There is nothing new under the sun. The United States has endured major financial panics in 1837, 1873, 1893, 1907, 1929, 1933 and now in 2008. Most of these economic events had ideological and political consequences -- as well as the inevitable economic play-outs. And if history is any guide, contrary to the hope of some and the fear of others, this is not the end of capitalism as we have known it.
But it is true that usually, major economic events have had political as well as economic consequences. For instance, the panic of 1893, which in some ways is similar to the current panic, was caused by overbuilding and sloppy financing of the railroads. The 1880s enjoyed dramatic economic expansion, which led to dangerous speculation. Once the railroad bubble burst, there was a run on the banks, a contraction of credit, and European investors demanded gold for payments, which forced the reduction in the value of the dollar.
Unemployment went from 3 percent in 1892 to 18 percent in 1894 -- not returning to single digits (6.5 percent) until 1899. Many out-of-work middle-class citizens failed to meet their mortgage obligations, abandoned their homes, and moved west. That was the end of the Gilded Age. After years of close presidential elections, McKinley's decisive victory in 1896 -- fought out over economic issues -- brought on political realignment and the beginning of the Progressive era. With the exception of President Woodrow Wilson from 1913-1921 (who won in 1912 only because Teddy Roosevelt split the Republican vote), Republicans controlled the White House from 1897-1933.
If economic events affect politics, it is also true that political events often have economic consequences. For example, the fall of the Soviet Union two decades ago deeply compromised the credibility and appeal of government-managed economies. As a result, throughout the world -- and particularly in the United States -- the past two decades have seen deregulation and a respect for market forces flourish. Not only Marxists but also conventional big-government democratic liberals in the West consistently lost the policy arguments to those of us who argued for a more vigorous, deregulated and freewheeling capitalism.
Those abiding and ever-true principles of economics will be tainted for a while by recent economic events. Now waiting in the grass to leap up and champion the cause of anti-free markets are the left two-thirds of the Democrats here in America, our mainstream media, the socialists and regulators in Europe, and the Mussolini-style corporatists in Russia, China and perhaps in America, too.
Blankley, who had been suffering from stomach cancer, died Saturday night at Sibley Memorial Hospital in Washington, his wife, Lynda Davis, said Sunday.
In his long career as a political operative and pundit, his most visible role was as a spokesman for and adviser to Gingrich from 1990 to 1997. Gingrich became House Speaker when Republicans took control of the U.S. House of Representatives following the 1994 midterm elections.
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