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Old Economy Steve Meme: An Absolutely True Criticism Of Baby Boomers and Their Economy

There is a new meme that has been creeping its way into various corners of the Internet. On a superficial level, it seems to consist of nothing more than the same snarky swipes at the tough economy facing today's youth that one can find plastered throughout cyberspace. Dig deeper, however, and this new viral trend offers some of the sharpest criticism of the economic status quo that can be found today. It's called Old Economy Steve and, for anyone who wishes to study the merits of that historical period which directly preceded our own, it deserves further analysis.

One recurring theme of these memes is the argument that members of the so-called Silent and Baby Boom generations, despite being quick to attribute the hardships facing today's youth to character shortcomings and over-entitled whininess, conveniently ignore the unique advantages that existed for young people when they came of age only a few decades ago ... and which have since been squandered.                     

 

While certainly harsh, this particular criticism has a strong bite precisely because it rings so true. Instead of being abandoned to a fate of chronic unemployment when the free market failed to provide adequate job opportunities for those just entering the national economy, several  of the programs passed by President Franklin Roosevelt as part of his "New Deal" agenda for fighting the Great Depression — including the Public Works Administration (PWA), Works Progress Administration (WPA), Civilian Conservation Corps (CCC), and National Youth Administration (NYA) — established a precedent for active government involvement in creating jobs whenever the private sector could not or would not do so. Similarly, the creation of agencies like the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC) offered protection against the caprice, chicanery, and/or incompetence of the financial sector, thus at least partially ensuring ordinary Americans against calamities such as the 1929 stock market crash. Finally, not only did World War II provide the federal government with an opportunity to sufficiently expand its economic investment so as to create a nearly-full employment economy (something which could have occurred without the global conflict but was no doubt facilitated by the opportunity provided therein), but measures like the GI Bill of 1944 provided substantial assistance for those in the Greatest Generation who needed help affording mortgages, starting businesses or farms, or paying for college.

In short, the "Old Economy Steve" era was one in which the private market was respected as an ideal rather than worshipped as an untouchable god. When possible, the prevailing logic went, jobs should be created by the private sector. If that failed to happen, however, the federal government had a responsibility to step in. As Roosevelt explained when articulating the ideological justification of his first presidential campaign, "Every man has a right to life; and this means that he has also a right to make a comfortable living. He may by sloth or crime decline to exercise that right; but it may not be denied him."  Because of this operational premise, the resulting boom in socioeconomic opportunity and mobility was so pronounced that by 1952 (which began with gradual relief during the Great Depression that became an outright recovery starting with World War Two), Democratic presidential candidate Adlai Stevenson could  make remarks such as these to a student assembly at the University of Wisconsin:

Most of you students were born, I suppose, in the early thirties and do not remember the state of the world at that time. Looking back, it must be hard for most of you to realize that such a world ever existed. Your world has troubles of its own — perhaps greater troubles than those of twenty years ago. But one worry you are spared is the worry of finding a job. When you finish college and military service, you will enter a world which wants and needs you.

This seems a natural thing — when you have it. It is a terrible thing when you don't ....

Of course, when Stevenson admonished those "who can't remember where we have been to know where we are," he did so not to be a scold, but because they could not afford to forget that "this freedom and this security [that] are part of the landscape of your world... have only been part of that landscape for a short time.

            This brings us to the Old Economy Steve observation about unions:

To appreciate the full historical context here, one must again return to an understanding of Great Depression America. As explained by Marriner Eccles, who served as Chairman of the Federal Reserve for much of that period (1934-1948):

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth — not of existing wealth, but of wealth as it is currently produced — to provide men with buying power equal to the amount of goods and services offered by the nation s economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

Naturally, the superior alternative to this economic model is one in which unemployment is sufficiently low, and wages adequately high, so as to provide a sustainable foundation for the mass consumption patterns necessary for widespread prosperity in a capitalist system. Back when a large fraction of American workers belonged to labor unions (in 1955, for example, more than a third of all employed citizens were part of a union), workers had enough bargaining clout to pressure their employers into providing them with wages and benefits commensurate with evolutions in the cost of living. Indeed, even Americans who weren't part of unions still benefited from the widespread presence of unionization, as employers who wished to remain competitive in the job market needed to be able to lure workers with income packages comparable to those provided by their unionized counterparts. This prevalent unionization was in large part due to legislation like the National Labor Relations Act of 1935 and the Fair Labor Standards Act of 1938 (both part of Franklin Roosevelt's Second New Deal), as well as the generally pro-union policies of the presidents who served between the end of Roosevelt's administration and the beginning of Ronald Reagan's first term in 1981. Because these labor protection statutes and other favorable federal policies helped ensure that Americans who wanted to join unions had little difficulty doing so, worker wages increased, the middle class grew in size, and the economy as a whole expanded. Indeed, as former Secretary of Labor Robert Reich explained several years ago, even today union workers are likely to earn considerably higher wages (as well as receive such benefits as employer-provided health insurance) than non-union employees. Nevertheless, one of the chief legacies of Reagan's presidency was the gradual weakening of labor protections and disempowerment of unions. Consequently, researchers have found that workers who try to form a union now have only a 1 in 5 chance of successfully doing so. As of 2012, only 6.6% of American private sector workers were unionized, compared to 28% in Canada, 25% in the United Kingdom, and 20% in Germany.

Finally, we can look at Old Economy Steve's commentary on the federal deficit:

 

It is noteworthy that this meme pinpoints the rise in our federal deficit as having begun over the last thirty years, since it was indeed the Ronald Reagan presidency that initiated our current trend in reckless spending. Because the goal of Reaganomics was to provide massive tax breaks to the wealthy while increasing military spending, it inevitably rested on the premise that the federal government would virtually eliminate social welfare spending (i.e., the economic and social programs implemented since the start of Roosevelt's first term) in order to make up the cost. Although many welfare programs were cut at the time, and have been cut since, they have not been nearly enough to make up for the expense of the tax cuts and military increases. While Roosevelt and his seven successors added $772 billion to the federal deficit during their forty-eight years in office (an average of $96.5 billion for each), Reagan heaped another $1.412 trillion to the deficit through his programs, a number echoed by his immediate successor George H. W. Bush ($1.03 trillion). Although the next president, Bill Clinton, managed to somewhat reverse this trend and actually turn in a $63 billion surplus during his administration, George W. Bush's continuation of Reagan's agenda — i.e., massive tax cuts for the wealthy and increased military spending (this time for the wars in Afghanistan and Iraq)  squandered Clinton's legacy and left America with a $3.294 trillion deficit. By the time Barack Obama took office in 2009, the conservative insistence that the tax cuts and increased military spending be left untouched (and indeed exacerbated) caused him to compile the greatest deficits of all, as he was unable to make the reductions in those programs necessary to offset the cost of his stimulus package or health care reform bill (although the latter is designed to reduce the debt by $143 billion over ten years).

This is not to say that the exact policies implemented by Roosevelt and his successors should be replicated today. That said, the basic principles which guided economic policy in the half century following his presidency are responsible for the prosperity and opportunity that Old Economy Steve could take for granted. Foremost among them was the belief that "bold, persistent experimentation" was the key to success, not rigid adherence to economic dogma — be it Marxism on one end of the spectrum or Austrian school laissez-faire on the other. "It is common sense to take a method and try it," Roosevelt explained. "If it fails, admit it frankly and try another. But above all, try something." As the historian David M. Kennedy pointed out in his Pulitzer Prize-winning book on Great Depression and World War II-era America, it was hard to discern any kind of consistent philosophical framework from policies that at times "tinkered with inflation and with price controls, with deficit spending and budget-balancing, cartelization and trust-busting, the promotion of consumption and the intimidation of investment, farm-acreage reduction and land reclamation, public employment projects and forced removals from the labor pool."

More important than the willingness to try anything, however, was the belief that the economic rights of citizens needed to be a paramount consideration for any free government. As Roosevelt put it in his 1944 State of the Union Address, "We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence." Because "necessitous men are not free men," it was important to recognize what was, "so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all - regardless of station, race, or creed." Indeed, I can think of no better way to encapsulate the message of Old Economy Steve than to reiterate that Economic Bill of Rights:

"The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

The right to earn enough to provide adequate food and clothing and recreation;

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being."

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