What do you think?
Rate this book
368 pages, Hardcover
First published January 1, 1963
If government wishes to alleviate, rather than aggravate, a depression, its only valid course is laissez-faire – to leave the economy alone. Only if there is no interference, direct or threatened, with prices, wage rates, and business liquidation will the necessary adjustment proceed with smooth dispatch.Now take a moment to examine yourself for any severe physiological changes and you should have a good idea of where you reside in relation to the Austrian School.
Any propping up of shaky positions postpones liquidation and aggravates unsound conditions. Propping up wage rates creates mass unemployment, and bolstering prices perpetuates and creates unsold surpluses.
Moreover, a drastic cut in the government budget – both in taxes and expenditures – will of itself speed adjustment by changing social choice toward more saving and investment relative to consumption. For government spending, whatever the label attached to it, is solely consumption; any cut in the budget therefore raises the investment-consumption ratio in the economy and allows more rapid validation of originally wasteful and loss-yielding projects.
Hence, the proper injunction to government in a depression is cut the budget and leave the economy strictly alone.
** Hoover's "voluntarism" which Rothbard decries as nothing more than massive government coercion of the country’s leading companies to “maintain wage rate, expand construction and cooperate regarding allocating reduced work.”All of these actions Rothbard argues had the opposite effect from what the Hoover administration intended and led the United States into the worst economic downturn in its history. The analysis and the support for his position is cogent and if not always engaging. Whether it is persuasive or not I will leave to you as much of the answer to that question will depend on what you bring with you to the reading.
** Pushing for the passage of the Smoot-Hawley Tariff which had a significantly negative effect on international trade just as the economy was in decline.
** Weakening bankruptcy laws which allowed unsustainable companies to continue to operate rather than being able to redeploy their assets into more productive endeavors.
** Encouraging the Federal Reserve (i.e., SATAN) to expand credit, reduce interest rates and bolster shaky financial positions, thus continuing to encourage bad investments and speculation.
** Pressuring Employers’ to maintain current levels of employment and not make required layoffs.
** Imposing limits on immigration and deported illegal aliens (Hoover was hoping to reduce unemployment by “reducing supply” in the available workforce.
** Pushing for laws limiting the hours construction workers on Federal projects could work per day.
** Publicly condemning short selling and supporting legislation banning the practice.
** Enacting one of the largest tax increases in history while the U.S. economy was tanking.