Air Date: Week of November 7, 2008

Many hope President-elect Barack Obama will follow in FDR's footsteps and lead the country through a great transformation. (Courtesy of Barack Obama)

Franklin D. Roosevelt launched his New Deal in the first hundred days of his administration. Will President-elect Barack Obama embark on an ambitious green New Deal when he takes office? Host Steve Curwood talks with Robert Reich, former Secretary of Labor in the Clinton administration, about the prospects for the new president.

Transcript

CURWOOD: Some people see an echo of the roaring 20s in the turbulence of present day financial markets. Back then the US economy went on a wild ride. Then, came the fall…

[MUSIC: Bing Crosby, “Brother Can You Spare A Dime” from a You Tube video]

CURWOOD: …the fall of 1929. The stock market crashed, thousands of banks failed, unemployment soared.

[MUSIC: Bing Crosby, “Brother Can You Spare A Dime” from a You Tube video]

CURWOOD: And by the next election America was deep in what became known as The Great Depression. Economist Robert Reich was the Secretary of Labor in the first Clinton Administration – now he teaches at the University of California at Berkeley.

And Professor Reich, how much does 2008 feel like 1929 to you?

REICH: Well, it feels a little bit like 1929, that is, there was before 1929’s great crash a lot of leverage, a lot of borrowing going on, both by the private sector and by consumers. Great concentration of wealth – the top one percent in the 1920s had about, just about twenty-two percent of total national income. Haven’t seen that since then until last year. We also see and saw in the 1920s and also over the last few years, a lot of – well, irrational exuberance you might call it. Some people would call it speculation in Wall Street. Well, all of that caved in in1929 and continued to cave in. Now hopefully there are profound differences – that is, in 1929 the economic authorities, that is the Federal Reserve Board, the Treasury, didn’t really know how important it was to infuse a lot of money, a lot of public money into the system very quickly in order to overcome a crisis of confidence. And we went in the opposite direction in fact. Herbert Hoover put the breaks on government spending, thought hat balancing the budget was very important, exactly the wrong instinct. Right now we have flooded the market. The Federal Reserve Board has – is spending like mad, as is the Treasury Department as you know, so hopefully we will not have a 1929-type situation.

CURWOOD: So, Mr. Hoover lost his job to a man named Mr. Roosevelt who came in on pretty much a landslide and had this to say as he began his term.

ROOSEVELT: This nation is asking for action, and action now. Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of a war. But at the same time through this employment, accomplishing great, great needed projects to stimulate and reorganize the use of our great national resources.

CURWOOD: So, Professor Reich, Franklin Roosevelt didn’t talk about pouring lots of money into banks. He said let’s use the federal government as the engine to hire a lot of people and put them to work. How relevant is that approach today? And to what extent do you think it should be part of a green New Deal?

REICH: Steve, it is relevant to the extent that Roosevelt did understand how important it was to rebuild the nation’s infrastructure, build roads and highways, bridges, all sort of ports, things that the nation had never done before, because there was so much unemployment, because there was so much excess capacity. And there are parallels today. Our infrastructure is crumbling, most reports show that there’s a lot of deferred maintenance, and with regard to the whole issue of energy and the environment, there is so much to do. The entire area of alternative energy sources, government investment in everything from solar to wind to biomass, all sorts of fuels to get rid of our dependence on oil, and also clean up our environment. There’s also likely to be a lot of unemployment out there and maybe, just maybe, a lot of that investment will generate many, many new jobs - green jobs. If we’ve got investments that have to be made in infrastructure, in the environment - well, borrowing to make those investments can generate high pay offs and grow the economy in the future.

CURWOOD: Former Secretary of Labor Robert Reich’s latest book is called “Supercapitalism.”

 

Links

Robert Reich's Blog