Remember the Great Depression of the 1920s? If not, that’s because it didn’t happen. The recession of the early ‘20s quickly ended after spending and taxes were cut dramatically. It provides a clear lesson in “austerity” that President Obama should heed. In 1920, newly elected President Warren Harding inherited a very sharp downturn from his predecessor, Woodrow Wilson. According to Cato economist Jim Powell, the downturn was “almost as severe, from peak to trough, as the Great Contraction from 1929 to 1933 that FDR would later inherit. The estimated gross …
During the Great Depression, Franklin Delano Roosevelt promised to act in the name of “the forgotten man,” that is, the poor man, the old man, the man “at the bottom of the economic pyramid” in need of government help. Amity Shlaes explained that FDR redefined the forgotten man and his plight. “As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil …
Three weeks ago, Democrats took what President Obama dubbed a “shellacking” at the polls: Republicans picked up 62 seats in the House, enough to gain a majority, and six in the Senate. The next day, the post-election analysis and finger-pointing began. Defeated Democrats blamed the President. Defeated Republicans blamed the media and the Washington establishment. The President (whose usual reaction is to blame Bush) blamed the American people’s anxiety over not feeling the change he had promised. All blame games aside, the real question remains unanswered: what did the 2010 …
The obvious reason to prevent a tax hike by extending current tax rates is that doing so will prevent further economic harm to an already flat economy. How do we know that tax increases will cause economic harm? Three examples: 1932, 1937 and 1993. After the 1929 stock market crash, the Smoot-Hawley tariff of 1930 raised import prices and more importantly threw a bucket of cold water on global trade flows, helping send the economy into deep depression. The economy had very little chance to recover. Along with gross and …
Breaking news: President Obama is a strong believer in free markets. Yesterday, in an address to the Business Roundtable, Obama mounted a vigorous defense of the free market and private enterprise, explaining his basic approach to economics and regulation. In his own words, Obama has “always been a strong believer in the power of the free market. It has been and will remain the very engine of America’s progress – the source of a prosperity that has gone unmatched in human history. I believe that jobs are best created not by government, but …
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 …
“We have tried spending money. We are spending more than we have ever spent before and it does not work.” Sound like, oh, Rep. John Boehner of Ohio or some other exasperated Republican stalwart lamenting proposals to spend our way out of the recession? Listen again: “I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises.” Sound more like a liberal Democrat pushing job creation — say, Harlem’s …
“A Conservative,” that anonymous scribe within Heritage, surfaces again for the second time in three days with a cautionary tale for the Big Three about Henry Ford, FDR and Big Government strings. This latest edition of New Common Sense, titled “Ford Faced Down FDR’s Blue Eagle,” reads as follows: Out of the rubble of the proposed bailout of the Big Three automakers, a phoenix may rise — or is it a blue eagle? President Bush and Treasury Secretary Henry Paulson just might speed $10 billion or more to Detroit regardless …
A Christian Science Monitor article this morning argues that Roosevelt didn’t spend enough to jolt economy into recovery. Only when spending skyrocketed for World War Two did the economy recover (unemployment finally dropped, of course this was because everyone was mobilized either as soldier or to support the war effort – creating things which were then destroyed in fighting the war). The Article claims that “One big reason is that President Roosevelt didn’t spend enough to really boost the economy, historians say.” Notice, that it isn’t economists that argued that …
According to The Center for American Progress, pointing out that much of FDR’s New Deal only prolonged the Great Depression is just a “favored pasttime of activists on the radical right.” Well someone might want to tell George Mason University economics professor Tyler Cowen that he’s now officially part of the Vast Rightwing Conspiracy. He writes for the New York Times: Many people are looking back to the Great Depression and the New Deal for answers to our problems. But while we can learn important lessons from this period, they’re …
