purpose of maintaining the viability of those sectors as free enterprise. One of the things that helped prolong the Depression was the government's direct intervention in the industrial sector, competing for capital with private enterprise and further weakening job growth and productivity.

There are also many misconceptions that remain about the Great Depression. One is that President Herber Hoover was a laissez-faire Republican who tried nothing to slow the Depression. Although he was not the interventionist that FDR proved to be, Hoover was the consummate technocrat who believed that the federal government had a role to play assisting "Main Street." His earlier accomplishments included spearheading successful federal flood relief efforts in the South and water projects in the West. As U.S. Commerce Secretary he oversaw the expansion of the Department.

Actually, Hoover did attempt to intervene in the economy. He raised taxes and signed the disasterous Smoot-Hawley Tariff Act--both very un-Republican things to do. Raising taxes confiscated valuable capital at the time the private sector needed it most to pay bills, hire labor and invest. Smoot Hawley ignited a global trade war that closed foreign markets to U.S. manufacturers, putting yet more people out of work. But a case can be made that much of FDR's New Deal, rather than solving the Depression, actually prolonged it.

Another misconception is that World War II pulled the nation out of the Depression. Actually, two reliable economic indicators, the Dow Jones Industrial Average and the unemployment rate never returned to pre-Depression levels until 1953--20 years after the inauguration of President Roosevelt.

Just thought you might like to know.