I’ve commented many times about the misguided big-government policies of both Hoover and FDR, so I can say with considerable admiration that this new video from the Center for Freedom and Prosperity packs an amazing amount of solid info into about five minutes.
Perhaps the most surprising revelation in the video is that America suffered a harsh depression after World War I, with GDP falling by a staggering 24 percent.
But we don’t read much about that downturn in the history books, in large part because it ended so quickly.
The key question, though, is why did that depression end quickly while the Great Depression dragged on for a decade?
One big reason for the different results is that markets were largely left unmolested in the 1920s. This meant resources could be quickly redeployed, minimizing the downturn.
But this doesn’t mean the crowd in Washington was completely passive. They did do something to help the economy recover. As Ms. Fields explains in the video, President Harding, unlike Presidents Hoover and Roosevelt, slashed government spending.
It is time for economists and historians to take seriously the hypothesis that the New Deal prolonged the Great Depression by creating an extraordinarily high degree of regime uncertainty in the minds of investors.
. . . From 1935 through 1940, with Roosevelt and the ardent New Dealers who surrounded him in full cry, private investors dared not risk their funds in the amounts typical of the late 1920s. In 1945 and 1946, with Roosevelt dead, the New Deal in retreat, and most of the wartime controls being removed, investors came out in force. To be sure, the federal government had become, and would remain, a much more powerful force to be reckoned with. But the government no longer seemed to possess the terrifying potential that businesspeople had perceived before the war. For investors, the nightmare was over. For the economy, once more, prosperity was possible.
———-Robert Higgs
I’m ok with the idea of the New Deal prolonging the Depression, but I’m not sure that the rise of unemployment to its 1932 levels (25%) can be blamed on the Smoot-Halwey tariff. Our foreign trade (combined imports and exports) was worth some 7.5 billion at the time, while the GDP was about 100 billion before the Depression. So a fall in foreign trade caused by Hawley-Smoot, to 3.7 billion in 1933 (combined), really wouldn’t account for a collapse in the GDP. Of course Hawley-Smoot didn’t help at all, but I think it’s a stretch to say that this was the government intervention that turned a slight downturn into a depression.
I brought in Hawley-Smoot above, b/c that was Sowell’s argument in the article that this video cited, that’s all.
Excellent video… The girl is so hott! (perhaps a man my age should not make that comment but I am doing it anyway. Here in Latin America those comments are allowed) No talk about the “loose” and “tight” money controversy: Very wise, in my humble opinion.
Reblogged this on The Conservative New Ager.
[...] the way, you may recognize Michelle Fields because she narrated this video on how bad government policies such as the New Deal made the Great Depression worse. Rate this: Share [...]
[...] the way, you may recognize Michelle Fields because she narrated this video on how bad government policies such as the New Deal made the Great Depression [...]
[...] to know more about that issue, including the damaging impact of statist policies by Hoover and FDR, this video is an excellent introduction. Rate this: Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike [...]
[...] of government spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed to [...]
[...] spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed [...]
[...] spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed [...]
[...] of government spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed to [...]
[...] spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed [...]
[...] of government spending in hopes that Keynesian economics would magically work (after failing for Hoover and Roosevelt in the 1930s, Japan in the 1990s, Bush in 2008, and Obama in 2009), the Estonians realized that they needed to [...]
Actually no way to determine any REALISTIC truth on economic policy — both (or more) sides can cherry-pick “data” and formulate as needed from a political, often ideological stance.
[...] In previous posts, I have cited both Sowell and the Wall Street Journal to make this very point, but I also call your attention to this post referencing the seminal work of Robert Higgs, as well as this video on the pernicious role of government intervention in the 1930s. [...]
[...] explained on many occasions that Franklin Roosevelt’s New Deal was bad news for the economy. And the same can be said of Herbert Hoover’s policies, since he also expanded the burden of [...]
[...] explained on many occasions that Franklin Roosevelt’s New Deal was bad news for the economy. And the same can be said of Herbert Hoover’s policies, since he also expanded the burden of [...]
[...] And if you want to see rich, pro-tax statists exposed as hypocrites, watch these ambush interviews by Michelle Fields (who also narrated a very good video explaining how government policy mistakes caused – and exacerbated – the Great Depression). [...]
[...] bad, but FDR’s statism helped extend the Great Depression – by an additional seven years according to scholarly research! That’s a much worse [...]
[...] bad, but FDR’s statism helped extend the Great Depression – by an additional seven years according to scholarly research! That’s a much worse track [...]
[...] it’s also clear that the statist policies of Hoover and Roosevelt turned the downturn into a Great [...]
[...] In previous posts, I have cited both Sowell and the Wall Street Journal to make this very point, but I also call your attention to this post referencing the seminal work of Robert Higgs, as well as this video on the pernicious role of government intervention in the 1930s. [...]
[...] back further in time, Presidents Hoover and Roosevelt dramatically increased the burden of government spending, mostly financed with borrowing, and a recession became a Great [...]
[…] I studied economics and public policy, I learned that Herbert Hoover and Franklin Roosevelt were two peas in a failed big-government pod and deserve membership in that Hall of […]
[…] I studied economics and public policy, I learned that Herbert Hoover and Franklin Roosevelt were two peas in a failed big-government pod and deserve membership in that Hall of […]
[…] In previous posts, I have cited both Sowell and the Wall Street Journal to make this very point, but I also call your attention to this post referencing the seminal work of Robert Higgs, as well as this video on the pernicious role of government intervention in the 1930s. […]