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  • Boudreaux: FDR's Policies Put the 'Great' in Great Depression

    Don Boudreaux

    George Mason University economics professor Don Boudreaux offered a grim assessment of the economic stimulus package that’s making its way through Capitol Hill, questioning President Barack Obama’s contention that government must do something.

    “Conventional wisdom in Washington is that we must do something regardless of how wise or prudent it is,” said Boudreaux, the keynote speaker at an economic recovery event cosponsored by Heritage and the Club for Growth. “It’s taken as a matter of course that we must spend wildly.”

    Instead, Boudreaux said, history offers a lesson that shows massive spending programs, such as those advocated by President Franklin Delano Roosevelt as part of the New Deal, do not work.

    “FDR’s policies put the ‘great’ in Great Depression,” Boudreaux said. He cited unemployment, which never dipped below 14%, and comments made by FDR’s own treasury secretary, Henry Morgenthau, who lamented that spending didn’t work.

    Should the United States fall into a deeper recession or depression, Boudreaux said, it would be the result of economic policies like those Obama is pursuing as part of his stimulus proposal.

    Boudreaux, a popular economics blogger at Cafe Hayek, asked attendees to put the current fiscal problems in perspective. He reminded them that unemployment was 7.6% in 1992 — the same as today. And he joked that he had food in his refrigerator that was older than when the current recession began in December 2007.

    Boudreaux outlined these three objectives:

    1. Even if the economic situation is the worst in our lifetime, it doesn’t follow as a logical necessity that government must take action through a massive spending program.
    2. Washington is not a city known for principles. Raw politics and personal agendas will always dominate any legislation, including the current stimulus.
    3. Now is not the time to lose trust in markets; America needs them more than ever. He encouraged lawmakers to rejuvenate the economy by lowering taxes and reducing regulations.

    For more coverage of the event, see these Foundry posts from earlier today:

    Posted in Scribe [slideshow_deploy]

    10 Responses to Boudreaux: FDR's Policies Put the 'Great' in Great Depression

    1. Ozzy6900, CT says:

      It is obvious that with the comments of Sen. Chuck Schumer ("Americans don't care about Pork spending!") and that the President's Spending Plan has passed the Senate, we who know the past and know what will happen, don't know a damn thing! If President Obama and the Senatorial and Congressional Prince and Princesses say that spending will bring the Country into check, then they must be right! After all, FDR's ideas were the great of the Great for the Depression, right?

    2. Joan Chew Butler PA says:

      I was born in 1929. I remember well what my family went through. The war, which we entered in December of 1941, was the real reason we had a better economy. I was 11 years old at the time and remember it well. My brother served and we wrote every day. When the war ended thing began to be much better. That was and is a huge price to pay of the great economy we enjoyed. Many friends lost family in that war. We lost a relative in Italy.

      Spending is not the way to get out of our problem. Lower taxes will give more money to people to spend. Better business practices are more the answer. Greed is a big problem and having worked for government I am suspect of the motives of the President and our congress.

    3. John Sharp,Federal W says:

      The ONLY way this entire fiasco of this PORKULUS GIGANTUS spending agenda will ever stop is for those of us that REALLY care for our America as it once was & needs to be AGAIN for our kids & grandkids to prosper in it..is to make certain that those of the Obama, Pelosi, Reid, Franks, Dodd, & Shummer Ilk NOT BE ALLOWED TO CONTINUE IN THE POLITICAL POSITIONS THEY NOW DICTATE FROM..BECAUSE IF THEY REMAIN..NOTHING WILL EVER CHANGE!! AND THE ULTIMATE SACRIFICES MADE BY EVERY U.S. MILITARY & CIVILIAN PERSON TO PROTECT & PRESERVE IT WILL ALL HAVE BEEN IN VAIN!!

    4. Mary Wood, TX says:

      Our government officials should adopt the Hippocratic oath , "first do no harm". I feel Pelosi and many others look at their jobs as just a power game, nothing else. This earth can't be made into heaven no matter how much money we spend on it. This is life! We try to make our world better when we can but we can be of no use to anyone when we are left with nothing to give. When we are too weak to give or defend ourselves for that matter.

    5. Len, Alexandria,KY says:

      Yeah BUT.. Can anyone Convince the Oblahblah Kamp of Regressive thinkers that they haven't got a clue of what they say?????

      Spend Now.. Tax Next Year and pray that their application to the Socialist EU does not get rejected based on the Disparaging ratio of Debt to GNP….

    6. Ross, Bradenton, Flo says:

      Obviously, if our fellow citizens do not understand,or sadly don't care about how government works,or the history of our constitutional government,or studied the Constitution of the United States of America,or even understand the concept a representive republic, thank a government school. If they have no concept of simple economics, thank a government school. If they have no idea what caused the Great Depression, why it lasted so long, why the only way the USA came out of the Great Depression was entering WW2, thank a government school. I have always been told if we don't know our history, we a bound to repeat it. Thus the "Stimulus Package". Who runs government school? A liberal agenda made into law and the teacher's unions.

    7. Margi Eaton, Texas says:

      As simplistic as this sounds… don't spend what you don't have! Don't buy on credit what your paycheck can't cover. It seems to me like our Country is in the Red already… where are they getting the $$$ for the stimulus?

    8. kent, Virginia says:

      I repeat something that was said during the campaign for presidency, and I believe it was said by a Liberal Democrat,"This is NOT the time for on-the-job training."

    9. Raoul from neocon la says:

      I simply love the way you neocons are able to spin everything including FDR's essential enactment of various things to get us out of the Great Depression.

      The depression was caused by the same kind of people we have today – Darwinian free market capitalists who support doing NOTHING at all to help anyone save themselves.

      FDR's actions saved us from greater financial horrors than had occurred with his policies. Yes, the unemployment went down for a while and then, after a few years in the 30s started going back up. Wanna know why? I know you don't but I'll tell you anyway. FDR CAVED into the right wingers of his day and enacted some spending cuts – I believe around 1937 or 1938. Those cuts began undoing everything his stimulus plans had done for the American people. Once he saw the folly of doing anything for the right wing of his day he corrected his policies.

      Now stop lying okay? You lost badly in November. So go back into your caves and sulk. You're very good at sulking and whining…

      graciously yours,

      raoul

    10. Ted from Minnesota says:

      On the basis of four comparisons it seems readily apparent which approach to our current problem is most effective. Though some may disagree, history and economic policies point to the answer.

      1. 1980's versus 1930's tax and U. S. government policies for business

      2. US capitalism as a whole versus USSR communism and the respective standards of living.

      3. Small businesses or large business growth and GDP versus government cost effectiveness and growth

      4. Land of opportunity–which country? Capitalist or socialist?

      Which choice do we see people make when given an opportunity to move to? Also how do we compare with Europe now on the basis of employment over the last decade?

      Truthful history, economic comparison and political ideologies point to the answer.

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