“[A] wise and frugal government … shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” –Thomas Jefferson
Oh well…
Tag: history
November 1989 was the most liberating month of arguably the most liberating year in human history, yet two decades later the country that led the Cold War coalition against communism seems less interested than ever in commemorating, let alone processing the lessons from, the collapse of its longtime foe. At a time that fairly cries out for historical perspective about the follies of central planning, Americans are ignoring the fundamental conflict of the postwar world, and instead leapfrogging back to what Steve Forbes describes in this issue as the “Jurassic Park statism” of the 1930s.
[…]
The consensus Year of Revolution for most of our lifetimes has been 1968, with its political assassinations, its Parisian protests, and a youth-culture rebellion that the baby boomers will never tire of telling us about. But as the preeminent modern Central European historian Timothy Garton Ash wrote in a 2008 essay, 1989 “ended communism in Europe, the Soviet empire, the division of Germany, and an ideological and geopolitical struggle…that had shaped world politics for half a century. It was, in its geopolitical results, as big as 1945 or 1914. By comparison, ’68 was a molehill.”
There is no more reliable rule than the 95 percent rule: 95 percent of what you read about economics and finance is either wrong or irrelevant.
[…]
[T]he most repeated statement about the cause of the U.S. Great Depression is that it was caused by the October 1929 stock market crash. How could that be? By April 1930, the stock market had recovered to its pre-crash level. What is not taught in history books is the Great Depression was caused by a massive government failure. The most important part of that failure were the actions by the Federal Reserve Bank that led to the contraction of the money supply by 25 percent. Then, in the name of saving jobs, Congress enacted the Smoot-Hawley Act in June 1930, which increased U.S. tariffs by more than 50 percent. Other nations retaliated and world trade collapsed. U.S. unemployment rose from 8 percent in 1930 to 25 percent in 1933. In 1932, the Herbert Hoover administration and a Democratic Congress imposed the largest tax increase in U.S. history, raising the top tax rate on income from 25 percent to 63 percent. The Roosevelt administration followed these destructive policies with New Deal legislation that massively regulated the economy and extended the Great Depression to after World War II.
Have today’s politicians and their economic advisers learned anything from yesteryear’s policy that turned what would have been a short, sharp downturn in the economy into a 16-year affair? The answer is very little.