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Sic Semper Tyrannis

Saturday, December 27, 2008

I did not know that.

Thomas Sowell on what did and did not cause the Great Depression:
Let's start at square one, with the stock market crash in October 1929. Was this what led to massive unemployment?

Official government statistics suggest otherwise. So do new statistics on unemployment by two current scholars, Richard Vedder and Lowell Gallaway, in their book "Out of Work."

The Vedder and Gallaway statistics allow us to follow unemployment month by month. They put the unemployment rate at 5 percent in November 1929, a month after the stock market crash. It hit 9 percent in December-- but then began a generally downward trend, subsiding to 6.3 percent in June 1930.
That doesn't fit my popular-media induced preconceived notions.

So what happened next?
That was when the Smoot-Hawley tariffs were passed, against the advice of economists across the country, who warned of dire consequences.

Five months after the Smoot-Hawley tariffs, the unemployment rate hit double digits for the first time in the 1930s.
Sowell seems to be saying that government intervention made things worse, instead of better. But that can't be right, can it? I mean, we look to the government to solve all our problems.

Don't we?