This morning I was driving over to the mountains for a hike when I heard Lawrence Reed Being Interviewed [click to read and listen] on the radio. I had discovered this economics expert before as I explored the eery parallells of our present crisis to the one we faced in 1929.
He is a solid historian and his knowledge of the Smoot-Halley Tariff and its effects on our economy convinced me to read his 'Great Myths of the Great Depression,' a pamphlet-sized book that is packed with essential information for all Americans who want to understand the true history of the depression. Consider the following Reed observations:
"The economy was only in recession in the spring of 1930. The stock market had rebounded from its crash and regained half of the value it lost. The recession became a depression with the Smoot-Halley Tariff that choked off international trade. Two years later with double-digit unemployment, the government doubled income taxes and unemployment went higher. So we must guard against protectionist trade policies during this recession.
There's no example in history of government spending ending a recession. There's only a short-term positive impact from stimulus of expanding the money supply. But expanding the money supply lessens the value of the currency."
Taking money from those doing things the right way and giving it to people doing things the wrong way makes no sense. It diminished incentive for being successful. It also harms production, and drives away investors. I don't think the economic stimulus package will help our economy in the long-term.
A better approach is fiscally responsible government, lower taxes and personal responsibility that produces prosperity. Don’t be timid about speaking out as in individual citizen. If you think the country is going in the wrong direction, tell your congressman. Speak authoritatively, carefully, and gently. Encourage your family and friends to do the same."
Yesterday I mentioned some point from Mr. Reed's writings to a client who replied: "that is all so beyond my understanding." I said "No its not, you just have to read the right things." I have to feel that if Mr. Reed can make it clear to ME, then ANYBODY should be able to understand some basic economic principles.
The Foundation for Economic Education [click to read] offers a lot of good resources by Mr. Reed and many other authors. It's solid scholarship but it is in language that is both understandable and interesting. Their website is: www.fee.org if you would like to learn more.
This shelter at Sherando Lake was built by young men in Roosevelt's Civilian Conservation Corps.
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