The Super Summary of World History - Alan Dale Daniel [166]
Roosevelt fought to end the Depression and tried everything his economic advisors—mostly university professors—could think up. Experimentation with everything became acceptable because of the national emergency. If a program failed they would try something else, but everything they tried involved deep government interference with the capitalist market economy. Most of the interference came under the philosophic heading of corporatism, or tripartite control. Corporatism means government combined with big business to create cartel like situations limiting competition and imposing price controls. Under a typical tripartite scheme government, big business, and big unions join together to decide production levels, wages, prices, and regulatory oversight routines. With both corporatism and tripartite concepts the government has the ultimate say so, and it can enforce the decisions of the group with government power. These concepts were implemented in the Great Depression, WWI and WWII, although less effectively in the US than in the nations of Europe. Both ideas, like socialism, destroy the free market.
Strangely, if Hoover and Roosevelt had done nothing the Depression in the United States may have ended in a year to perhaps three years. Today there is little doubt that government interference with the market economy prolonged and deepened the Great Depression.[201] Sharp downturns occurred in previous years under various presidents, but the government sat still allowing the recessions to run their course. Usually, they cut taxes and just rode out the problem for a few months. From 1854 to 1919, the average downturn was over in 17 to 24 months (see stlouisfed.org). From 1873 to 1879 a severe panic hit the nation; however, the government allowed the economy to punish marginal businesses, and the recovery, although delayed, was very robust. In 1920 through 1921 another panic hit and unemployment reached a high of 11.7 percent, but the government, under President Coolidge and Treasury Secretary Mellon, remained aloof and the adjustment was swift. Unemployment fell to 2.4 percent in 1923. After World War I bigger government was the rule, and some intellectuals (university professors) thought the government could solve the economic hardships, overturn the rules of classical economics, and build a bright tomorrow. They were very wrong. Nearly everything the government did under Hoover and Roosevelt was wrongheaded and backfired in ways beyond imagination. Huge voting majorities continued to back Roosevelt and the Democrats because they were “doing something” about the Depression. Roosevelt’s propaganda was excellent, and the public failed to understand the harm done by its well-meaning, but economically ignorant, government leaders.
By the mid to late1920s America increased production by 24 percent and real income grew by 2.1 percent; that is real prosperity. The next ten years stood in stark contrast to the prosperous 1920s. Even after the 1930s and 1940s America’s problems continued, and the nation’s return to true prosperity occurred in the 1950s.[202]
A few statistics should help focus the issue:
1929 Unemployment 3.3%
1930 " 8.9
1933 " 24.9 (Roosevelt takes office in March)
1935 Unemployment 20.1%
1937 " 14.3
1938 " 19.0 (5 years in office)
1941 " 9.9 (8 years in office)[203]
Clearly, the chart shows FDR’s New Deal did not solve America’s economic problems until after 1941.
By interfering with the economy, the government destroyed the economy’s ability to adjust. Wages, for example, must be allowed to fall along with prices in economic downturns (classical economics—see Economic Theory