One of the most hotly debated issues today is probably government involvement in the economy. This is a point that I feel deserves some very careful examination. Now, I’m not an economist, or a statistician or anything else of the type. I’m just a guy who can use his own head, and wanted to lay out a few things for you to think about.
First, let’s assume we can agree that the turning point for economic policy was during the Great Depression with FDR’s “New Deal” policies. As such, I took an average of recession lengths and time between the start of recessions from before and after the Great Depression. Unfortunately, these numbers only tell part of the story.
First, the average length for a recession (then called “Panics”) prior to the Great Depression was actually 4.1 years, while post Great Depression was only 1.21 years. Obviously, this looks like a strike against truly free markets, right? Well, not so fast.
You see, the time between recessions prior to the Great Depression was an average of 13.4 years, while post FDR we had only 9.75 years. What’s more, during that time we had two huge wars that artificially propped up the market, namely World War II and Vietnam. This caused gaps of 24 years and 13 years respectively. These numbers skew the average a fair amount, obviously.
You see, I’ve never claimed that Keynesian ideas that government spending can get us out of a recession are actually wrong. They’re not. What my claim is, and has always been, is that the prosperity is artificial. The 24 year period post World War II was a result of debt spending to finance the war, yes, but also the lack of anyone’s ability to actually spend any money. Rationing was the norm in those days, and both adults in a household were typically bringing in money. The guys fighting the wars often had wives at home working in places like aircraft factories (my grandmother worked in a munitions plant for example). This forced savings, and permitted people to buy things like cars and houses in great amounts. It created an era of prosperity.
However, this prosperity was an illusion. Behind the scenes was massive debt, and 8 years after the war ended, we were slammed with yet another recession. This is similar to what happened during Vietnam, as more people were working to support the war, and large numbers of Americans were being drafted (and plenty were volunteering) to go to war, which kept even more people employed. Only this time, the war was barely over before we were smacked with yet another recession.
I should also, in the interest of fair disclosure, mention that I did not count the Long Depression. The reason for that is that I don’t feel it was truly a recession. Production actually increased fourfold during that period, which is hardly indicative of a recession. Instead, prices went out of whack as the United States tried to get the US back on the gold standard, among other factors that were based outside of this country.
Recessions are a part of life. Keynsian ideologies haven’t done a thing to prevent them from happening, and it is an ideology that requires that governments take on massive debt and tax the people to pay for it. Since the numbers don’t show this to actually solve anything long term, why not let people keep their money and stimulate the economy that way. It’s what this nation was founded on, so lets just step up and return to a true free market economy.
Government intervention doesn’t actually work, and it provides yet another way for Uncle Sam to take away our freedoms. It’s time for this to end.
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