New Agenda for America: Mirror, Mirror on the Wall…

To mark the 80th Anniversary of the Great Crash of ‘29, we asked 15 progressive thinkers to write about lessons learned and what lies ahead. Together, their reflections constitute a New Agenda for America — a message of how the ideals of a fair society should apply to the economic and social policies of our time.

Those who gaze into Harry Potter’s Mirror of Erised see not their faces, but their deepest desires. The Great Crash and the even greater Depression that followed work the same way, except that their magic is pitch black: Viewers see their worst nightmares.

In the thirties, as New Deal programs ushered in the 40 hour week, Social Security, and unemployment compensation while regulating utilities, stock exchanges, banks, and labor markets, many otherwise sensible people saw Red. They became passionately convinced that America was only steps away from totalitarianism and that swelling public deficits implied a German-style Great Inflation. More recently, we have been told that a tariff bill that passed many months after the Crash was really responsible for the whole mess; that somehow, with all the banks closing as FDR took office, that just doing nothing would have been better than putting people back to work, and that forcing Wall Street to disclose basic information about the products it sells was either un-American or counterproductive or both.

The real lesson of the Crash, of course, was what happens when you fail to regulate markets, especially financial markets. And the lesson of the New Deal is how you fix this. You can safely disregard claims that regulating banks and stock exchanges destroys profits or the capitalist system or somehow threaten “freedom.” The caterwauling about “socialism” is extensively a smokescreen for private interest and avarice; and if banks are deleveraging - cutting back their lending - then vigorous state action to secure credit and mortgage markets is no threat to the future of anyone but loan sharks.

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston, Senior Fellow of the Roosevelt Institute, and a member of the Advisory Board of INET.