In his speech of Dec. 6, 2011, at Osawatomie, Kan., our president said capitalism doesn't work. "Now, just as there was in Teddy Roosevelt's time, there is a certain crowd in Washington who, for the last few decades, have said, let's respond to this economic challenge with the same old tune. ‘The market will take care of everything,' they tell us. If we just cut more regulations and cut more taxes - especially for the wealthy - our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn't trickle down, well, that's the price of liberty.
"Now, it's a simple theory. And we have to admit, it's one that speaks to our rugged individualism and our healthy skepticism of too much government. That's in America's DNA. And that theory fits well on a bumper sticker. But here's the problem: It doesn't work. It has never worked. It didn't work when it was tried in the decade before the Great Depression. It's not what led to the incredible postwar booms of the ‘50s and ‘60s. And it didn't work when we tried it during the last decade. I mean, understand, it's not as if we haven't tried this theory."
He said it has never worked. His first example was the decade before the Great Depression.
Consider this ... President Harding (Republican) inherited a depression from the progressive Democrat Wilson's administration and an unemployment rate of 20 percent. He reduced taxes, reduced the national debt, and cut back on immigration. Then, President Coolidge (Republican) followed through on Harding's policies with his own battle to avoid government intrusion into the private sector. Both men felt the excessive taxes on the wealthy were a hindrance to prosperity. Therefore, they rolled them back. The result was The Roaring '20s when money was as plentiful as was bootleg whiskey.
Along came Hoover (Republican) who thought the government should help and we went into another depression. Franklin D. Roosevelt (Democrat) superseded Hoover as president. He followed the Keynesian socialist economic theory, which is used today, without success. The Great Depression lasted from 1930 until 1941, when we became embroiled in World War II because of the Japanese attack on Pearl Harbor, Dec. 7, 1941.
In 1960, President J. F. Kennedy (Democrat) successfully reduced taxes and regulations to help us out of a weak economy.
We blundered through the Nixon (Republican) and Ford (Republican) administrations with the usual economic ups and downs.
Then came President Carter. A new word entered the economic lexicon - stagflation. The economy was stagnant and inflation was running rampant. During the last two years of Carter's term, inflation was 11.3 and 13.5 per cent, respectively. Keynesian economics was the order of the day.
Then came President Reagan (Republican) who returned the economy to prosperity with tax reductions and reduced government regulations. Revenues substantially increased while the Democrat Congress continued to spend into deficits.
Supply-side economics, formerly known as classic economics, was his guiding light.
We muddled through the first Bush administration; entered the Clinton administration with its firm belief in the Keynesian economic theory, and things were looking bleak until House Speaker Newt Gingrich put together the Contract with America, which returned us to prosperity. Clinton, being the shrewd and intelligent man he is, went along with the idea of tax reduction and reduced regulations. He presided over four years of a strong economy, balanced budgets and increased tax revenues. Pure supply-side economics.
All in all, this exercise is to point out that our president isn't telling the truth, again. Capitalism works. Freedom and liberty work. Too bad he doesn't understand that.
• Don Kennedy is a graduate of Dartmouth College with a degree in sociology. He has been a resident of Ahwatukee Foothills since 2002.