Friday, June 18, 2010

A Mind-Changing Page

by Thomas Sowell - June 17th, 2010 -

Those who think that the stock market crash in October 1929 is what caused the huge unemployment rates of the 1930s will have a hard time reconciling that belief with the data in that table [and that mind-changing page].

Although the big stock market crash occurred in October 1929, unemployment never reached double digits in any of the next 12 months after that crash. Unemployment peaked at 9 percent, two months after the stock market crashed-- and then began drifting generally downward over the next six months, falling to 6.3 percent by June 1930.

This was what happened in the market, before the federal government decided to "do something."

What the government decided to do in June 1930-- against the advice of literally a thousand economists, who took out newspaper ads warning against it-- was impose higher tariffs, in order to save American jobs by reducing imported goods.

Once again the smartest man in America gives some common sense advice to our nation, much of which is unfortunately not listening. Thomas Sowell looks at what happens and pays attention. He is smart enough to read volumes of data and make sense of it. Sometimes he simply looks at data that even an idiot can read and points it out to the idiots who will not read.

Hoover, FDR and the interventionists after the 1929 market crash ignored the evidence of the earlier success of Harding and Coolidge in handling the market crash after World War I. Their efforts to cut back government and allow the free market to recover led to the huge economic prosperity of "the roaring 20s". The greatest economic boom times in history. Harding and Coolidge are never given credit for their actions in creating that prosperity.

Though Hoover was a Republican and FDR was a Democrat, both were Wilson "progressives" (essentialy socialists), which meant they believed in a government dominated "planned" economy. Their shared experiment in the 30s was a disaster. Instead of cutting government expenditures and letting the free markets recover, they raised taxes, borrowed and regulated business. The results were predictable to any except those who will not learn.

The fiasco of Carter trying the same tactics should have put a nail into this progressive experiment for all time. Yet as recently as 2000 another Republican like Hoover, George W. Bush, tried to turn the Republican Party into a progressive modeled big government boondoggle. In essence he wanted us to be a variation of the Democrat Party, only more patriotic. Why is it that our politicians cannot see the idiocy of this repeatedly failed form of government?

Read this article by Thomas Sowell. It is proof that government intervention and stimulus is always a disaster. How hard is that to understand?


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