Sunday, July 8, 2012

Defying history?

An AP story making the rounds yesterday, as well as a similar AFP story, suggest that for President Obama to win re-election in the face of our country's continued high unemployment rate would represent some kind of miracle, contrary to all recent historical precedent. Stories like these might be helpful in building up Obama's image as a miracle-worker, but they don't fairly represent history.

In passing, the AP story does note that the last time a president won re-election with unemployment higher than it is today was 1936, as if to suggest just how unlikely such a victory would be. But what if 1936 is in fact the closest historical parallel to today? We have not had a recession this severe since the Great Depression. When Franklin D. Roosevelt came into office, the financial system was on its knees, and the country was suffering massive unemployment. Nothing like that kind of financial collapse occurred again until 2008. And although we have had many recessions during the intervening years, we never had the kind of shocking collapse in asset values, notably home prices and financial portfolios, as also occurred in 2008. The only reason we do not see the shantytowns and bread lines that existed in the 1930's is that we have a better social safety net (partly thanks to Roosevelt) than existed at that time. It is food stamps, Social Security benefits, and unemployment insurance that are keeping millions of people out of abject poverty. Those programs were not available in the 1930's.

The public understood the severity of the problems Roosevelt had to deal with when he was elected in 1932. Many were ready to give him dictatorial powers. But people did not expect FDR to bring economic conditions back to normal in his first four years. They saw slow progress in lifting the country out of recession, and efforts by the federal government to try new ideas. That was enough to re-elect Roosevelt in a landslide. (FDR lost only two states in 1936.)

I'm not predicting a landslide for Obama. The public seems less inclined to give the president the benefit of the doubt, and more impatient for instant results than people were in the 1930's. And the crisis this time is not as severe as it was during the Great Depression. Still there are no better recent historical parallels for the upcoming re-election campaign. That is why President Obama will not be defying history by winning re-election while we are still in the midst of a bad economy. He will be re-playing to some extent the history of 1936.

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