Enthusiasts of excessive control of the market enthusiastically liken President Obama to FDR. This enthusiastic comparison rests on a flawed premise, that FDR's hyper intervention via the New Deal saved the country from a crushing depression.
The comparison of our current president with FDR is not a flattering one, however, when we take the long view of the Great Depression. As Jim Powell amply illustrates in his book FDR's Folly
, government control and manipulation of nearly all aspects of the economy--and therefore society--turned a depression not uncommon to American history into a deep and abiding depression, lasting over a decade.If President Obama is the new FDR we have worse economic times ahead.
Put another way, why was this one depression bad enough to be remembered our only great depression? It was, after all, the only one "great" enough in American history to be remembered by that name.
A market economy runs primarily on freedom: cooperation among individuals, contractual agreements, entrepreneurship, pursuit of respective self interest, and marginal business growth all require a free society. In order to create wealth, employment, and a rising standard of living for a diverse population of millions, capital and limited resources with alternative uses must be efficiently allocated and utilized.
Controlled and over- regulated markets have never been up to the task of efficiently meeting the demands of advanced societies; socialism, in whatever degree and form, creates uncertainty in market condition-- lack of freedom, that is--that stagnates growth. Government obstruction of the freedom required by the market and regulation beyond its proper role (and there is a good role for government) inevitably brings about economic stagnation and high unemployment.
Remember to ask, what and who is "the free market," or what is more commonly tossed around, "the private sector"? It is nothing less than you, me, and other individuals freely and responsibly pursuing our respective self interests.
As the above quote from Milton Friedman pointedly reminds us, not trusting "the market" is not trusting in freedom itself--it is a distrust of ourselves. A demand for more regulation of "the private sector" is not a demand to control some faceless entity out there in the murky distance; it is a distrust of and demand to control yourself and your own lives!
Of course, it's never ourselves and our own liberty we don't trust; it is always some other guy. In a free society based on a free exchange economy, that someone else is you. During the New Deal when the federal government ordered millions of pigs slaughtered and acres of wheat plowed under, people everywhere went hungry longer than they needed to because some people were not free to produce the food millions of others demanded.
The more freedom was increasingly needed the more it was repressed, and the depression dragged on and on and on.
So let's make sure we're not in for a New New Deal.
