Category Archives: Business

Why The New Deal Didn’t Work

This is an important point:

The New Deal prolonged the Great Depression because of not one but a combination of misguided policies that made it harder for employers to create jobs and harder for consumers to buy things. Keynesian commentators talk as if FDR made a single key mistake, like not incurring big enough budget deficits. This ignores the tripling of the tax burden during the New Deal period (1933-1940). Also ignored is the fact that New Deal spending was mainly paid for by the middle class and the poor, because the biggest revenue generator for the federal government was the excise tax on beer, cigarettes, chewing gum, and other cheap pleasures disproportionately enjoyed by the middle class and the poor. Moreover, several New Deal laws made everything — especially food — more expensive when Americans desperately needed bargains.

There’s a lot more.

Notions that the New Deal didn’t work because they didn’t do enough of it (particularly based on the absurd notion that the war was “the New Deal on steroids” which was why it did) are just the kind of rewriting of history that I was talking about.

[Update on Tuesday morning]

There are few things I enjoy more than dealing with history-challenged simpletons who stupidly assume that because one doesn’t accept the gospel that FDR Saved Us From The Breadlines, that one must therefore think that Herbert Hoover was (in the parlance of the times) the cats pajamas, and that if we’d only stuck with his (non-existent) laissez-faire policies, all would have been well with the world. Larry Kudlow had a guest on his show who made this idiotic assumption last week, when he talked about Larry’s “hero,” Herbert Hoover. Kudlow quickly put him in his place (as I did here with my own idiot in comments). It’s the same (or at least related) pigheaded mindlessness and false choice that causes people to foolishly assume that because I’m down on Democrats I must be a Republican.

[Update a couple minutes later]

Michael Barone, on the real lessons of the Great Depression. Of course, those pushing “stimuli” don’t want to learn the real lessons, because it would remove much of the justification for their efforts to grow government and take over more and more of our lives as individuals.

[Bumped to Tuesday morning]

Return Trip

Jeff Foust has an interview with Charles Simonyi, who is about to become the first space tourist (and unlike many, he doesn’t dislike the phrase) to do it again.

There are two interesting points to me. First:

If you look at professional astronauts and cosmonauts, it’s astounding how many of them fly multiple times. It was something I never quite understood: I would see the same names again and again, and I would wonder why this person is flying again when there are others who would probably want to fly too.

The answer is that space agencies see that people with experience do much better. The “start up” time on that first flight takes away so much from the overall performance compared to the second and third flights. The top ten people have 60 flights among themselves, which is a lot of flights. It shows that, with experience, you can do so much better. In my case, I hope to accomplish more, in terms of experiments and amateur radio communications with schools and so on.

To me, while you obviously want to use the best candidates for a mission costing hundreds of millions of dollars, this validates the theory that George Abbey grew the astronaut office to a high surplus in order to maintain control over them, by forcing competition among them for the limited flights available.

As for the frustration of some in the space community with these millionaires who buy rides for themselves, but don’t otherwise help the nascent industry with their millions:

I’m not an investor, I’m a customer of these industries. I recommend it to everyone else to be a customer. Whether it’s a good investment is a completely different question, and one I’m not qualified to talk about.

Well, we do need customers, so he is playing a key role. It’s just a shame that, at least for now, “everyone else” can’t afford it. So we’ll need investors too.

[Monday evening update]

Here’s another interview with Simonyi over at Popular Science.

Will The “Stimulus” Really Stimulate?

Economists say no:

“I think (doing) nothing would have been better,” said Ed Yardeni, an investment analyst who’s usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

“It’s unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits.”

It won’t slow them down, of course. Because it’s not really about “stimulus.”

As a commenter over at Instapundit noted a few weeks ago, a government providing stimulus is like an ugly and uncoordinated person performing a lewd dance. Even if the intent is to stimulate, the effect is exactly the opposite.

[Afternoon update]

The shock doctrine:

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?


It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is “an opportunity for us”. After all, he said: “You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before” such as taking control of the financial, energy, information and healthcare industries.

That’s just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think. “Some people stockpile canned goods and water in preparation for major disasters,” Klein wrote. “Friedmanites stockpile free-market ideas.” But that is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would.

As is often the case when the left accuses the right of something (lying, racism, hate), Naomi Klein’s thesis is simple projection.

Dangerous For Your Health?

Yet another time bomb in the “stimulus” package, that won’t be debated:

One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and “guide” your doctor’s decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, “Critical: What We Can Do About the Health-Care Crisis.” According to Daschle, doctors have to give up autonomy and “learn to operate less like solo practitioners.”

The last entity that I want monitoring my health care is the federal government.

This bill is apparently chock-a-block with stuff like this, each and every one of which should be discussed, debated and if passed, passed on its own merits with its own bill, and has nothing to do with stimulus. This is quite possibly the worst piece of legislation in the nation’s history, and it’s being rushed through with almost no debate, discussion, or even knowledge of its contents by those voting for it. The Founders would weep.

If they vote for the conference product, I hope that Collins, Snowe and Specter all lose their next races, even if they’re replaced by Dems. At least they’ll be honest Dems.

[Early evening update]

(Democrat) Mickey Kaus explains how this bill will roll back, if not completely undo, welfare reform.

Avoiding Hoover

Jim Manzi has a good post on the real implications of this disaster wending its way all too quickly down Pennsylvania Avenue.

What I find most appalling about it are the perverse incentives and moral hazards that it sets up. Buy more house than you can afford? No problem, the taxpayers will prop you up and keep you in it. Spending more than revenue in your state capital? Don’t sweat it, we’ll just steal money from other states so you can keep it up.

It is punishing the prudent and rewarding the irresponsible. And when you set up a system like that, you’ll get a lot less of the former and a lot more of the latter behavior. At some point, Atlas will shrug. I don’t know how far off we are from it, though.

[Update a few minutes later]

Welcome to the Great American Handout.

“Thugs Ransacking My House”

Well, Arnold Kling certainly isn’t mincing any words:

“I think about the stimulus as an economist but I feel it as a father. Barack Obama is destroying my daughters future. It is like sitting there watching my house ransacked by a gang of thugs. That’s how I feel, now back to how I think.”

As noted if you read the whole thing, this isn’t a “stimulus” plan. It’s a grow-government-and-make-us-all-increasingly-dependent-on-it plan. The welfare provision alone is proof of that.