Citing a scholarly book by Richard Vedder and Lowell Gallaway, Tom Sowell concisely explains that government intervention caused the Great Depression.
Right here and right now there is a widespread belief that the unregulated market is what got us into our present economic predicament, and that the government must “do something” to get the economy moving again. FDR’s intervention in the 1930s has often been cited by those who think this way. …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. This was the first massive federal intervention to rescue the economy, under President Herbert Hoover, who took pride in being the first President of the United States to intervene to try to get the economy out of an economic downturn. Within six months after this government intervention, unemployment shot up into double digits– and stayed in double digits in every month throughout the entire remainder of the decade of the 1930s, as the Roosevelt administration expanded federal intervention far beyond what Hoover had started. If more government regulation of business is the magic answer that so many seem to think it is, the whole history of the 1930s would have been different.
I particularly like that Sowell compares the 1929 and 1987 stock market crashes. The market actually fell more in 1987, but Reagan wisely did nothing and the economy continued growing.
The very fact that we still remember the stock market crash of 1929 is remarkable, since there was a similar stock market crash in 1987 that most people have long since forgotten. What was the difference between these two stock market crashes? The 1929 stock market crash was followed by the most catastrophic depression in American history, with as many as one-fourth of all American workers being unemployed. The 1987 stock market crash was followed by two decades of economic growth with low unemployment. But that was only one difference. The other big difference was that the Reagan administration did not intervene in the economy after the 1987 stock market crash– despite many outcries in the media that the government should “do something.”
[…] Pervasive intervention […]
[…] Pervasive intervention […]
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[…] It wasn’t under Herbert Hoover. […]
[…] It wasn’t under Herbert Hoover. […]
[…] Was it the fault of capitalism that Hoover and FDR expanded intervention? […]
[…] Was it the fault of capitalism that Hoover and FDR expanded intervention? […]
[…] P.S. As a big fan of Professor Sowell, I’ve cited his columns more than 20 times. My favorite examples of his writing can be viewed here, here, here, here, here,here, here, here,here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action here. […]
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[…] P.S. As a big fan of Professor Sowell, I’ve cited his columns more than 20 times. My favorite examples of his writing can be viewed here, here, here, here, here,here, here, here,here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action here. […]
[…] some people then blame capitalism for the damage caused by government intervention (the Great Depression, the Financial Crisis, […]
[…] a tit-for-tat trade war, mostly caused by the United States (Hoover’s Smoot-Hawley tariff), also contributed to the economic destruction of the […]
[…] give extra weight to the protectionist Smoot-Hawley legislation, which surely must rank among the worst bills ever enacted. The tax hike in 1932 also gets some extra weight because of the […]
[…] can be viewed here, here, here, here, here,here, here, here,here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action […]
[…] can be viewed here, here, here, here, here,here, here, here,here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action […]
[…] can be viewed here, here, here, here, here,here, here, here,here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action […]
[…] writing can be viewed here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action […]
[…] 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 […]
[…] 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 […]
[…] 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 […]
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[…] not a trivial matter. Indeed, the Great Depression lasted so long and was so deep in part because Hoover and Roosevelt kept expanding the burden of taxes, spending, regulation, and intervention. The productive sector of the economy kept getting knocked to the canvas, so there was never an […]
[…] not a trivial matter. Indeed, the Great Depression lasted so long and was so deep in part because Hoover and Roosevelt kept expanding the burden of taxes, spending, regulation, and intervention. The productive sector of the economy kept getting knocked to the canvas, so there’s was […]
[…] 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 […]
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[…] minor part of the problem, so even though President Roosevelt’s policies exacerbated and extended the Great Depression, the program he created is only responsible for a small share of the fiscal […]
[…] minor part of the problem, so even though President Roosevelt’s policies exacerbated and extended the Great Depression, the program he created is only responsible for a small share of the fiscal […]
[…] Government Intervention and the … Lowell Gallaway, Tom Sowell concisely explains that government intervention … Government intervention; Government Spending; Government stupidity; Government Thuggery […]
[…] the Great Depression with their tax-and-spend, interventionist policies (see here, here, here, here, here, here, and here). But I’ve only once waded into the deeper economic issues. […]
[…] the Great Depression with their tax-and-spend, interventionist policies (see here, here, here, here, here, here, and here). But I’ve only once waded into the deeper economic issues. […]
[…] the Great Depression with their tax-and-spend, interventionist policies (see here, here, here, here, here, here, and here). But I’ve only once waded into the deeper economic issues. […]