President Barack Obama can look to former President Calvin Coolidge's economic achievements in the 1920s as he tries to shape a successful path to financial recovery, panelists said in the third lecture in the "Interesting People, Interesting Times" series on Wednesday night at the Tuck School of Business.
The panel featured former chair of the Democratic National Committee and former Vermont Gov. Howard Dean, chief economist of the Parthenon Group Roger Brinner, economics professor Douglas Irwin and Tuck Associate Dean Matt Slaughter and focused on the current economic recession.
Irwin began the panel by drawing upon the parallels between today's financial instability and that of Coolidge's presidency. The roaring '20s were a time of steady economic and technological growth, aided by the expansion of home electricity, but farmers suffered high rates of debt. Coolidge consistently vetoed attempts by Congress to enact price support legislation to assist farmers economically, calling price fixing an "economic folly," Irwin said.
Today's economy is also undergoing structural and technological change, though Irwin emphasized that Coolidge was aided by the health of the period's economy in creating a smooth recovery.
"Making the transition is very difficult when we have a stagnant economy," Irwin said of the current period.
Brinner discussed the "myths" in politics that impede a bipartisan agreement on the federal debt. The federal debt has risen significantly during Obama's presidency, and Congress is operating on anecdotes instead of facts, according to Brinner.
"We're on a path that everyone but Washington knows is unsustainable," he said.
He pointed to public perceptions of the shrinking incomes of middle-class Americans, calling this belief a "falsehood." He said that positive income growth indicates that the middle class is in fact not declining and advocated the slow reduction of the federal debt.
"I am an anti-deficit hawk, but I'm a gradualist," he said.
Dean urged the government to let the country go over the fiscal cliff in order to cut defense spending and return to Clinton-era taxes, arguing that the government needs a base of fiscal responsibility in order to support an increased number of social programs.
Dean emphasized that Coolidge's Vermont roots shaped the former president's policies. Coolidge's support of civil rights for women, American Indians, Catholics, Jews and African-Americans demonstrated his "Vermont character," he said.
"What we really are is libertarian with a very strong communalism streak," Dean said. "We're not used to having the government tell us what to do."
Slaughter said that Coolidge's humility is his greatest lesson to Obama and current politicians. Coolidge never took responsibility for the roaring economy, though many politicians laid claim to it later during their time in office, Slaughter said.
Economic stability can have a wide range of nuanced reasons, including technological innovation.
Slaughter also commended the humility that some politicians demonstrated during the financial crisis and questioned others' reactions that resulted in the vilification of the banking system.
"Crises in capital markets are hard things to predict," he said.
Dean, however, said that banks were "too big" and called for systematic changes. He argued for increased regulations to encourage long-term investors in riskier but productive ventures.
In response to an audience member's question about college students' political apathy, the panelists spoke of their "high hopes" for the next generation.
"I think they ought to vote," Dean said. "Politicians may not help you much, but they sure can hurt you."
Slaughter also emphasized the opportunities available to students who desire leadership roles in repairing the economy.
The panel was presented by the Calvin Coolidge Foundation with support from the Rockefeller Center and Tuck.
