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Gridlock to the Rescue? (Thomas Sowell)
Creators Syndicate ^ | December 12, 2011 | Thomas Sowell

Posted on 12/12/2011 3:21:02 PM PST by jazusamo

Washington gridlock may turn out to be the salvation of the Obama administration.

Not only does gridlock allow the president to blame Republicans for not solving the financial crisis that his own runaway spending created, the inability to carry out as much government intervention in the economy as when the Democrats controlled both Houses of Congress means that the market can now recover on its own to some visible extent before the next election.

Such a recovery would of course be credited as a success of the Obama administration's policies. With this theme being echoed throughout the pro-Obama media, enough voters might be sufficiently impressed to give the president a second term.

The media and the intelligentsia seem obsessed with the idea that government intervention is necessary to get the economy out of the doldrums. This is certainly the prevailing dogma but it is contradicted by history. Yet who reads history any more?

If you look back through history and compare what happens when the federal government intervenes during a downturn in the economy with what happens when the government leaves the market free to work its own way back, doing nothing has by far the better track record.

First of all, this country existed for a century and a half without the federal government intervening to save the economy. No downturn in all that time was as severe or as long-lasting as the downturn that persisted throughout the decade of the 1930s, when both the Hoover administration and the Roosevelt administration intervened on an unprecedented scale.

There was no Federal Reserve System to help — if that is the word — during downturns before 1914. One of the few things on which liberal economists like John Kenneth Galbraith and conservative economists like Milton Friedman agreed was that the Federal Reserve made the Great Depression of the 1930s worse.

Economists writing in a leading scholarly journal in 2004 concluded that government intervention prolonged the Great Depression by several years.

Back in the 1930s, John Maynard Keynes cautioned President Roosevelt about demonizing and threatening business. Yet FDR, who said in his famous first inaugural address, "We have nothing to fear but fear itself," spent the rest of the decade spreading fear to businesses and investors — and wondering why there was still mass unemployment, despite his record-breaking spending.

Back in 1920-21, there was a sharp economic downturn, with unemployment spiking to 11.7 percent. President Warren G. Harding did nothing, except for cutting government spending. Yet the economy quickly recovered and annual unemployment rates ranged from a high of 6.7 percent to a low of 1.8 percent in the rest of the decade.

In the mid-1940s, as World War II neared its end, Keynesian economists were frantically trying to come up with postwar plans to prevent massive unemployment when 12 million people were to be discharged from the military and millions of civilians would lose their jobs when plants producing military supplies shut down.

Two things prevented those wonderful Keynesian plans from being put into operation. First, the atomic bomb brought the war to an end much sooner than anyone expected. Secondly, the Republicans got control of Congress, producing the "do-nothing 80th Congress" that President Harry Truman excoriated during his 1948 election campaign.

In short, plans for vastly expanded government intervention were thwarted — and the "problem" that such intervention was supposed to solve did not materialize. There was a G.I. Bill of Rights for returning military veterans but this was a fraction of what liberal Keynesians had been contemplating.

Anticipating postwar employment problems, former Vice President Henry A. Wallace wrote a book titled "60 Million Jobs," advocating sweeping government interventions to achieve this otherwise unattainable goal. Wallace's interventions never took place, but the free market created 60 million jobs anyway.

A stock market crash in 1987 broke some records set in 1929. But Ronald Reagan did nothing, despite howls from the media, and the economy recovered — leading to 20 years of prosperity.

Obama may yet be re-elected, as a result of gridlock.

TOPICS: Business/Economy; Editorial; Government; Politics/Elections
KEYWORDS: obama; sowell; thomassowell

1 posted on 12/12/2011 3:21:12 PM PST by jazusamo
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2 posted on 12/12/2011 3:24:41 PM PST by jazusamo (The real minimum wage is zero: Thomas Sowell)
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To: jazusamo

I have this sick sinking feeling in my gut that Obama knows something (something horrible) that we don’t know. Why else is he so up-beat all the time acting like nothing is bothering him - he’s on top of the world?

3 posted on 12/12/2011 3:30:52 PM PST by Saundra Duffy ( For victory & freedom!!!)
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To: Saundra Duffy

I hear you.

This turkey is so bad for the country that it’s scary he might even have a very slim chance for reelection.

4 posted on 12/12/2011 3:41:03 PM PST by jazusamo (The real minimum wage is zero: Thomas Sowell)
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To: Saundra Duffy

I agree there is something very wrong here. We have a president who is loosing his base and with a low opinion rating and he doesn’t seem very worried about it.

5 posted on 12/12/2011 3:42:50 PM PST by CowboyConservative
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To: jazusamo

Does it really make any difference? Politicians on both sides are corrupt, incompetent, greedy, selfish and very un-American.

6 posted on 12/12/2011 4:21:05 PM PST by mulligan
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To: Saundra Duffy

Planning on some false flag catastrophe followed by cancellation of the election, maybe?

7 posted on 12/12/2011 5:05:44 PM PST by Still Thinking (Freedom is NOT a loophole!)
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To: jazusamo

Well we better break out the BIG bolt cutters, and break the lock on the grid, ‘cause we can’t have that SOB in there appointing more SCOTUS, and destroying this country anymore than he already has. God only knows what is in store for us between now, and November.

Thanks for the ping jaz.

8 posted on 12/12/2011 6:06:29 PM PST by rockinqsranch (Dems, Libs, Socialists, call 'em what you will, they ALL have fairies livin' in their trees.)
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To: sickoflibs

i believe you repeatedly speak of the idiots in DC not articulating this simple truth ???

9 posted on 12/12/2011 6:53:56 PM PST by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: Gilbo_3
RE :"i believe you repeatedly speak of the idiots in DC not articulating this simple truth ???"

It was politically obvious to me last year that if Republicans took the house Obama would transfer the blame for everything bad from himself to them, or certainly try his best. When he had huge majorities last year and still couldnt get stuff through the Senate the blame fell back on him wrt voters. But now he is claiming he has the fix for everything but the 'Republican congress' is blocking it all for political reasons.

Unfortunately our R-stupid party is clueless in responding to it.

10 posted on 12/12/2011 7:07:39 PM PST by sickoflibs (Man we are screwed!)
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