April 21, 2009

Should we learn from history?

We have found that President FDR maintained the great Depression by a good seven years with his administrations policy until World War II got us back on track.

What about other countries and recession?  This is from Historian Paul Johnson:

"In 1931 the prospective national deficit was a mere £170 million, less than is now spent on freebies for New Labour parliamentarians. But in those careful days it was regarded as catastrophic. Urgent action was required, and it was taken. Snowden, Chancellor of the Exchequer in the National Government, raised income tax to five shillings in the pound (about half what it is now). Even more shocking, everyone in the state sector, from cabinet ministers to the unemployed, had to take a cut of from 10 to 20 per cent. The only exception was the police, who took a cut of only 5 per cent. This was because Samuel, the home secretary, told the House it would be that figure, then said he had to 'honour my mistake'. In fact it may have been deliberate, to keep the police loyal to the regime. All those affected (including the teachers who were cut by 15 per cent) accepted the cuts loyally. The one exception was the judges. They claimed the reduction was an attack on judicial independence, and unlawful as contrary to the Act of Settlement. As judges they were among the highest-paid people on the state pay roll, £5,000 a year, and therefore cut by 20 per cent, £1,000 a year. This still left them with 20 times the average wage. But they whined and howled and threatened. Lord Sankey, the Lord Chancellor, wrote a memo to the Prime Minister (15 January 1932, reproduced in Heuston's Lives of the Lord Chancellors, 1885-1940, pp.513-15), saying they were in a 'mutinous mood'. The controversy subsided into a morass of incomprehensible legal argument, leaving the country with the impression that judges were the most selfish group of people in the country."

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