Neely Young: Cicero's Surprise
“The budget should be balanced, the treas-ury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.” Cicero – 55 B.C.
The quote was the opening line in a speech by Economist Dr. Albert Niemi, dean of the business school at Southern Methodist University and former UGA business school dean. Niemi was a columnist for Georgia Trend for many years before he left for SMU. His remarks were part of a recent talk to more than 350 people, who gathered in Cobb County last month at a seminar sponsored by Bank of North Georgia.
Here are excerpts from some of his comments made in the past, with a surprise at the end.
“Last January, I argued that we were in for at least 12 to 18 months of recession, and it would be mild. Obviously we missed it badly. What happened?
“I think the main reason most forecasters missed the call is that they underestimated the strength of the internal cause of this recession. We are going to have a recession with or without our present war,” he said. “We are having the recession because of excesses of the past decade.”
He continued: “Debt is still an albatross around the economy’s neck. Consumers are going to have to pay off their debt before they start spending vigorously; we have never had a strong recovery that was not consumer driven.
“The unparalleled spending of the recent past triggered the greatest improvements in the standard of living in American history. Consumers bought more automobiles, televisions and houses than ever before. After a while they stopped spending. They either had all the cars or houses they needed – or they were too broke. Unfortunately, production kept producing and the economy is being depressed as a result.
“These past two years were the worst for the auto industry in history. The market saturation in residential and commercial real estate is even more depressing. The over-supply in commercial real estate is the worst since the Great Depression. Some analysts suggest that it could take a decade to balance supply and demand.
“Many banks are not in a position to help finance a recovery. They are more concerned with correcting their balance sheets than making new loans, and, despite interest rate declines, credit is still tight. In a nutshell, the economy is still in trouble because of debt, market saturation and a credit crunch.”
Niemi said, “Traditionally, when the economy is in trouble, the government and the Federal Reserve come to the rescue. In this recession the help has been too little too late. It will take more than cheap money to reduce the debt burden, correct saturated markets and solve the problems in the financial community. The problems outlined above will not go away soon. The recovery will be long.”
Here is the surprise. The quotes above come not from his speech in Cobb County a few months ago, but from a column Niemi wrote in a January 1992 issue of Georgia Trend magazine.
Yet they are almost word for word the same as his recent talk. The economy in 1992 was in the tank, as a result of excesses of the 1980s and the Gulf War. The economy is in the tank today because of the excesses and easy money from 2002 to 2008 and somewhat from our present war.
The U.S. economy pulled out of the 1992 recession, and America experienced the greatest prosperity in its history and even balanced the federal budget at the end of the decade in 1999!
Niemi’s quote, “The budget must be balanced …” came from a statement made by the famous Roman statesman Cicero, 55 years before the birth of Christ. Early in 45 B.C., Rome did balance its treasury, public debt was reduced, and people began to work. Rome went on to have almost 400 years of prosperity.
The lesson Dr. Niemi was trying to convey in 1992 and again in 2011 could be summed up with a quote from Theodore Roosevelt, who said: “Thrice happy is the nation that has a glorious history.”
Our nation and state have had a glorious economic history, the greatest in the world. Let’s hope we will return to it soon.