D o w n s i z e r - D i s p a t c h
Quote of the Day: "History doesn't repeat itself, but it does rhyme." -- Mark Twain
Subject: Educate the Powerful!
Mark Twain was right. History doesn't repeat itself, exactly, but often the present does rhyme with the past.
Sadly, the evidence for this is now all around us.
Too much of what the politicians are currently doing rhymes too well with what the politicians did during the Great Depression.
Then, as now, the politicians blamed the economic downturn on the free market. They were wrong then, and they are wrong now.
Predictably, government schools don't teach this view. Instead, they teach that . . .
The depression became Great because President Hoover was an advocate of laissez-faire economics who did nothing to intervene. In fact, Hoover was the first president to ever make major interventions in the economy.
Another economist, Murray Rothbard, has described how President Hoover was the true creator of the "New Deal" approach for which FDR later claimed dubious credit.
Caplan and Rothbard are not alone in this. Roosevelt aid Rexford Guy Tugwell was to say years later . . .
“We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.” (Source: Paul Johnson, A History of the American People -- New York: HarperCollins Publishers, 1997, p. 741)
* "immediate and drastic reductions of all public expenditures"
* "abolishing useless commissions and offices, consolidating bureaus and eliminating extravagances"
* "reductions in bureaucracy"
* Implied tax cuts
* And a "sound currency to be maintained at all hazards."
We aren't taught that Roosevelt promised these things. Instead, we're taught that FDR's heroic interventions saved the free market from itself.
But what did his interventions actually achieve?
* The depression became Great under FDR's guidance.
* It lasted more than a decade.
* Prosperity never returned while he was President.
* The economy only recovered after Roosevelt was dead and buried
Even FDR's own economic team knew that his New Deal interventions had been a complete failure. Here's what FDR's Treasury Secretary, Henry Morganthau, admitted to Congress in May, 1939 . . .
"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"
It's significant that Hoover and Roosevelt were the first to intervene in the economy. Previous downturns had always been allowed to run their course, lasting from a few months to a couple of years. But the first one the politicians tried to stop is the one that lasted more than a decade, and that really hit hard.
If government intervention worked, then why did the 1929 depression become Great, when none had before?
It ought to make you angry. The injustice is so clear. The politicians caused the problem, blamed it on the free market, and then benefited from the disaster they had created by grabbing vast amounts of power and money.
And now it's happening again. History, sadly, is rhyming.
We're being told that the economic downturn resulting from the housing bubble is a market failure, and that massive government intervention is needed in all directions. But the truth is this . . .
In short, the politicians should stop pursuing policies that rhyme with those pursued during the Great Depression.
In addition, the advocates of Big Government should be asked . . .
* Why, precisely, was the first economic downturn in which the government intervened the only one that became so bad that it earned the name of the Great Depression?
* And why is it, precisely, that the major areas of American life where the government has intervened to make things more affordable -- such as health care, higher education, and housing -- are exactly those areas where costs have risen the most?
Government intervention does not work. It does not make things more affordable, it makes them more expensive. It does not prevent economic downturns, it causes them, and deepens them.