I had a letter in today’s ABQ Journal Business Outlook section. As Deroy Murdock stated at our Lights of Liberty event a few months ago, when it comes to economic crises, the reactions of politicians often worsens the situation instead of improving it. This applies to Bush’s ineffective “economic stimuli” as well as Obama’s. When a crisis hits, there may be certain policy issues that need to be resolved in a targeted manner, but massive, broad-based reforms can do more harm than good. This was what made the “Great Depression” so “Great.” Anyway, the letter is at this link and below:
In search of certainty
In Winthrop Quigley’s recent article about what he calls the “economic fear factor,” he brushes on a number of important topics as to why the U.S. economy and stock markets continue to founder. We’ve seen this movie before and many of these policies of uncertainty and rapid change are what caused the Great Depression to be “great.”
During the Depression, as described in Amity Shlaes’ landmark book “The Forgotten Man,” FDR’s “Brain Trust” embarked on an ever-changing mix of policies that were experimental and often in direct conflict with each other. This ever-changing policy environment transformed what was a severe economic downturn into a 12-year-long depression that only ended when the onset of World War II forced a coherent set of policies on the administration.
Obama’s administration, while supposedly obstructed by the GOP, has embarked upon a massive health care reorganization, forced new credit card policies on what was an efficient system, enacted financial regulations that failed to address the very roots of the financial crisis at Fannie Mae, Freddie Mac and the Federal Reserve, and is on the verge of allowing the largest tax hike in U.S. history with the expiration of the Bush tax cuts.
Add on top of that the fact that Bush and Obama have combined to double the size of the federal government in a mere 10 years from $1.9 trillion to $3.8 trillion and it is no wonder that businesses and consumers alike are waiting for some certainty before investing, hiring or spending.
Paul J. Gessing
Rio Grande Foundation