Tuesday, November 25, 2008

I hadn't planned on posting this Sowell piece on the ECONOMY, but it's too important not to.......

"Jolting" the EconomyThomas Sowell
Tuesday, November 25, 2008

Barack Obama says that we have to "jolt" the economy. That certainly makes sense, if you take the media's account of the economy seriously-- but should the media be taken seriously?
Amid all the political and media hysteria, national output has declined by less than one-half of one percent. In fact, it may not have declined even that much-- or at all-- when the statistics are revised later, as they very often are.

We are not talking about the Great Depression, when output dropped by one-third and unemployment soared to 25 percent.

What we are talking about is a golden political opportunity for politicians to use the current financial crisis to fundamentally change an economy that has been successful for more than two centuries, so that politicians can henceforth micro-manage all sorts of businesses and play Robin Hood, taking from those who are not likely to vote for them and transferring part of their earnings to those who will vote for them.

For that, the politicians need lots of hype, and that is being generously supplied by the media.
Whatever the merits of trying to shore up some financial institutions, in order to prevent a major disruption of the credit flows that keep the whole economy going, what has in fact been done has been to create a huge pot of money-- hundreds of billions of dollars-- that politicians can use to give out goodies hither and yon, to whomever they please for whatever reason they please.
No doubt we could all use a few billion dollars every now and then. But the question of who actually gets it will be strictly in the hands of Barack Obama, Nancy Pelosi and Harry Reid. It is one of the few parts of the legacy of the Bush administration that the Democrats are not likely to criticize.

Much as we may deplore partisanship in Washington, bipartisan disasters are often twice as bad as partisan disasters-- and this is a bipartisan disaster in the making.

Too many people who argue that there is a beneficial role for the government to play in the economy glide swiftly from that to the conclusion that the government will in fact confine itself to playing such a role.

In the light of history, this is a faith which passeth all understanding. Even in the case of the Great Depression of the 1930s, increasing numbers of economists and historians who have looked back at that era have concluded that, on net balance, government intervention prolonged the Great Depression.

Many of those who have, over the years, praised the fact that this was the first time that the federal government took responsibility for trying to get the country out of a depression do not ask what seems like the logical follow-up question: Did this depression therefore end faster than other depressions where the government stood by and did nothing?

The Great Depression of the 1930s was in fact the longest-lasting of all our depressions.
Government policy in the 1930s was another bipartisan disaster. Despite a myth that Herbert Hoover was a "do nothing" president, he was the first President of the United States to step in to try to put the economy back on track.

With the passing years, it has increasingly been recognized that what FDR did was largely a further extension of what Hoover had done. Where Hoover made things worse, FDR made them much worse.

Herbert Hoover did what Barack Obama is proposing to do. Hoover raised taxes on high-income people and put restrictions on international trade, in order to try to save American jobs. It didn't work then and it is not likely to work now.

Perhaps the most disastrous of all the counterproductive policies of the federal government was the National Industrial Recovery Act under FDR, which set out to do exactly what the politicians today want to do-- micro-manage businesses.

Fortunately, the Supreme Court declared that Act unconstitutional, sparing the country an even bigger disaster.

Today, it is unlikely that the courts will let anything as old-fashioned as the Constitution stand in the way of "change." In short, the economy today has some serious problems but things are not desperate, though they can be made desperate by politicians.

z GOD BLESS THOMAS SOWELL..........now, if only someone would LISTEN TO HIM.

18 comments:

Pat Jenkins said...

whether the economic downturn is real or perceived, the solution for finacial solvency isn't going to be found in the promotion of government as the epicenter for growth. mr. sowell has done his part to warn obomber of the path he is own. someone needs to listen to him is right.....

The Merry Widow said...

I really wish Dr. Sowell had run for president...I would have worked for his campaign!

tmw

Z said...

Me, too, TMW. He's fabulous. A national treasure.

Pat...I'm hearing some of Obama's economic team is pretty down on raising taxes; let's hope he listens to THEM, and they're not there as tokens to make it look like he's reaching across the aisle.

Law and Order Teacher said...

The most gutless and easy way for BO is to let the Bush tax cuts expire. That way he can have the benefit of them for awhile in the hope it will help the economy until they run out and he's a hero again to his minions. It's all too easy for the One.

Incognito said...

Me too TMW!! He would have been a fab choice for our first black president!! Such a smart, amazing man.

Agent Orange Peel said...

what has in fact been done has been to create a huge pot of money-- hundreds of billions of dollars-- that politicians can use to give out goodies hither and yon, to whomever they please for whatever reason they please.

My favorite Economist:
Owe no man any thing, but to love one another:...

Rick Frea said...

AMAN YOU get an A+ for this report.

Anonymous said...

Darn close to everything Sowell writes would be worth posting. While reading Paul Johnson's history of the United States, I was pleased to see him describe Sowell as "America's leading philosopher". I also liked a piece by Jay Nordlinger on NRO in which he, only semi-facetiously, asked Sowell to endorse a candidate in the GOP presidential primary so the rest of us would know whom we should back.

Highly unlikely that we would see Sowell make a run for the presidency, but it sure would be nice if the media portrayed him as a model to whom blacks could look up. (That sentence came off fairly stodgy. I should have thrown caution to the wind and ended the sentence with a preposition.)

--Tio Bowser

(((Thought Criminal))) said...

One of the odd points of historical trivia is that FDR ran against Hoover and won by calling Hoover a "socialist."

Now, it is true that Hoover was as anti-laissez faire as Ducky or any other deluded leftist, but FDR was WORSE.

Ducky's here said...

FDR did make things worse ... when he attempted to balance the budget.

It's instructive that the country to emerge most quickly from the depression without going to a war economy was Sweden. They used Keynesian government spending techniques.

And now they have a better standard of living than Americans.

Ducky's here said...

I also enjoy Sowell's comments on NIRA, an act that was WRITTEN BY BUSINESSMEN. The heads of several large corporations were behind it.

It was struck down by the court because the felt it stretched the interstate commerce clause too far and ruled the seriousness of the situation couldn't be used to take powers that should stay with the states.

I do notice that the far right were quite willing to judge the security threat sufficient to violent constitutional guarantees but since we know that right wingers live scared it shouldn't be surprising that they looked the other way on that one.

Sowell is a very shallow analyst.

Z said...

I'm glad you agree about Dr. Sowell's constantly excellent thinking, guys......he puts the country first, not some demonic socialist bunk that only lefties can STILL be enamored with.
In Sweden, their income tax alone is up to 59%. Sad. Imagine?

We need to buckle up and struggle for a while..the left wouldn't listen when Bush and mcCain warned of the subprime fiascos...and now they're blamed. Typical.

Time to stop blaming and stop spending, but that won't happen.

may God be with us all..

(((Thought Criminal))) said...

And now they [Sweden] have a better standard of living than Americans.

Especially if they don't try to buy anything but fish to eat or live long enough to be euthanized.

Anonymous said...

Dr. Sowell is one of the many things for which I am thankful this Thanksgiving time.

FT

Ducky's here said...

That's odd, Beamish. According to the CIA Factbook the life expectancy in Sweden is 81, nearly three years longer than the U.S.

They also have a significantly lower infant mortality rate which may reflect on our dedication to the so called "culture of life".

Anyway, pitch till you win.

Anonymous said...

I can't understand why people of a certain mindset don't just pack their bags and emigrate to Sweden. Is it because Sweden wouldn't have them, perhaps?


Or could it be the climate?


Or could it be that Sweden has a much worse Muslim Problem than we, and really won't be "Sweden" anymore at the rate she is going?


Eurabia and Shariah Law! {{{{{{{{{SHUDDER}}}}}}}}}


What would be worse: A world united under the yoke of Socialism, or a world united under Shariah Law?


I may not know very much, but I am one American who is grateful to be part of the USA. I wouldn't want to be anywhere else.


~ FreeThinke

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