The Greater Depression

You can’t say we haven’t been warned. Despite the high debt price tag resulting from the government intervention and arbitrary price controls designed to “spur the economy” during the American Great Depression, modern politicians on both sides of the aisle are more than willing to repeat the same mistakes. Interestingly, just as Herbert Hoover is blamed by leftist historians (but I repeat myself) for leading us into the Depression with his so-called free-market policies, so is George W. Bush blamed for his “capitalistic” tendencies. This is nonsense of course, both Hoover and Bush implemented interventionist economic policies that were exactly the antithesis of free-market capitalism. And both were succeeded by men who took their economic strategies (i.e. political compromises) and opened them up to full-throttle. What Hoover and Bush began, FDR and Obama have respectively finished.

In his book, America’s Great Depression, Murray Rothbard sets the record on Hoover in proper perspective:

Hoover’s role as founder of a revolutionary program of government planning to combat depression has been unjustly neglected by historians. Franklin D. Roosevelt, in large part, merely elaborated the policies laid down by his predecessor. To scoff at Hoover’s tragic failure to cure the depression as a typical example of laissez-faire [meaning “allow to act,” or free-enterprise] is drastically to misread the historical record. The Hoover rout must be set down as a failure of government planning and not of the free market.

In similar fashion, George W. Bush receives much of the media scorn for the current recession (read: government subsidized depression) due to his “lack” of enacting interventionist tactics—what one investor refers to as the “unregulated shadow banking system”—which is pure lunacy. Bush’s government spending makes Bill Clinton look like a miser, but it took Obama little more than a year to outspend Bush. As far as the economy is concerned, Clinton was far more Republican than either Bush or Hoover. In other words, both Hoover and Bush should receive a fair share of the blame for their contributions to a weak economy, but it shouldn’t be because of their loyalty to free-market principles—just the opposite in fact.

A 67-year-old warning from an authoritative source should be heard and heeded all across America. After World War II, Hermann Goering, one of Adolf Hitler’s right-hand men, told an American war correspondent:

Your America is doing many things in the economic field which we found out caused us so much trouble. You are trying to control peoples’ wages and prices—peoples’ work. If you do that you must control peoples’ lives. And no country can do that part way. I tried and it failed. Nor can any country do it all the way either. I tried that too and it failed. You are no better planners than we. I should think your economists would read what happened here.

Goering came to understand—too late—that any form of economic intervention by the government is ultimately destined for failure, regardless if it is “part way” or “all the way.” Goering came to realize that controlling people’s work is the same as controlling their lives, and this type of control is illusory and temporary. In the 67 years that have taken place between Goering’s warning and today, the American government is still holding onto this illusion, convinced that it can somehow beat the odds of Goering’s prediction. It can’t and it won’t. Hermann Goering was not warning of what might happen, but of what was already happening in 1946. He could see it because he had lived it and actually helped to implement it. And both Presidents Hoover and Bush would (now) agree.