Economic Myths and Irrelevancy
by Walter E. Williams
Steve H. Hanke is a Professor of Applied Economics at Johns Hopkins University in Baltimore and Senior Fellow at the Cato Institute in Washington, D.C., and writes frequently for Globe Asia and Forbes magazine. Professor Hanke starts off his "Hu versus Sarkozy" article (Globe Asia, November 2009) with a warning. 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. The article contrasts the Chinese versus the French responses to the financial crisis but the major focus is on economic myths.
Hanke says that the 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, 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. Professor Hanke argues that the chief enabler of both the Great Depression and our latest economic downturn is the Federal Reserve Bank, who sees itself as America's systemic risk regulator. This is the world upside down, Hanke explains: The Federal Reserve is the systemic risk.
How about a bit of history? Between 1787 and 1930, our nation has seen both mild and severe economic downturns, sometimes called Panics, that have ranged from one to seven years. During that interval, there was no thought that Congress or the president should intervene in the economy to enact stimulus packages, jobs programs or massive corporate handouts. Probably, the reason that no one thought to do so was that there was no constitutional authority to do so. It took the Herbert Hoover and Franklin Roosevelt administrations to massively and unconstitutionally intervene in the economy and, with the help of a frightened, derelict U.S. Supreme Court, turn what might have been a two- or three-year sharp downturn into our longest depression.
Professor Hanke says that the lesson to be drawn from business cycle history is that, if left to run their natural course, severe downturns are followed by rapid snapbacks. The 1921 recession is a good example where wholesale prices, industrial production and manufacturing employment fell by 30 percent or more and reached their low in mid-1921. There was little government intervention, at least by today's standards, and the economy recovered naturally; and by early 1922, it had fully recovered and the nation was off to the Roaring Twenties.
The bottom line is that the idea that government bureaucrats have enough knowledge to manage an economy well is the height of conceit -- what Nobel Laureate Friedrich Hayek called the "fatal conceit."
do you really want to go through this again...i give a huge list of my thoughts beliefs and philosophical positions in detail...you slam on them and when i say" fair is fair" ...now you give your own positions...you say "i don't have to answer" you don't understand shit...
and then curse me up and down ...while still refusing to reciprocate
(fair is fair)(remember?....no...of course not)
with ANY of your own positions that you are willing to state and defend....(besides just attacking my positions which i readily;y state time and time again...
except....when i say i have already stated them...i don't just say ..."i've said them many times" and just stop
i always post them again.....so....
Re: Are Republicans mentally constipated?
March 22 2009, 9:36 AM
Do they ever have any solutions to our problems or do they just regurgitate what Rush has told them?
Do any of them do any original thinking or do they just repeat platitudes from the past?
Do they still defend GW Bush at any cost?
Do they inexorably castigate straw man Liberal attributes?
Are they just really all cartoonish apparitions?
Come on give us your original solutions to any of the current crises the USA is facing
No Rush Bullshit allowed.
If you don't have an original idea, don't respond.
***************
many of them have left the republican party and gone independent (or libertarian) because the republicans today are too liberal and thus, incompetent to analyze the use of a failed economic and political philosophy that historically has done nothing but enslave people and impoverish them before collapsing their countries.
I'm not republican but i have many solutions to the problems facing the US today
1. remove the income tax and replace it with a national retail sales tax that TREATS ALL CITIZENS EQUALLY UNDER THE LAW...one man , one vote?...one man , one tax rate...23% across the board no deductions... no political favors ..no deals....you buy it retail...you pay 23% tax....you earn a paycheck....you get ALL OF IT (you make 2,000 dollars a week , you receive a check for you make 2,000 dollars)....this ends a lot of the lobbying for deals on tax break laws, and makes foreign tourists and drug dealers pay into our system.
2. close the borders...anyone arrested for a crime of any kind ...check their citizenship status...if they are not here legally ,they get deported....they can come back , but they must get in the back of the line (behind all of the europeans /africans and asians who are trying to get here legally)....and those deported must pay a seven thousand dollar fine to cover their cost of deportation
3.No more foreign aid for countries that are not openly friendly to the US.....with us?...great....justify why we should give you anything in the way of money....not with us ?cut off ...not only the money but the food we supply to you and any allies you have.
4.install a new (group of state representatives [maybe governors]...not congress)commission to examine all laws passed and determine the constitutionality of those laws and make a recommendation to the American people.....we'll call it the 10th Amendment commission
if it is outside the 10th amendment.. it will be broadcast across America
5.put all congressional and senate retirements on the social security system
this job is for them to serve the people...not to get rich....they are free to do that any other way they want (legally)AND make congress pay for their own medical insurance on the open market
6.Loser pays legal system...if you sue and lose ...you pay for the lawyers on both sides
this(along with the removal of illegal aliens ) will make the medical care cheaper.
7.no "free money " bailouts for anybody...there are bankruptcy laws for a reason...let them work
[freedom includes the freedom to fail from poor decisions as well as succeed from good ones]
8.immediate tax moratorium for two years for individuals to relieve the current crisis....if the government is going to bail any one out it should be the people who produce...(but not with a check from your neighbor)(or printed inflationary money)- if you are working and paying taxes you earned that money...the government has enough to run for two years without revenue...but it has to do with its budget what we all have had to do -slim down the enormous waste.
but will only do so if forced.
9.repeal the 16th Amendment
10.end the failed war on drugs (including prescription drugs) we should be free to buy drugs from any source we wish and without the government 's (or the AMA's ) permission.....if you don't know how to self- medicate....ask your doctor....
Dangerous?....so is gasoline....but morons handle that every day!
individual liberty -and the protection of private property rights -and equal protection under the law are the key elements to the health of the greatest country in history THE USA... under that concept we have lifted more people from the crushing poverty that exists around the world than any other political or economic philosophy in the history of mankind. ....
if we socialize that system ....we will meet the fate of the other socialized systems in history ....
under Stalin/Lenin
Mao
Pol Pot
Castro
well then ...let's hear some "conservative truths" from you....
***********************************
That's not my job. It is yours. You come up with a few.
Fair is fair.
Jim...
*********************
conservative truths
individual liberty is more important than "re distribution of wealth"
it is immoral to take your neighbor's productive capacity (money) by force to give it to another neighbor (individual) because you think he "needs it or deserves it " more than the PERSON WHO EARNED IT
-charity is moral...but only when it is VOLUNTARY.....
-there is only a :"right to health care" if you believe that it is moral to force someone else to pay for or provide it
-socialism fails every time it is tried for the same reasons
-it is more compassionate to teach a neighbor to fish if he is hungry than to take a different neighbors fish to give it to the hungry one (even if the hungry neighbor refuses to learn the fishing lesson to his own detriment)
-incentive is an essential element in any economic system...without incentive (like the ability to profit from one's labor and keep that profit )the productive have no reason to innovate or continue their productive activity
-it is impossible to truly support freedom (to succeed) without supporting the freedom to fail from one's own decisions as well
-socialism enslaves one citizen for the sake of another by removing his earned property and re-distributing it to his neighbor (who did not earn it)
OK let's hear some liberal truths from you spalding
fair is fair
Jim
(Login Avalon99)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:06 AM
are those absolute truths, or only "truths" that you believe?
If they are "absolute"... then why in the world would you even want to argue with me?
Jim...
gillis7
(Login gillis7)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:07 AM
OK let's hear some liberal truths from you spalding
fair is fair
Jim
(Login Avalon99)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:09 AM
OK let's hear some liberal truths from you spalding
fair is fair
****************
I asked you first. You've just given us conservative talking points.
I asked you a fair follow up question. Are your truths "absolute"?
Jim..
gillis7
(Login gillis7)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:12 AM
OK let's hear some liberal truths from you spalding
fair is fair
i provided truths
if you think them untrue...
prove it
then post liberal truths and if i think them untrue i will prove that
i provided a good faith response
not from a book or blog ....but from my own mind and belief
This message has been edited by gillis7 on Aug 30, 2009 12:15 AM
gillis7
(Login gillis7)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:13 AM
fair is fair
or don't you believe what you post?
gillis7
(Login gillis7)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:14 AM
your good faith responses (or lack thereof ) define you
Jim
(Login Avalon99)
Re: ABC, NBC Won't Air Ad Critical of Obama's Health Care Plan
August 30 2009, 12:31 AM
your good faith responses (or lack thereof ) define you
*******************
Nope. Your bumpersticker thoughtless "truths" define you.
If your "truths" are absolute, at what point are you willing to enforce them?
Jim..
so let's hear some of what Spalding believes
or (gillis, do you ever have any of your own thoughts?
Jim...)
let's hear some of YOUR Thoughts that you are willing to state and defend
or is all you've got a bunch of insults?
This message has been edited by gillis7 on Nov 6, 2009 9:12 AM
I don't owe you an explanation, but, I will give you one anyway.
I have spent the last 72 hours mostly with my wife's elderly cousin in the Cancer Center at Providence Hospital, and when her blood pressure crashed, in the ER.
My "failure" to respond to you has absolutely nothing to do with you.
You, and your demands for a response to your own thoughtlessness, means very little to me.
However, feel free to renew this post as often as you wish.
just don't have it in you to put anything forth of yourself worth defending.
you really are here just to take potshots and snipe and hurl epithets and insults, you have no intention of engaging in dialog...just liberal hit and run mud slinging....no real substance....yeah, that defines you....
When was the last time? Find a recent example of your opinion in the archives.
Do it yourself, you LAZY bastard. You're as big of a LIAR as gilligan is.
LOL! I'm not the one making the assertion, stupid. I don't think what you are claiming exists! Makes it a little tough, doncha think? Moron... *chortle*
gus.
[Edited to add:] You appear to be on a roll here, stupid. Here are some examples from other threads. Can you say "consistancy"? *chortle* Clearly you don't own any.
