Beating Bennett

I wonder, if I was a PM faced with the circumstances confronting R. B. Bennett in the 1930’s, how I would steer the nation. Keeping in mind that I believe in the utility of a free market, and that my political leanings, to the extent I have any, are almost certainly libertarian (see http://gordonfeil.blogspot.ca/2016/11/questions-about-practical-libertarianism.html and

http://gordonfeil.blogspot.ca/2016/11/normal-0-false-false-false-en-ca-x-none.html).

The big problem in the 30s was the shrinking money supply. I am lumping credit into the money supply. At a time when banks were cancelling credit, the Bennett government was focused on balancing the budget. While a balanced budget makes sense, over what time frame? If you spend more than you earn this weekend, should you be bothered by it? If you are going to earn it Monday through Friday, then what does it matter? You may not have a balanced budget for the weekend, but for the week you do. But does it even have to be for the week? So long as your earnings this month exceed your outgo, does it matter on what days each occurs? For that matter, does it matter if some months you run a deficit, so long as for the year as a whole, you have a surplus? Yet, what is so magical about a year as a timeframe? Why not a decade or a quarter century?

Canada may be the country that was hardest hit by the “Hungry Thirties”. Laboring wages were incredibly low. Even as low as 2 cents per hour in some cases. The “relief” camps, set up by the government in remote areas to remove young men from cities where they might voice their dissatisfaction, were essentially slave camps. There were plenty of goods around, but most people did not have the money to buy them. Inventory surpluses were so extensive that in some cases, inventory was destroyed. Food was not scarce; it was simply unaffordable by the masses. Eventually the government solved that by sending some of the masses to the destruction of war. I am being partly facetious here, but not totally.

So how should Bennett have responded? He should have extended credit to the needy. He campaigned against hand-outs on the basis that it would train people to not be industrious. Of course, it is likely he just didn’t want to raise taxes on the rich to fund the dole. Credit would have been more effective methinks. The most engaging politician ever produced in this country, and maybe in the whole Western World, was probably William Aberhart. Too bad he was such a bungler as Alberta Premier. But his idea of extending credit to the poor was a good one. He didn’t know how to execute it. What should have happened in Canada probably includes the following:

1. Stockholders rights should have been protected from rapacious managers who had incredibly high wages during the Great Depression. Perhaps a limit on total remuneration (salary, stock options, etc.) to a reasonable multiple of the wage of the average assembly line worker within the business.

2. Government credit granted should have been extended to the needy on the basis of zero interest and payback as conditions improved. This would have meant a budget that was unbalanced over a short timeframe, but over the long haul it could have been balanced with funds inflows during times of prosperity, or simply by the printing of new money.

3. The borders should have been opened to free trade. All customs duties eliminated. This would have reduced prices on consumer goods. It probably would have allowed American freight companies to compete on Canadian freight. A significant food distribution problem was that producers found it more profitable to let the food spoil than to pay the freight getting it to market. Open borders probably would also have allowed international markets to bid up the price on foodstuffs. Meat packers were selling beef at 19 cents a pound while farmers were being paid 1 cent a pound. This was only feasible because of government intervention in the market allowing for price and profit dislocations.

4. Fully applying the biblical rules regarding the release of debt after 6 years would have restored dignity and economic security to many oppressed families. Of course, such measures should only take place when the creditors have known in the first place that they were lending on that basis.

5. Sales tax should have been eliminated. Government could have been funded by the issuing of new money. This means that Provincial and municipal governments should have been allowed to issue money also. A free market would have destroyed the worthless money and kept the issuance honest over the long run.

I could go on, but I need to haul a bunch of stuff to the thrift shop. In short, the problem was not capitalism. It was the abandonment of practical concern for the poor combined with government bullying in the economy.

Who Won WWII?

When I was young, I saw people in more black and white terms than I do today. This resulted in liking some and disliking others. Long experience has shown me that people are the result of many influences. All have aspects I like and ones that I dislike. Some are more compatible with me, so I still tend to like them better I suppose, but at least I have learned not to be as judgmental as I was.

Even Josef Stalin, who instigated the deaths of millions of his own people, had an honorable side to him. I am reminded how he refused to save the communists in Greece from the British after the Second World War because he had promised Churchill that Britain could have Greece. It would surely have been in his interests to have a communist Greece, but he kept his word. I know we could argue that he kept his word because if he hadn’t, then Britain would not have allowed the Soviets free reign in the Slavic countries, so it was really in Stalin’s interests to honor his promise, but I don’t see how Britain was in any position to stop Russian predominance in Eastern Europe.

Long ago I started asking Why in regards to people’s behavior, partly out of curiosity, but partly to know how to influence better behavior. I’m a Bible student, and I know that the Bible is not so much into the Why of human behavior so much as the What and How. I mean Bible based therapy is focused on What, not Why. William Glasser’s Reality Therapy is a solid approach to psychological problems that focuses on the What far more than the Why. This is in contrast to psychotherapy, which wants to explore childhood and formative influences to understand what is going on. The problem is that no amount of understanding of how you got to where you are is going to fix the problem. Reality Therapy is about identifying and making choices and then acting on them. It is done with the aid of a therapist who behaves as an interested and loving friend, whereas the psychotherapist practices detachment.

Back to the point that began this post. We are all a mixture of good and bad. Propaganda sometimes tries to persuade us to make enemies. I grew up during the Cold War. The godless Soviets were not to be trusted. They wanted to bury us, so thankless were they for the USA winning the War. Now that I am older, I see that it was really the Soviets that won the war. They cost the Germans 6 million men, whereas the USA and other allies took out only 1 million. The Soviets lost more personnel in the Battle of Stalingrad than did all the Allies during the entire war.

FDR recognized this and he appreciated it. He viewed the Soviets as America’s friends. He died, and the rather inexperienced Truman, who in his 82 days as vice-president had only met FDR twice, began listening to Edward Stettinius and other business moles in government who felt threatened by communism. They urged Truman not to trust the Soviets. Even the dropping of the 2 atomic bombs on Japan seems to have been to threaten the Soviets. Japan was already defeated by that time. The mega “slaughter bombing” had destroyed both military targets and hundreds of thousands of civilians.

Anyway, just musing this morning about the complications of people’s motives and how they are not always evident, so we need to be slow to judge.