The Effects of Government Intervention in the Economy

Thomas Sowell, a man whom I respect immensely, has a warning for us. He reminds us here that it was not the stock market crash of 1929 that caused unemployment in the 1930s; it was the Hoover and FDR government intervention in the economy! In 1929 unemployment after the October crash did rise to 9% in December, but then began a downward trend to 6.3%the following June.

That was when the Smoot Hawley Tariffs were passed, against the advice of economists across the country. Five months later, unemployment hit double digits, and continued to rise under Hoover and FDR's government intervention in the economy. Beginning in February 1932 the unemployment rate never fell below 20% before January 1935!

Sowell points out that it worked great for four-term President FDR, but not for the country. He also points out that FDR had Herbert Hoover to blame; now Obama has George W. Bush!