More Economists Join Higgs’s Call to “Do Nothing”
By Mary Theroux • Monday August 16, 2010 11:54 AM PDT • 4 Comments
The Wall Street Journal has been polling economists throughout the recession on their forecasts, including for unemployment—which have not been very accurate—as well as advice on government policy. Their most recent response: “Economists Want Policy Makers to Back Off Now.”
Despite the continuing challenging conditions, 30 out of 48 economists ... said the economy didn’t need any more fiscal or monetary stimulus.
Had they heeded Robert Higgs’s advice 18 months ago, “Instead of Stimulus, Do Nothing—Seriously,” the $787 billion wasted by the American Recovery and Reinvestment Act of 2009 could have remained in the private sector, with vastly different outcomes than the negative multiplier of government spending. Instead, we have ongoing regime uncertainty, as markets, consumers, and investors remain wary of the Obama administration’s pursuit of one “top priority” after another.
Tags: Bailouts, Budget and Tax Policy, Business, Economics, Employment, Federal Reserve, Free Market, Government subsidies, Great Depression, Mercantilism, Money and Banking, Politics, Presidential Power, Taxation, Transparency, Welfare 
I wonder how much the misunderstanding of how the Great Depression ended has and is contributing to the policies affecting the ongoing recession. Many misguided economists believe that if World War III started right now then the ongoing recession would end just like how World War II allegedly ended the Great Depression.
“World War II did not end the Great Depression. U.S. unemployment nearly ceased to exist due to 11 million people joining the armed forces, mostly by conscription. The government allocated large amounts of gasoline, rubber, steel, and other resources away from the production of cars, radios, refrigerators, and other consumer goods, and into the production of bombs, ships, tanks, and other weapons. That made people poorer. The depression was hidden by war production. If defense production is excluded, the civilian economy during World War II had less growth than during the prewar depression. At the beginning of the Roosevelt administration, the national debt was about $20 billion. When Roosevelt died, the national debt was about $260 billion. The economy recovered after the war ended, when resources were returned to the private sector, when taxes were lowered, and when economic uncertainty ended after the Roosevelt administration ended.” – Viception (http://viception.wordpress.com)
Z | Aug 16, 2010 | Reply
Thanks, Z.
Robert Higgs’s work on the Great Depression and World War II provides the greatest scholarship debunking the war as “ending” the depression. The first five chapters of his recent book, Depression, War and Cold War cover it at length. For a quick overview, see my earlier blog post, “One More Time: World War II Did Not Bring Us Out of the Depression;” or the book’s summary or the news release of the book, “Did the New Deal and World War II End the Great Depression?”
Best wishes,
Mary
Mary Theroux | Aug 16, 2010 | Reply
Many were for it when it was wrong and the damage was done.
richard | Aug 17, 2010 | Reply