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"Each individual should allow reason to guide his conduct, or like an animal, he will need to be led by a leash."
Diogenes of Sinope


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Thousand Flowers tapestry (15th Century) - Beaune, France (detail)

Sunday, November 09, 2008

Five myths about the Great Depression

From the Wall Street Journal article Five myths about the Great Depression: "With the vitality of U.S. and world economies at stake, it is essential that the decisions of the coming months are shaped by the right lessons -- not the myths -- of the Great Depression."

a sample:
Enlightened government pulled the nation out of the worst downturn in its history and came to the rescue of capitalism through rigorous regulation and government oversight.

To the contrary, the Hoover and Roosevelt administrations -- in disregarding market signals at every turn -- were jointly responsible for turning a panic into the worst depression of modern times. As late as 1938, after almost a decade of governmental "pump priming," almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth.

Hoover was destined to fill the role of the left's designated scapegoat. Despite that, the one place where he and FDR truly "triumphed" was in enlisting the support of leading writers and intellectuals for government planning and intervention. This had a lasting effect on the way that generations of people think about the Great Depression. The antienterprise spirit among thought leaders of this time (and later) extended to top business publications. "Do you still believe in Lazy-Fairies?" Business Week asked derisively in 1931. "To plan or not to plan is no longer the question. The real question is who is to do it?"


Read the whole thing. It's deja vu all over again.

2 comments:

Mac said...

As students of history like to say... those who fail to learn the lesson are doomed to repeat it. Interesting article. Thanks for posting it!

Anonymous said...

All the old film reels I have been fortunate to see concerning that period have all triumphed the 'new socialism' created in that era. Now it is more obvious that it was propaganda on a par even with Hitler and gang. (real conservative)