A (Somewhat Unlikely) Summer Reading Recommendation for Advocates
Congress is headed home for the July 4th recess. It’s time to take stock, to think, and maybe catch up on some reading—say, Lords of Finance: The Bankers Who Broke the World, the world of the 1920s and 30s, that is.
Why might child advocates want to read Lords of Finance? It offers a lesson in balance that’s particularly relevant to those of us working to make a difference in a time of tight (to put it mildly) budgets.
Many economic analysts credit last spring’s stimulus package with helping to turn the economy around. But as we inch toward economic recovery, a question keeps arising: how long do we focus on short-term spending in order to stimulate the economy, versus longer-term efforts to reduce the deficit?
As with most things, balance is key.
Economists who have studied the Great Depression often say that stimulus spending—that is, deficit-spending by the federal government—was essential for getting the economy moving again. Another lesson from the Great Depression: if you try to address the deficit too soon, you can stall a rebound.
Many child and youth advocates were frustrated in June 2010, when the Senate tried and failed to pass a new “extenders” bill that would have extended federal aid to individual out-of-work families and aid to states, which continue to struggle to meet rising Medicaid and other costs.
Some economists were also concerned that we were shifting to a deficit focus too quickly, and that limiting assistance could jeopardize our economic recovery before it can take hold, as the Coalition on Human Needs recently reported.
We all agree that our nation’s long-term debt needs fixing. The issue is timing.
And here is another lesson from the Great Depression – not from the aftermath, but from the period leading up to the stock market crash of 1929. If you don’t get the policy balance right, there can a big difference between fiscal health (the federal deficit and national debt) and economic health (job growth, productivity and adequate wages).
Fiscal health, in other words, does not guarantee economic health. In fact paying too much attention too soon to fiscal health can impede economic progress, sending a destructive ripple effect out through future generations.
That’s the story in Lords of Finance. European nations took different paths to cope with their huge debts after World War I. One history lesson that Baby Boomers may recall: when Germany just ignored its debt and printed money, it experienced devastating rates of inflation.
But here’s the other history lesson: when England took a rigid approach, insisting on reducing its debt first and foremost, its economy—jobs and wages— stagnated, contributing to an unemployment rate of over 10 percent for years.
We must attend to our federal deficit—but not too soon, and not at the expense of getting our economy back to growth and our jobless families back to work.
Of course, on a more inspiring note, the bankers didn't really break the world after all. As a recent Roll Call op-ed reminds us, it's often in times of catastrophe that we as a nation have fashioned some of our proudest accomplishments, like Social Security – if we don’t sacrifice long-term well-being for a short-term balance sheet to impress Wall Street.
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Jan Richter is the editor emeritus of the SparkAction Update e-newsletter, a clinical social worker and a long-time child advocate. She lives in rural Virginia.
