Leave the Economy Alone

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What about the track record of doing nothing? For more than the first century and a half of this nation, that was essentially what the federal government did — nothing. None of the downturns in all that time ever lasted as long as the Great Depression.

An economic downturn in 1920-21 sent unemployment up to 12 percent. President Warren Harding did nothing, except for cutting government spending. The economy quickly rebounded on its own.

In 1987, when the stock market declined more in one day than it had in any day in 1929, Ronald Reagan did nothing. There were outcries and outrage in the media. But Reagan still did nothing.

That downturn not only rebounded, it was followed by 20 years of economic growth, marked by low inflation and low unemployment.

The Obama administration’s policies are very much like the policies of the Roosevelt administration during the 1930s. FDR not only smothered business with an unending stream of new regulations, he spent unprecedented sums of money, running up record deficits, despite raising taxes on high income earners to levels that confiscated well over half their earnings.

Like Obama today, FDR blamed the country’s economic problems on his predecessor, making Hoover a pariah. Yet, 6 years after Hoover was gone, and nearly a decade after the stock market crash, unemployment hit 20 percent again in the spring of 1939.

Doing nothing may have a better track record in the economy but government intervention has a better political record in getting presidents re-elected.

People who say that Barack Obama cannot be re-elected with unemployment at its current level should take note that Franklin D. Roosevelt was elected a record four times, despite two consecutive terms in which unemployment was never as low as it is today.

Economic reality is one thing. But political impressions are something very different — and all too often it is the political impressions which determine the fate of an administration and the fate of a nation.

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  • The Infidel

    If that wasn't so true it would make a brilliant comedy sketch. every job created by a govt ie: govt employee = liability, some of those jobs are important like the millitary, but for the most part those jobs are not much more than expenses which are paid for by the tax paying public.

    If govts really are interested in creating long term jobs, they need to sit down and figure out which laws THEY have passed which have reduced a business's ability to operate and employ people. here's a hint, the biggest employers out there are those who employ 10 or less people, doesn't sound very exciting but its the truth. Cut the red tape and regulation and you will see business boom and employment opportunities pop up everywhere. that is if there are still any entrepeneur's left who have not been driven offshore.

  • ebonystone

    "People who say that Barack Obama​ cannot be re-elected with unemployment at its current level should take note that Franklin D. Roosevelt was elected a record four times, despite two consecutive terms in which unemployment was never as low as it is today."

    A sobering rejoinder to those conservatives who claim that Obama is a failure, and that left-liberalism has collapsed. FDR was a failure too, but he kept getting re-elected.

  • Anamah

    Thanks Mr. Sowell. We must be alert right now to stop this madness!!! Even with a president who each time opens his mouth is for the making of an op campaign and leaving his bluff for everyone to enjoy. At the same time all parameters continue going to the red and the country is entering in the darkness and masochist depression by choice.

  • Phil Robb

    Why isn't Thomas Sowell invited more often to appear on TV, especially Fox TV. Bill
    O'Reilly is okay but he is not a free-market economist. He invites goofy economists like
    Ben Stein to appear, as well as many other liberal politicians and commentarors.

    Dr. Sowell or Dr. Walter Williams should be on a least one Fox show, O'Reilly, Cavuto,
    Van Susteren, Hannity etc. at least twice a week.

    I am tired of hearing Carl Rove, Juan Willams, Dennis Miller and other guests who know
    nothing about economics.

    Phil

  • Raymond in DC

    As that famous line goes, "Don't just do something. Stand there!" And rather than talking about working with the administration to pass a bill, their attitude should be, "Haven't they done enough damage?"

    The current package also contains numerous political traps for the Republicans, one of which concerns how it's to be "fully paid for". It's by taxes, of course, and "closing loopholes for the rich". When Republicans reject that, his retort will be "OK, *you* decide how to pay for it!", thus putting *them* on the spot.

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