If you’re anything like me, and let’s hope you’re not, being advised to “do nothing” in response to any problem or crisis is sweet music to my ears. “Nothing,” I can do; it’s “something” where things get a little prickly for yours truly.
Yet for the overwhelming majority of politicians in this country, the notion that their inaction would be an addition in the equation being calculated to get the economy back on stable legs is as foreign to them as the cast of Jersey Shore is to a library.
Sometimes hand-sitting is more appropriate (and desperately needed) than hand wringing (and finger-waving).
In his latest column, Dr. Thomas Sowell of Stanford’s Hoover Institution delves further into this understandable, if not lamentable, obsession politicians have with “fixing” societal woes.
What would probably get the economy recovering fastest and most completely would be for the President of the United States and Congressional leaders to shut up and stop meddling with the economy. But it is virtually impossible that they will do that.
Think about telling all the millions of people who have lost their jobs, their homes or their businesses: “I really messed you up but, hey, nobody’s perfect. So I’m going to leave things alone now.” In fact, that would be hard even to tell yourself.
If the stimulus isn’t working, the true believers have to believe that it is only because it hasn’t been tried long enough, or with enough money being spent. There are always calls for the government to “do something” when things are going bad. Those who make such calls have almost never bothered to check out what actually happens when the government does something, as compared to what happens when the government does nothing.
It is not just free market economists who think the government can make a mess bigger with its interventions. It was none other than Karl Marx who wrote to his colleague Engels that “crackbrained meddling by the authorities” can “aggravate an existing crisis.”
The history of the United States is full of evidence on the negative effects of government intervention. For the first 150 years of this country’s existence, the federal government did not think it was its business to intervene when the economy turned down. All of those downturns ended faster than the first downturn where the federal government intervened big time– the Great Depression of the 1930s.
After pointing out the two very different stories told about The Great Depression (1) Government intervened and saved America vs. 2) Government intervened and prolonged/worsened the depression), Sowell continues:
If you look at the facts, they go like this: Unemployment never hit double digits in any of the 12 months following the big stock market crash of 1929 that is often blamed for the massive unemployment of the 1930s. Unemployment peaked at 9 percent, two months after the October 1929 crash, and then began drifting downward.
Unemployment was down to 6.3 percent by June 1930, when the first big federal intervention occurred. Within six months, the downward trend in unemployment reversed and hit double digits for the first time in December 1930.
What were politicians to do? Say “We messed up”? Or keep trying one huge intervention after another? The record shows what they did: President Hoover’s interventions were followed by President Roosevelt’s bigger interventions– and unemployment remained in double digits in every month for the entire remainder of the decade.
Ironically, to prevent meddlesome politicians and busy-body special interest groups from “fixing” the rest of us into snug-fitting economic straight-jackets, many of us who support freer markets in the economy and de-centralization of power in the government must constantly be “doing stuff” to combat them.
It took a lot of people to land us in this mess. It’s going to take a lot us to get America out of it.
(Here’s the link for the Sowell article I am citing in the piece.)