The year is 1930. Banks are failing, the stock market is in free fall, people are losing their jobs and the federal government is reluctant to help. Sound familiar?
Professor Hugh T. Rockoff discusses the causes of the Great Depression in his American Economic History class. When I heard him talk about the Depression a year ago, a student raised his hand at the end of the lecture. "Could it happen again?" he asked. "No," Professor Rockoff replied immediately, "because the government now knows to step in and save the banks."
Last week Congress proved Professor Rockoff wrong. In an act that shocked the world, the House of Representatives defeated a bill that would have made great progress toward ending the economic crisis we are in. Congress screwed up, but this letter is not to them. It is to you, the average American, because Congress has finally decided to listen to the American people, and they could not have picked a worse time. Congress knows this bill needs to pass, but Americans don't seem to understand that.
A lot of people are upset about this bill, and rightfully so. After all, typical Americans are not Wall Street bankers making shady lending deals, or irresponsible borrowers taking loans they can't afford. So why should we hand over our tax dollars once the banks start losing on their risky gambles?
The reason is that this crisis is not just about those Wall Street executives. When the banks fail, the economy fails. This can already be seen. On Monday, when Congress rejected the bill, the market had its worst day in over 20 years - worse than the day the market opened after Sept. 11. The banks were not the only stocks to fall on Monday. Google fell 11 percent. General Motors fell 14 percent. In fact, only one company out of the 500 on the S&P 500 was up on Monday - Campbell Soup. Clearly investors were not worried about a company specializing in cheap food that is easily stockpiled.
Even worse, this recession now threatens the entire world. Banks in Europe and Asia have failed or been nationalized, and there is growing international pressure on America to get this bill passed. When stocks fall, we all lose. The hedge funds are not the only ones losing money, so are our parents' retirement funds. The fact is, this bill's price tag is less than the cost of doing nothing. Yes, accountability is important, but the problems we face are simply too great to sit by and do nothing.
The proposed bill is nothing to be happy about, but most experts agree it is better than the alternative. We must decide between the lesser of two evils, and time is short. Remember, 75 years ago, Hoover also thought it was a bad idea to intervene in the economy to save it. He thought the free market should pay for its mistakes and fix itself without government help. Roosevelt disagreed. We must decide, do we want a Hoover plan or do we want a Roosevelt plan? When faced with a crisis, shall we do nothing or shall we act? When President George W. Bush, Speaker Nancy Pelosi, Sen. Barack Obama, Sen. John McCain, Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson all support the passage of this bill, I think the decision is clear.
Noam Brown is a Rutgers College senior majoring in mathematics and computer science.
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