Many modern academics are reflexively anti-capitalist. Whether they are in the humanities or sciences, ethics and honesty are something else reserved for the little guy.  Tenured idiots feel they don’t need to be particularly honest with the common folk, since they have more important agendas at stake.  Professors are no less basely motivated or subject to original sin than the rest of us, and they are altogether more likely to lie about climate change or the truth about historical “consensus” if they don’t quite square with the research evidence.  Americans, if they are a confident free people, should never give control of their thoughts and opinions to eggheads or government officials.  Doing so leads inevitably to manipulation, exploitation, and to eventual enslavement.  What we need to do instead is hone our critical thinking skills and weigh things carefully, but always trust oneself more than others.  Now if you trust just one thing I’m going to say, however, believe me that, notwithstanding some family member or significant other, you are the only person in the world who has your best interests in mind!  Government never does. 

The New Deal was responsible for prolonging the Great Depression because of the uncertainty created by numerous and conflicting interventions in the economy.  One of the leading investors of the day, Lammot du Pont explained in 1937 that the tax situation, the labor situation, the level of inflation or deflation, as well as the legal conditions under which businesses operate were all up in the air.  Even Roosevelt’s mood swings, whenever he faced political opposition, might generate vindictive executive orders aimed at capping profits or taxing more.  FDR’s very own Treasury Secretary, Henry Morgenthau, confided to his personal diary: “We have tried spending money.  We are spending more than we have ever spent before and it does not work.  …We have never made good on our promises.  …I say after eight years of this Administration we have just as much unemployment as when we started…and an enormous debt to boot!”  It is not frequently admitted by so-called “consensus” historians, but the economic hardship of the Great Depression persisted and even grew worse, and President Roosevelt’s political popularity correspondingly declined to such a degree that he may not have won reelection a third time had Pearl Harbor not intervened. 

Americans rallied around their president in wartime.  Economic conditions also improved, because along with the horrendous destruction and death associated with World War II there came a revival of trade with the Allies.  The Fed also changed its monetary policy, and re-inflation of the money supply helped to counteract the high costs of the New Deal.  President Truman then came in behind Roosevelt and rhetorically at least, started to encourage business activities and investment.  The free market did not cause or prolong the Great Depression, political bungling did—and the same thing is about to happen today.  According to Lawrence Reed, “This time we have nothing to fear but myths and misconceptions.”  We should know and do better, in other words!  The financial crisis that has gripped America since 2008 can end in a couple years or take a decade, and it is our choice to make at the polls and/or by applying responsible political pressure on Washington. 

From 2001 to 2005 the Fed expanded the money supply at a double-digit rates.  The dollar lost value, but banks flushed with liquidity lowered interest rates and made riskier loans.  When the bubble burst, the culprits of the bad policies recommended those government bailouts!  Many of them are now calling for higher taxes and tariffs to supposedly help reduce debt, but also to maintain the ridiculously high level of spending.  The same nonsense took a recession in 1930 and turned it into the Great Depression.  Not only will future generations be saddled with the bills we have for decades, but we are also still throwing good money after bad.  In so doing we are undermining free enterprise and the soundness of our currency.  The great economist Ludwig von Mises once observed that, “Government is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink.”  He was describing inflation and the way government expands the money supply by printing more of it.  The value of each monetary unit erodes as the supply of money increases, until the unit (say, the dollar) becomes potentially worthless. 

The impact along the way will be prices rising and erosion of savings and investment.  Lawrence Reed again: “Our economy looks like a roller coaster because Congresses, Presidents and the agencies they’ve empowered never cease their monetary mischief.  …[Politicians blame] each other, scrambling to cover their behinds and score political points in the midst of a crisis, and piling debts upon debts they audaciously label ‘stimulus packages.’”  Reed then poses some simple questions that begin to address in a very personal way the culprits as it were behind the culprits; namely, “Why do so many Americans want to trust [the politicians] with their health care, education, retirement and a host of other aspects of their lives?”  Does freedom really mean so little to the people anymore?  And do they know so little about past experience that they would walk into a swirling propeller?  George Santayana famously wrote, “Those who cannot remember the past are condemned to repeat it.”  I should say that we have received fair warning. 

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Wesley Allen Riddle is a retired military officer with degrees and honors from West Point and Oxford.  Widely published in the academic and opinion press, he ran for U.S. Congress (TX-District 31) in the 2004 Republican Primary.  Article based on essay of the same title by Lawrence W. Reed and published jointly by the Mackinac Center for Public Policy and Foundation for Economic Education, 2008.  Email: wes@wesriddle.com.