Sold a Bill of Goods?

My generation was taught that greed and capitalism-run-amok were responsible for the Great Depression. We were taught that the Stock Market crash was directly responsible for the eventual 20%-plus unemployment rate which plagued the country for several years during the early 1930s. Thomas Sowell refutes this notion in his latest column, “Another Great Depression?” (http://www.realclearpolitics.com/articles/2008/12/another_great_depression.html) Using data from Out of Work, a book written by scholars Richard Vedder and Lowell Galloway, Sowell argues that it may have been the government interventionist policies of Presidents Herbert Hoover and FDR that were truly responsible for the skyrocketing unemployment rates of the 1930s.

Sowell points out that in Nov 1929, one month after the stock market crash, the unemployment rate was 5%. In December 1929 it climbed to 9%, but then steadily decreased until it hit 6.3 percent in June 1930. It was at this time that the Smoot-Hawley tariffs were passed, which like all tariffs sought to limit imports to protect American jobs. According to Sowell just five months after the passage of these acts “the unemployment rate hit double digits for the first time in the 1930s.” From there despite government intervention, or because of government intervention as Sowell argues, the unemployment rate climbed to over 20% where it remained for nearly three years.

Not being an economist I am in no in position to argue whether Sowell’s contention is accurate or not. However, since I generally believe that when government bureaucracy gets involved in anything it tends to make matters worse, it would not surprise me if his analysis is correct. Which brings me to the current taxpayer bailout of corporate America. I understand that if these corporations tank many jobs will be lost. But are we just throwing money into an empty pit? Will the same mismanagement that bankrupted these companies waste the bailout money as well? Where does the accountability lie?

Plus, the game of politics dictates that you never agree to anything unless there is something in it for you. The people on Capitol Hill are politicians, not missionaries, which means that in exchange for approving federal handouts in any form they will expect support for their pork projects. For ex., today Las Vegas television network News 3 reports that Nevada Senator Harry Reid is looking for one billion dollars from a possible federal economic stimulus package to repair and upgrade Las Vegas roads. (http://www.kvbc.com/Global/story.asp?S=9567674) I’m sorry but you will be hard-pressed to convince me that fixing roads in Vegas somehow benefits those who have been laid off without a severance package and are relying on unemployment insurance to feed their families and pay their bills.

Something tells me that decades from now history will not look back kindly at how taxpayers dollars were spent.


Donald Tremblay