FDR and the Great Depression Myth

Let's dispel the myth that President Franklin D. Roosevelt saved America from the Depression.  The Depression would not have been so "Great" if not for bad policies from FDR and Herbert Hoover before him.

The New Deal Didn’t Always Work, Either

By TYLER COWEN

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 not always the ones taught in school.

The traditional story is that President Franklin D. Roosevelt rescued capitalism by resorting to extensive government intervention; the truth is that Roosevelt changed course from year to year, trying a mix of policies, some good and some bad.

<snip>

In short, expansionary monetary policy and wartime orders from Europe, not the well-known policies of the New Deal, did the most to make the American economy climb out of the Depression. Our current downturn will end as well someday, and, as in the ’30s, the recovery will probably come for reasons that have little to do with most policy initiatives.

Tyler Cowen is a professor of economics at George Mason University.

The Idiots You Elect

How many times have I said most ordinary people are smarter than government officials?

"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself."
- Mark Twain

US officials flunk test of American history, economics, civics

Thu Nov 20, 2:24 pm ET

WASHINGTON (AFP) – US elected officials scored abysmally on a test measuring their civic knowledge, with an average grade of just 44 percent, the group that organized the exam said Thursday.

Ordinary citizens did not fare much better, scoring just 49 percent correct on the 33 exam questions compiled by the Intercollegiate Studies Institute (ISI).

<snip>

Asked about the electoral college, 20 percent of elected officials incorrectly said it was established to "supervise the first televised presidential debates."

In fact, the system of choosing the US president via an indirect electoral college vote dates back some 220 years, to the US Constitution.

The question that received the fewest correct responses, just 16 percent, tested respondents' basic understanding of economic principles, asking why "free markets typically secure more economic prosperity than government's centralized planning?"

Beware the Government Bailout

When your friends advocate a government bailout or other "help" from the federal government in response to the credit mess, refer them to the following article.  I've seen many economists say essentially the same thing on how the policies of Hoover and FDR lengthened the Great Depression and made it worse.  This is just another one, and it's from a reputable and well-known source.

FDR's Policies Prolonged Depression by 7 Years, UCLA Economists Calculate

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt's record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Above is an excerpt.  Full article here.

Great Moments in Anarchy

Somalia -- An ongoing experiment in anarchy:

Somalia has not had a functioning government since 1991 and foreign vessels are frequently seized for ransom by armed pirates, making it difficult and expensive to deliver aid to the impoverished region. (AP) Story at http://tinyurl.com/6h6s6f

Nepal -- My wife's native land:

Much of my wife's native country beyond the urban areas has been largely beyond the control of the central government. No rule of law. Lots of corruption. Thugs form a militia. Rob banks. Buy guns. Declare themselves Maoists. Kill enough people to break their will. Now the Maoists rule the country.

Pakistan's autonomous tribal areas:

See northwest Pakistan, where autonomous rule has resulted in local tribal warlords forcing their oppressive theocracy on people. It's a safe haven for authoritarian theocrats and terrorists.

Summary:

Anarchy leads to authoritarian control by brutal and powerful warlords, crime syndicates, or others who suppress liberty. There is no accountability over disorganized gangs, thugs, and invaders within a null system. With limited government, however, there are elections and other methods of recourse. It ain't perfect of course -- far from it. Better to decimate government, not eliminate it. In the total absence of government, there is no practical way to stop the tribal and criminal thugs. Anarchists seem to be imagining that all tribalism, plunder, and oppression will spontaneously disappear when the government falls and their anarchist paradise is achieved. Kumbaya y'all.

Crustacean property rights

SoCal school opening delayed after shrimp find

SAN DIEGO - San Ysidro school officials have delayed the construction of a new elementary school after the discovery of shallow basins harboring the endangered fairy shrimp on a vacant lot in nearby Otay Mesa. ... Tom Silva, the district's coordinator of construction, says the delay will increase the school's $27 million price tag.

The Politics of Economics

I was just reading another positive spin on the economy.

http://www.signonsandiego.com/news/business/20080604-1420-economy.html

As a commenter observes: "Good News! Eh? must be Bush's fault lol."

I don't deny that everything negative the doom and gloom pundits write about the economy might come true.  But one reason I am very skeptical is the political nature of economics reporting.  Most on Wall Street are Democrats, and most reporters are Democrats.  This is an election year with an incumbent Republican they want to replace.  They are thus motivated to emphasize the bad news.

Political Party Labels

Brian Holtz wrote one of the better statements I've seen on political party differences:

I try to use only "nanny-state parties" when referring to the Ds and Rs.

I don't use "alternative party" as much as I should, perhaps because there are too many people who consider the two incumbent parties as alternatives to each other.

I also try to avoid using "Republicrats" and "Demopublicans", or "Coke and Pepsi" etc. The D's are discernibly leftist, the R's are discernibly rightist, and to pretend they're indistinguishable marks us as politically illiterate. More importantly, treating them as indistinguishable throws away our differentiation against the voter's other available choices (Green and CP). We are the only party that has evolved beyond the obsolete left-vs.-right dichotomy, and are the only party that wants to legislate neither personal morality nor economic equality. When we suggest that the primary difference between the LP and the Ds/Rs is that they're in power and we're not, we suggest that 1) we would probably be corrupted by power too and 2) any non-incumbent party is as good as any other.

I will always believe that our marketing should be built around the Nolan Chart. Does anyone know whether the Greens or CP ever try use the Nolan Chart and claim that they occupy the moral high ground on it? I'd be very surprised if they did.

No Brian, I doubt the Greens or others would like the results they'd get with the Nolan Chart. However, I doubt they'd ask the questions and label the results in the same manner as Nolan or other libertarians.

Will Obama "Root for America"?

I heard Libertarian Party presidential candidate Wayne Allyn Root interviewed on the Glenn Beck radio show this morning. I caught only a small segment where Wayne described studying the same major as Barack Obama at Columbia University in the class of 1983.

During class one day in 1981, someone ran into the auditorium and shouted, "President Reagan has been shot. They assassinated him. He's dead." Immediately, the "entire class" of 300 or so students stood up and celebrated. They were high-fiving and shouting with joy. At that point, they incorrectly believed the patriotic anti-communist American president was dead, and they were very happy about that. Wayne was horrified.

Wayne then noted that many of his Columbia University classmates now dominate the news media and other influential establishments in our society. I infer that Wayne Allyn Root believes these elite Americans are essentially anti-American socialists.

Thoughts on Libertarian Party Campaigning

I've been think about the LP and how its candidate run their campaigns. I'm guessing the problem is at least partly in delivery. Most LP members have apparently never heard of Emily Post. Then there are non-focused statements that meander off into libertarain obsessions regarding the evils of the state. But back to the campaigning:

IMHO, the top five issues that libertarians should communicate better to non-libertarians should closely align with public opinion polls.

LP candidates should describe to non-libertarians the issues that concern mainstream voters, and tell them how libertarian policies help them. And I use the word "them" intentionally. Most voters are greedy selfish bastards, so they want to know what's in it for them. Even voters willing to cut programs are not willing to cut their own handouts.

According to polls like this, voter priorities are the economy, Iraq war, healthcare, immigration, and terrorism. They don't want to hear about libertarian obsessions with guns, drugs, 9/11 conspiracies, and the military-industrial complex. Candidates should communicate voter issues, not libertarian ones. Keep it short, simple, and focused.

So in summary, perhaps LP candidates need simple focused sound-bite descriptions of libertarian policies and expected results for the top issues of interest to mainstream voters.

Should the US Withdraw from the United Nations?

Ron Paul, other libertarians, and some conservatives talk of withdrawing the US from the United Nations. Sounds good. However, William F. Buckley and others on the right think another course of action might be better. Stay in the UN, but don't vote -- except to veto the really bad stuff.

As Willaim Rusher writes:

What to do? Pulling out of the United Nations would not eliminate it. It would keep on doing its best to body-block the United States, and hostility to this country would not only continue but increase, dramatically highlighted by our solitary absence from the organization. But staying in and doing nothing is scarcely better.

Ideally, the best course would probably be to encourage the founding and growth of a new group of the world's truly democratic nations, dedicated to addressing the world's problems with their wealth and wisdom, and gradually diminish the United Nations's pretensions. But such undeniably democratic nations as France and Germany would undoubtedly refuse to go along with such a scheme, preferring to pursue their current strategy in the United Nations.

In the circumstances, therefore, the best course may be the one proposed by the late James Burnham: for the United States to announce that it will continue supporting the beneficial activities of the United Nations in such matters as world health, but henceforth will not participate in, or vote on, its deliberations involving major political issues. (We would retain, however, our veto power, to block seriously offensive actions.) The United Nations would undoubtedly continue, and probably increase, its issuance of anti-American manifestos of one sort and another, but their essential unimportance would become steadily more apparent as the years rolled by.

Freedom through Aggression

I was challenged by a friend, presumably of the libertarian-left, to respond to the following claim: "There are absolutely NO examples of acts of aggression expanding the freedom of those who were aggressed against."

Talk about a target-rich environment. I quickly came up with the following examples:

- German Nazism
- Japanese imperialism
- Italian fascism
- North Korean communism
- Soviet communism
- Afghan Taliban
- Saddam's Baathism
- British colonialism

All these were eliminated partly or totally through US intervention, aggression, and the military’s superior ability to kill people and break things. The US intervened, and its military used massive force and aggression to achieve those victories. People bled profusely and many died. In each case, greater liberty was the result.

I think many left wingers, libertarians, and others live in a dream world – a kind of Shangri-La – where they fantasize that all is free and peaceful until some bully American president screws things up by intervening and ordering the US military into action. Well, that’s not the way the world works. Indeed, even at an individual level, people would rob you blind and hurt you severely without the police or some other collective aggressive security force.

The world mostly sucks as far as liberty is concerned. Other than the Western nations, most of the world is run by thoroughly corrupt and often unelected thugs who care not about individual rights of any kind. Fortunately, freedom is on the rise, largely due to American intervention and aggression. That these are forceful acts of intevention tells us nothing about the purpose for which they’re used. You can kill someone to secure liberty or to take it away. You must always be willing to fight for freedom, or you will soon lose it.

In the real world, blood must often be shed to obtain and preserve liberty. Even the overly-admired Swiss selfishly keep their own little piece of freedom by arming all able-bodied males in a system of compulsory military service. No one attacks them because they are so well prepared to respond aggressively.