Monday, February 2, 2009

Good reading on the damage caused by Roosevelt's New Deal

At a time when the economy is being ridiculously compared to the 1930's depression in order to sell a massive expansion of government wealth and power similar to the New Deal, it's useful to remember (for those who ever knew) how dismal the results of the New Deal actually were.

In this article, economics professors Harold Cole and Lee Ohanian point out how Roosevelt's plan to fix the economy by government intervention seriously lengthened and deepened the initial economic downturn.

For example, "there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32."

Anyone who believes that expansion of government power and control will improve the economy should visit North Korea. Production of goods and services by business is the economy. Government restrictions on business activities, and transfers of wealth from business to government, can only reduce economic output, non-government employment, and wages.

Obama said recently that he expects the current downturn to last years, not months. If his "solutions" are implemented, it will.

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