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Source link: http://archive.mises.org/9222/how-this-happened/

How This Happened

January 12, 2009 by

For years, many of us puzzled about how something so stupid and destructive as the New Deal could have happened. Now that we are living amidst this, it is easier to come to terms with how the New Deal came about. It is like watching a slow-moving train headed over a cliff. The problem is that the engineers have ear plugs in and blinders on.

Will this go on for ten years like the last time? Will it end in World War III, as if following some historical script? Is it possible that we will go the way of Germany in the 1920s, straight into the abyss of hyperinflation and into the hands of a ghastly dictator? It is unwise to rule it out. FULL ARTICLE

{ 15 comments }

Christopher Hightower January 12, 2009 at 10:02 am

I’m constantly amazed at the general lack of understanding by MSM and “sheeple” of what produces wealth. They think it’s paper with ink on it!

Lew,

Your book is teaching me a thing or two; I’m a little over half-way through.

prettyskin January 12, 2009 at 11:12 am

von Mises quote:
“And no one can find a safe way for himself if society is sweeping towards destruction.”

Does this include bankers? Haven’t they carved a safe way out. Therefore, some have find a protection for themselves.

One of the problem with repetitive economic self destruction of the country is socialistic economists. For so long, these economists have permeated the state with “entitlement” theories.

Wade A. Mitchell January 12, 2009 at 11:41 am

I welcome the optimistic tone of this article. Too much “gloom and doom” is not good for anyone. Most, who have taken the time to get acquainted with the ideas of Mises, Hayek, Rothbard and Rockwell have seen this coming for some time and taken steps to lessen the severity of the crisis.

As for me, I got out of debt, bought some gold and silver, have plenty of storage for non perishible food items and remain well stocked. Since the government cannot control the information technology nearly as well as FDR and his band of myrmidons, I am also optimistic that the truth will eventually rise to the top.

Great article!

dobropet January 12, 2009 at 11:42 am

It was sheer horror to watch, this past weekend, Obama’s economic adviser Robert Reich and numerous others on C-Span explaining their theories and beliefs about what to impose upon the economy to save it from utter collapse. You’d think the Mayan predictions for the end of the world were just graffiti to Reich’s “immediate action is needed,” or the “consequences of no action,” would have dire effects upon the defenseless people of America.

Plus, the complicit interviewers(I believe all Democratic, not positive though), had no true or direct questions that would atleast hint at the current interventionism as substantially prolonging the current crisis for the American people. Finding this sort of ignorance in economics only affirms what to expect from the coming administration and to become prepared for their consequences upon the economy.

Have already printed this post and distributed accordingly to those uninformed of the true nature of Obama’s economic team and why to brace for the worst.

dobropet January 12, 2009 at 11:42 am

It was sheer horror to watch, this past weekend, Obama’s economic adviser Robert Reich and numerous others on C-Span explaining their theories and beliefs about what to impose upon the economy to save it from utter collapse. You’d think the Mayan predictions for the end of the world were just graffiti to Reich’s “immediate action is needed,” or the “consequences of no action,” would have dire effects upon the defenseless people of America.

Plus, the complicit interviewers(I believe all Democratic, not positive though), had no true or direct questions that would atleast hint at the current interventionism as substantially prolonging the current crisis for the American people. Finding this sort of ignorance in economics only affirms what to expect from the coming administration and to become prepared for their consequences upon the economy.

Have already printed this post and distributed accordingly to those uninformed of the true nature of Obama’s economic team and why to brace for the worst.

Pat January 12, 2009 at 11:54 am

Judging from the few articles I have seen online, it seems some of Mr. Obama’s supporters are showing signs of vague disappointment. Of course, that does not include those who naturally are not happy with him in the first place because of him not being more forceful than they wish. I feel we can expect a more vociferous attack on Obama from the left than from the right precisely because of how disappointing he is, not because of how objectionable he is in the first place.

Regarding Hoover, I find interesting that most of the defense of the New Deal does not address Hoover’s policies. Which brings me to the following question: if the New Deal (essentially FDR’s policies) is defensible, then should Hoover’s policies be defensible as well (considering Hoover’s and FDR’s policies were more or less based on the same premise, namely the government has to intervene in the economy)? If not, then what are the fundamental differences between Hoover and FDR?
Naturally, to answer those questions won’t change the fact that government’s intervention in the voluntary human interaction is not desirable. But asking those questions does expose the flaw in the “blame the market” reasoning.

Michael Smith January 12, 2009 at 11:57 am

Has anyone else noticed how rapidly liberals have abandoned the claim that Roosevelt’s “New Deal” ended the Great Depression?

For decades, indeed for my entire adult life, I’ve heard liberals make that claim. But recently, a handful of books have appeared that demonstrate quite beyond doubt that the “New Deal” not only failed to end the Great Depression, but actually prolonged it. Even ardent neo-Keynesians like Krugman no longer make that claim.

Instead, the current claim is that Roosevelt failed because he didn’t spend enough — his programs weren’t “ambitious” enough — he didn’t go “far enough”. And thus a failure of Keynesian economics is instantly converted into an argument for trying it on an even more massive scale. Slick, isn’t it?

There is only one problem. Obama’s proposed $750 billion stimulus package is about 5.2% of our current GDP of $14.412 trillion. Roosevelt’s budget deficits in the first two years of his “New Deal” were 4.6% and 5.44% of GDP respectively. So the proposed stimulus is actually of no greater magnitude than what Roosevelt tried.

All of which means that the current claim that this stimulus will work — even though Roosevelt’s did not — is a smokescreen. Evidently, the people pushing the stimulus haven’t even looked at the numbers to see if their claim makes any sense.

I point this out with some trepidation because we don’t want to give these fools any excuse for expanding the scale of the damage they plan to inflict.

Stanley Pinchak January 12, 2009 at 12:07 pm

Michael Smith,
Last week, Krugman made a similar observation. He called Obama’s proposal too small. He didn’t resort to any statistics, but merely emotional appeals.

prettyskin January 12, 2009 at 2:03 pm

Wade, have you found a safe way for yourself as the state rockets to destruction? Am trying to understand why no one can find a safe way for himself. But yet, safe ways are purported and packaged and sold.

gooddebate January 12, 2009 at 3:11 pm

The very last line of Mises’ quote made me think of the debate over voting. “Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle”. Does this apply to voting?

Gellert January 12, 2009 at 3:37 pm

gooddebate

It means that you should take the time to explain the facts of the situation to your friends, associates and colleagues. It means you should not hesitate to correct those who repeat incorrect assertions even in “polite” social situations. It means you should debate against those who promote untrue assertions (whether on the radio, at university, at work, in the boardroom, in the newspaper (write and straighten the record out- show that they are wrong and how they are wrong), on blogs etc. Join the fray and expose the errors/untruths. You may not get immediate feedback, but you will be having an effect. People’s opinions are changed one at a time.

The other thing to do is read up on as much Austrian Economics as you can. Be familiar with Von Mises and Reisman. You can be certain that those you engage will not be. You will have the advantage of knowing substantive fact. They won’t be able to respond with any.

Gellert

greg January 12, 2009 at 3:48 pm

Good article, brings the comparison to the front.

One thing though is something I heard on the History Channel that over the last 100 years, technology has incresed our productivity 1000X. It is this increase that will keep us out of same major problems we saw in the 30′s.

I did not live during the Great Depression, but my grandfather lost his ranch in the 30′s and was forced to work as a migrant worker in the fields to make ends meet. Today, it will be a hardship for most to loose their landscaper and have to mow their own yard.

And this is why I am against the stimulus plan. The money will be spent to keep their landscaper mowing their lawns.

killben January 13, 2009 at 2:04 am

Let us look at this way … where are the meddlers getting the resources with which to meddle .. tax-payers money. If this resource is stopped, then meddling will also come to a halt. Let the tax-payers lead a revolt making it abundantly clear that any use of their money needs to have their approval .. propose “say we want to bailout citi with your money” …. say yes or no … online, sms etc..
Then we will see action .. till then tax-payers will bleed

(8?» January 13, 2009 at 12:29 pm

Michael Smith, this morning Krugman was on CNBC and responded to “the New Deal not fixing the Depression” question by stating that while it didn’t fix the economy, it still helped it, by minimizing the damage, and by providing “valuable public works.”

This reminded me of the true value of these works, the political value, and the stories of John T. Flynn discussing how FDR crushed local political machines through the federalization of handouts, but only if you abandoned your opposition to him. Refuse though, and you found your Republican self no longer at a government desk, but on a government rock pile.

There’s value in the centralization/federalization of power all right. Too bad we have to bear it as a cost, instead of as an accumulating benefit.

Ron January 13, 2009 at 7:28 pm

I posted this article on my FaceBook page earlier today, and a friend of mine responded, “I stopped reading after ‘stupid and destructive’.”

While I agree with Lew’s article, it just reminded me how utterly foreign many Austro-Libertarian concepts are to the majority of the public. To most people, the mere notion that the New Deal may not have saved us from the Great Depression sounds like tinfoil-hat conspiracy nuttiness.

I’m not nearly as optimistic as Lew. I think we’re in for GD2, and I think capitalism will be blamed for it, just as it was the first time. The anti-capitalist mentality is so ingrained in the public mind that most people are simply not open to changing their minds. That doesn’t mean I’m going to stop trying, though.

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