The problem with the so-called stimulus bill isn’t that it’s full of “pork,” bad as that is. The problem is the tooth-fairy economics on which it is based. Here’s my column on the subject.
The other day I was interviewed by Scott Horton on the economy and, by extension, on my new book Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. Scott plays the devil’s advocate role with unnerving verve.
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Hi Tom!
I heard you on the Bill Handle Show in Southern California today. I’m ashamed to say it, but I listened to the whole interview without recognizing your voice. I was so impressed by this interview. You masterfully answered all of his questions and I suspect your message was well received by many of his listeners. Great job!
Mike
Thanks, Mike. I assumed Handel was a free-market guy when I went on, so I was caught a little off guard. Glad it sounded OK. Had I known, I would have chosen my words a little differently.
I thought you did a great job!
Quick question: How do we square the two Austrian positions that 1) the relatively free market response to the recession of 1920 lead to a booming economy and 2) the fed-fueled boom of the 1920s lead to the crash of 1929? Is there an obvious switch in fed/government policy late in the decade that allows us to view the 20s as a time of genuine growth followed by a set up for disaster?
Mike
Mike, I’m going to try to flesh this out in my Mises Circle talk in April. But your instinct is correct.
Tom,
This is an OUTSTANDING interview you had with Scott Horton! I really think between you and him, it covered topics the average “Joe,” both liberal and conservative, can grasp. I can’t wait to read your book! Can I have permission to post the MP3 on my website and blog (with the proper references of course)?
At a time when true liberty is such a foreign concept in our country, you are certainly one of the lights at the end of the tunnel.
Cory,
By all means. No permission necessary. Thanks!
Rather it’s Tooth Decay Economics.
If you rob a guy at gunpoint of $20, then he is broke and can’t buy food, you can’t “stimulate” him by “lending” him $10 of his own money.
Since the stimulus takes from the economy to give back to the economy, the very best thing it can achieve is status quo.
But in practice, it distorts and decays the economy.
The economy would be better off if it was left to itself.
I was glad to be able to catch the Handle interview (replayed because of popular demand). I noted the comment you had about thinking Handle was a free marketer. Rush Limbaugh made the same mistake a couple of years ago and had him host his program, big mistake. You by the way, were able to reply to and handle his considerations on health care and he had no argument. I was amazed as he always does as he is (stupidly) for nationized healthcare. Well done.
Excellent work, Dr. Woods!
I am reading _Meltdown_ right now, and can recommend it highly as a lay-person’s intro to understanding our current problems. I plan on passing it along to friends and family, when I’m done.
Keep up the great work, the message is spreading!
Is there any mp3 anywhere on the net from the Bill Handle Show?
One point I like to make is that everyone blames the government 100%. I think they are imbeciles, yet those people still bought those houses for twice their value thinking they would go up forever, or took HELOCs to spend on a boat, etc. The bigger problem is the populations is part brain dead and cannot comprehend this. It is the people who elect the government.
And then there’s the free Viagra hand-out, that gives a whole new meaning to political “pork.”
Until very recently, the headlong crash into despotism and regimentation across the globe has depressed me to no end. And yet, all the same, these inroads made into the mainstream media by the Austrian Business Cycle Theory have buoyed my spirits.
With each interview, Tom comes off more poised and more assertive and while I may be biased I think he’s more convincing. Tom’s been everywhere lately. I caught him, in impressive form, on our local David Boze show where he probably accelerated the host’s – what I might call – imminent conversion to Austrianism by a factor of twelve. On Michael Medved, where Tom actually elicited something I never thought I’d hear from Medved: “you’ve changed my mind” and even some positive comments from the host directed toward Ron Paul. Glenn Beck’s been drooling over “Meltdown” since he read it a few weeks back. I guess it’s not entirely an insurmountable affair to bring conservatives around, if only partially, to our side of things. The real work to be done is probably in penetrating the “liberal” shows. Nonetheless, Tom’s having an impact.
Now if only Tom can get all of these armchair warriors to pick up “We Who Dared To Say No To War”…
Tom, I’m the Matt that called into the Young Americans for Liberty podcast you were on a few days ago and pitched you a few softballs. Just want to join the chorus in offering you my praise: You are doing God’s work — and I say that as an agnostic — in removing the wool from peoples’ eyes. You’re also an incredible inspiration to many of us young people in the libertarian movement who aspire to be as eloquent, ardent, and productive as you’ve been in defense of liberty.
Keep up the incredible work, Tom.
For those asking about a link to the Handel interview, you got me curious so I did a search and found it.
http://kfi640.com/podcast/BillHandel.xml
Here’s the Bill Handel podcast feed; you’ll find the Thomas Woods interview under “Morning Meltdown” for February 18, 2009.
Thomas, I really enjoyed reading “33 Questions”. Look forward to hearing these interviews and reading your latest book!
Why do you call your book “a free-market overview of what caused the problem” instead of just an accurate view?
Free-Market folks are a rare breed here in CA. I like the circus analogy in the article. Most befitting the antics taking place in DC
Milan wrote: “everyone blames the government 100%. I think they are imbeciles, yet those people still bought those houses for twice their value thinking they would go up forever, or took HELOCs to spend on a boat, etc. The bigger problem is the populations is part brain dead and cannot comprehend this. It is the people who elect the government.”
The Market Ticker said the same thing 10 days ago: “Let’s ask some basic questions of ourselves, shall we? Did someone force Congress to spend more money than the government takes in via tax receipts? If so, who was that person? Did someone force you to borrow to buy a house?
To buy a car?
To buy a flatscreen TV?
Did someone force the company you work for to borrow in order to fund some long-term objective?
Did, in fact, any of this borrowing – that made the bankers able to try to skim off profits from your economic activity – happen due to any act of the bankers forcing that borrowing to take place?”
March Sheffner,
You are missing the larger picture. The government created the conditions for this problem to exist. Not only through inflation of fiat money but also by the breakdown in the belief of individual responsibility. A vast majority of people no longer believe in individual responsibility and the profit-loss system, two essential pillars of capitalism. The welfare state has replaced these virtues with national/global responsibility and the profit system which has led to the corporatist state.
FA Hayek wrote about this many decades ago in “The Road to Serfdom”. In “The Constitution of Liberty” he does a great job of showing how the progressive tax system would eventually lead to a state where the non-taxpaying majority would force the taxpaying minority to pay for more and more social programs. All of these outcomes must happen as they are the logical outcome of the simple arguments put forth by Mises in “Human Action”.
Excellent excellent excellent answer on the insurance ? from Handle, Tom.
It always confuses me why people always jump to the conclusion that there should be emergency national health insurance in the event of disasters. After every major disaster there is an immediate charitable response to help those affected.
I am close with the family affected by the plane crash in Buffalo. Their house and father are now gone. Did they need the federal government to take care of them? No, the response from their friends, family, and community has been overwhelming. Before the NTSB could arrive from Washington, support groups and donation funds were established.
Despite all attempts by the central planners, capitalism is still alive.
Upon introducing the new $75B plan today, Obama stated, “By bringing down the foreclosure rate, it will help to shore up housing prices for everyone.â€
Economic ignorance seems to be the only thing alive and well in Washington. No wonder the stock market tanks every time they open their mouths.
Excellent Article Dr. Woods,
you are dead on! Not that you needed me to reassure you of your accuracy, but nonetheless I would like to add my two cents.
Also, congratulations on your book “Meltdown” being on the New York Times bestseller list. As a new, yet dedicated follower of Austrian economics, this gives me as much joy as it does you. I will be obtaining my copy in the morning! Thank you for exposing the evil leviathan we know as the fed reserve. Your work is greatly appreciated by all freedom loving people, not just in America, but across the world! Keep up the great work.
just descovered the austrian school .kinda shocked ive never heard of it b4 big fan already.hoping new zealand stands firm and dosnt copy world bailouts or bailins our friends in australia justs got got givin bout 700 us to every family for xmass from there kids.realy cant see how buying chinese toys on credit can be sold by anyone as economic stimulas.
Thomas Woods is a guilty pleasure–learning economic sense shouldn’t be this easy and fun. Thanks!
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