Thomas Sowell argues that “there was no Great Depression until AFTER politicians started intervening in the economy.”
There was a stock market crash in October 1929 and unemployment shot up to 9 percent — for one month. Then unemployment started drifting back down until it was 6.3 percent in June 1930, when the first major federal intervention took place.
That was the Smoot-Hawley tariff bill, which more than a thousand economists across the country pleaded with Congress and President Hoover not to enact. But then, as now, politicians decided that they had to “do something.”
Within 6 months, unemployment hit double digits. Then, as now, when “doing something” made things worse, many felt that the answer was to do something more.
Both President Hoover and President Roosevelt did more — and more, and more. Unemployment remained in double digits for the entire remainder of the decade. Indeed, unemployment topped 20 percent and remained there for 35 months, stretching from the Hoover administration into the Roosevelt administration.
Sowell is correct generally – correct that government interventions and other failures put the “Great” in the “Great Depression” – but he is incorrect in his suggestion that Smoot-Hawley did much to spark such a major increase in unemployment. Smoot-Hawley certainly didn’t help matters, and likely hurt just a bit. But as Doug Irwin argues in his new book Peddling Protectionism, foreign trade was too small a part of America’s economy in 1930 to have enabled Smoot-Hawley – as ill-advised as it unquestionably was – to be a major factor in deepening and prolonging the Great Depression.
A far worse government failure than Smoot-Hawley was the “Great Contraction” – the Fed allowing the money supply to fall by one-third between 1930 and 1933. And, following this calamity, an even more destructive curse descended on America: FDR’s New Dealing hyperactivity in which his Trusted Brains cartelized industries, destroyed agricultural products, attempted artificially to raise prices (in the wake of the Great Contraction, no less!), launched entirely new regulatory agencies headed either by Geniuses or by cronies, spent and ran up government debt orgiastically, pumped labor unions with more arbitrary power to behave monopolistically, and demonized entrepreneurs and industrialists.
The regime uncertainty unleashed by this earthquake of arrogance ought to be – but, sadly, isn’t – a sufficient warning to avoid such mistakes today.
The great Bruce Yandle – Emeritus Professor of Economics at Clemson University – is interviewed in the current issue of the Richmond Fed’s Region Focus. One of the finest privileges of my life was being Bruce’s colleague at Clemson for five wonderful years.
The editors at the Wall Street Journal rightly criticize Mitt Romney for his economically uninformed – but obviously politically motivated – criticisms of Beijing’s monetary policy. Listening to politicians address economic issues is like listening to astrologers talk about the physics of the formation of stars.
The September 2011 issue of The Freeman is, as is typical of each issue of this superb publication edited by Sheldon Richman, loaded with great material. At the risk of unintentionally insulting some authors, though, I want especially to recommend the powerful essay by Cato’s David Boaz on the outlandish and evil ‘war on drugs,’ and the essay by Freeman columnist and historian Burt Folsom on the Great Depression.
My GMU colleague (formerly in the Dep’t. of Economics, but now over in the School of Public Policy) Jack High explains, in this letter in the Washington Post, why we ought to be skeptical of policy solutions proposed by Keynesians.
And George Will discusses “our floundering ‘federal family’.”
I agree – with an important caveat – with Bryan Caplan’s post on his refusal to respect “the law” simply because it’s the law. My caveat – one pointed out by some commenters to Bryan’s post – is that law is not at all the same thing as legislation. Law deserves far more respect (although, still, not respect given mindlessly) than does legislation; indeed, legislation, by its very nature, is frequently used to break the law. For example, Jim Crow legislation in the late 19th-century American south broke the law that effectively enforced racial desegregation on streetcars.
One of the greatest dangers unleashed by modern language is the treatment of “legislation” and “law” as synonyms for each other – and, hence, the bestowal on legislation of the genuine respect that is due to law.
This theme, explained well in the first volume of Hayek’s Law, Legislation, and Liberty, is the subject of this talk that I gave last October to the GMU Economics Society and the Future of Freedom Foundation.
And here’s a short letter that I wrote a few years ago on this topic.
… is Art. 1, Sec. 8 of the United States Constitution:
Section. 8.The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To provide for organizing, arming, and disciplining, the Militia, and forgoverning such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; — And
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
Andrew Bolt – Sunday, September 18, 11 (01:58 pm)
So what is Julia Gillard’s plan D?
As well, the coalition has warned its support for the changes is “exceptionally unlikely” because the draft laws strip protections for asylum-seekers.
Labor’s Left faction will meet in Canberra tomorrow to discuss proposed legislative changes to the Migration Act, released by the government late on Friday.
Left MPs are concerned the changes remove completely Australia’s obligations under the 60-year-old UN convention on refugees.
They say the changes would remove legal protections and Australia’s obligations to refugees.
The coalition is saying much the same thing.
Andrew Bolt – Sunday, September 18, 11 (09:51 am)
Andrew Bolt – Sunday, September 18, 11 (06:06 am)
Whatever the presentation guru produced, it seems a lot less of the “real Julia”:
The Sunday Telegraph can reveal the Prime Minister has undertaken intensive coaching at Kirribilli House with a renowned “leadership skills trainer”.
Ms Gillard, who has struggled to translate her feisty parliamentary performances into convincing interviews and speeches, took the crash course ahead of two major prime ministerial addresses.
Image Media Services trainer Mike Macnamara met with Ms Gillard just days before she delivered her nationally televised address to the nation spruiking the carbon tax.
The lesson also came on the eve of the PM’s speech at the NSW Labor conference in July.
Despite Mr Macnamara’s expertise in “media interview technique and stand and deliver presentation skills”, Ms Gillard’s televised address received mixed reviews, with some labelling it wooden and overly scripted. And her speech to the party faithful was also oddly subdued.
Observers have noted that Ms Gillard, who has battled critics mocking her broad accent throughout her political career, has markedly slowed her delivery during speeches.
Andrew Bolt – Sunday, September 18, 11 (05:56 am)
But doesn’t Williamson deserve “full; confidence”, like his protege Craig Thomson?
MICHAEL WILLIAMSON will be forced to resign from his role on the Australian Labor Party national executive in the next few days.
Mr Williamson is still the president of the Health Services Union, which disaffiliated itself from the ALP on Friday as it battles allegations of misuse of credit cards from senior leaders.
But he remains a vice-president of the ALP, a non-voting position…
The Sydney Morning Herald has reported that Mr Williamson and the Labor MP Craig Thomson, a former HSU official, received secret commissions from a union contractor. Both men deny the allegation…
Mr Williamson, 58, has not been in contact with party officials yet. However, officials said yesterday if he did not offer his resignation over the weekend, he would be contacted ‘’on Monday or Tuesday’’.
I doubt this kind of thing stops at the HSU. Time to consider an inquiry.
(No comments for legal reasons.)
Andrew Bolt – Sunday, September 18, 11 (05:53 am)
So what’s Labor’s Plan G?
The Government plans to introduce changes to the Migration Act in parliament this week that would give the Immigration Minister power to send asylum seekers to foreign lands without human rights protection guarantees....
Prime Minister Julia Gillard has invited Mr Abbott for a meeting tomorrow in an attempt to win his party’s backing. But Mr Abbott said he only accepted the invitation out of “courtesy” to the Prime Minister…
“If we say no to this legislation, it will be because we are saying yes to basic standards of human decency in the way people are treated,” Mr Abbott said.
Andrew Bolt – Sunday, September 18, 11 (05:37 am)
Reporters get sacked for trying to discuss Julia Gillard’s professional and personal relationship with a union conman 15 years ago, but The Age is perfectly happy to retail gossip of who Sarah Palin was sleeping with back then:
Author Joe McGinniss claimed that, as a young television sports reporter, and while she was dating Todd, her husband-to-be, Mrs Palin had a one-night stand with Glen Rice, then a rising college basketball player and now a leading NBA pro.... in 1996. He also cites one or more witnesses who said they saw Sarah and Todd snorting cocaine ...
(No comments for legal reasons.)
Andrew Bolt – Sunday, September 18, 11 (05:27 am)
This sounds ominous, and will deflate the Liberals MPs who thought they were in politics to fight for conservative values, such as maintaining the proper authority of the elected over the unelected::
TED Baillieu will keep Victoria’s human rights charter and does not intend to significantly wind back the legislation, despite the urgings of a parliamentary committee and some of his own MPs.
After a five-month review, a Coalition-dominated parliamentary committee has called for several changes to the contentious charter of human rights, including dismantling the role of courts and tribunals that help implement it. Under the proposals, government departments and public agencies would also have no obligations to act compatibly with human rights and there would be no legal remedies for people who felt their rights had been breached.
The recommendations were put forward by the Liberal-National dominated scrutiny of acts and regulations committee and have once again polarised MPs in the Coalition’s ranks.
But Mr Baillieu has distanced himself from the report, issuing a carefully worded statement which noted ‘’the views expressed in the SARC report are those of the cross-party committee members and not necessarily those of the Coalition government’’.
Andrew Bolt – Sunday, September 18, 11 (05:18 am)
What “operational reasons” could justify this refusal to tell?
THE Customs and Border Protection Agency is under pressure to reveal all it knows about a missing asylum seeker boat carrying 105 Hazaras from Afghanistan after being accused of giving contradictory evidence to Federal Parliament.
The head of Customs, Michael Carmody, told a Senate estimates committee last year that ‘’we did not have a precise location’’ for the boat, which went missing in October 2009.
But in an answer to a question on notice this month, the agency revealed that the co-ordinates of the boat had been passed to the Australian Maritime Safety Authority.
In his comments to Senate estimates, Mr Carmody had also said: ‘’Perhaps this is more appropriate for the Department of Immigration and Citizenship, but there were further approaches from people requesting that we do something about this vessel and the people on it.’’
Customs has told The Sun-Herald that it would not reveal how it knew the boat was in distress for ‘’operational’’ and ‘’intelligence’’ reasons.