Have you ever wondered how American high school history books in the future will condense the political and economic events of the last ten years into a few brief paragraphs?
In my junior year of high school I took American history as a standard part of the curriculum. Although I now wish they had given the course a more accurate title — something like The History of American Politics, Presidents, and War — at the time I couldn’t have known any better. I was not in a great position to receive the information critically, and as a result I would later regurgitate the basic narrative of U.S. History that the textbook writers gave as though it was the obvious truth. Overstatement is a history textbook's most effective tool.
(Of course, none of the key issues in historiography, such as how viewpoints and ideology bias the interpretation of facts, or how alternative views interpret historical fact differently, were addressed. Our books were as matter-of-fact on why things happened the way they did as they were on dates and names.)
Most everyone has had to take some version this course in school, and the central themes are familiar: America is a dream of hope and the greatest political and social experiment in history; the evil South seceded from the Union in order to keep their slaves, and the heroic Abraham Lincoln held the Union together and freed the slaves with the glorious Civil War; the Industrial Revolution led to the brutal impoverishment of the working classes, until the government stepped in with labor unions, regulations, and workers’ rights; too much capitalism in the 1920s, coupled with Hoover’s laissez faire philosophy of doing nothing, led to the stock market crash in 1929 and subsequent Great Depression; Franklin Roosevelt saved America from greed, poverty, and despair with his fireside chats and the New Deal; World War II gave the American economy its much-needed boost and set it on the path to recovery; and so on.
The culmination of my studies came during the essay of the final exam, in which we were to defend the notion that Franklin Roosevelt was the greatest President in American history.
Even as a politically-unaware teenager, at the time I felt uncomfortable making this case. (Intuitively, I had sensed something awry with the notion that mass crop destruction and make-work government programs had kept our economy afloat during the depression.) But my teacher insisted that we should be able to write in defense of something even when we disagreed with it. And so, not wanting a failing grade, I called Mainstream Belief as my muse and began to give examples of how Roosevelt saved America from capitalism, Great Britain from Hitler, and re-inspired belief and hope in the American dream. As I recall, I got an A.
Of course, were I to write that essay now, I would probably start first of all by citing "great" not as an admirable personal quality, but rather in the context of the Great War, the Great Famine in Ireland, or the Great Fire in London. I would name Roosevelt as our greatest President in the same sense that the depression of the 1930s was America’s "greatest" economic phenomenon up until that point. Or, in the same spirit that TIME Magazine had named Hitler Man of the Year in 1938: not as an endorsement of his beliefs and actions, but as an acknowledgment of his influence. I would have little conscientious objection to writing that essay.
(Indeed, given the ratchet effect, and the relative size of government before and after each respective president since FDR, one could write the same essay in defense of just about any of them.)
Today’s headlines often make me ponder how PhDs will write history for tomorrow’s young adults. Surely they will dedicate a section, or even a chapter, to the economic boom of the 1990s followed by September 11th and this decade’s economic woes. I imagine that, in fifty years, high school students may read something along these lines:
A Growing Crisis
Even though the United States weathered the immediate economic impact of the 9/11 attacks, it had shown that even the world’s greatest economic power was vulnerable. In fact, the nation would face growing challenges in the years ahead, prompted by wild speculation in real estate markets.
President Bush’s platform of an "Ownership Society" fostered a strong desire in the American people to purchase their own homes. Real estate prices had seen dramatic increases for years, and as a result American enjoyed an unrivaled prosperity. But the high levels of home ownership came at a cost. The housing market became crazed, as many Americans sought to purchase a home at any price. To meet the high demand for housing and construction, companies had to devise new ways of lending to accommodate lower incomes. These so-called "subprime mortgages" largely failed only a few years later, crippling lending companies and putting the entire financial industry at risk.
Once again, it was up to President Bush to make tough decisions to try and save the economy. He knew that, left to its own devices, the financial industry was headed off a cliff, and might drag the rest of the United States with it! Bush met with the top officials of the Treasury Department and the Federal Reserve, and they drafted a massive plan that would save the major banks — and, with a bit of luck, the economy as a whole — from ruin.
There are many parallels between the economic booms of the 1920s and 1990s. Unbridled capitalism led to over-consumption of goods, and people relied on credit to purchase what they could not afford on their own. Although this led to profits for big companies, it was unsustainable and could not last.
In 2008, the trouble was that housing prices were falling drastically, but with no available credit, few could buy them. Without consumer spending driving demand in housing, everyone’s wealth was beginning to erode and disappear. Thus, in order to counter the irrational swing in the market and keep housing prices stable, the government decided to back the finance companies directly. In so doing, they reinforced the value of these firms, despite the fact that they had been taking severe losses. Within a couple of weeks, the bailout was enacted, which cost the government an unprecedented $700 billion, equivalent to about 5.7 trillion in today’s dollars.
The bailout was a huge gamble, but it worked. Although inflation, unemployment, and business failures deepened for another five years, the economy eventually stabilized and resumed its pattern of solid growth, founded on high levels of consumer spending and public infrastructure. Housing prices returned to 2005 levels by the year 2012, and by 2018 they were 50 percent higher. 96 percent of families who had defaulted on their original loan were able to keep their homes.
Before leaving office, George Bush also created the FOB (Federal Oversight Board) that set new standards and regulatory influence for every aspect of the lending business. He also guided Congress in passing a law that banned short-selling, to prevent speculators from manipulating the market and making immoral profits from the nation’s struggles. (This ban would later become permanent, in 2012.)
By giving insurance to unfortunate lending companies, protecting families from being removed from their homes, and preventing others from harming the economy further, the stage was set for a recovery. It was America’s second brush with potential economic collapse — a test that pushed the economy to its very limits. However, by committing itself to supporting American businesses and housing prices, the government was able to moderate the financial industry and lay the foundation for a successful future.
Is it far-fetched to imagine George Bush receiving praise specifically for the bailout, which is currently unpopular and likely to cause further harm? I don’t think so. We would do well to remember just how vehemently many Americans opposed the likes of Abraham Lincoln or Franklin D. Roosevelt at the time they were in power. (Indeed, try to imagine what people would say about Bush if he threatened to pack the Supreme Court or run for additional terms.)
Just think: my children (and your children) may one day be writing an essay for History class, defending the notion that George Bush was the greatest President in American history!
October 2, 2008