Economic power vs. political power

Always remember the difference between economic power and political power: You can refuse to hire someone’s services or buy his products in the private sector and go somewhere else instead. In the public sector, though, if you refuse to accept a politician’s or bureaucrat’s product or services you go to jail. Ultimately, after all, all regulations are observed and all taxes are paid at gunpoint.

The Great Depression

The Great Depression was not caused by laissez faire but by the actions of well-intended politicians and bureaucrats. The Federal Reserve System, after all, was not created in response to the Great Depression, but in 1913. Soon thereafter it began experimenting with its awesome powers, expanding the money supply during the roaring ’20s, propping up the pound sterling in London, extending credit so Europeans could buy American agricultural products. All the while, Congress was becoming more and more protectionist. When the Fed reversed policies in 1929 and actually shrunk the money supply by a third over the next three years and Congress culminated its protectionist tendencies with the Smoot-Hawley tariff, the collapse was underway. The fact that Hoover then raised taxes and Roosevelt kept wages artificially high guaranteed the massive unemployment that marked the 1930s. Government caused and exacerbated the Great Depression.