…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 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.
This was more than a year after the stock market crash. Moreover, the unemployment rate rose to even higher levels under both Presidents Herbert Hoover and Franklin D. Roosevelt, both of whom intervened in the economy on an unprecedented scale.
Before the Great Depression, it was not considered to be the business of the federal government to try to get the economy out of a depression. But the Smoot-Hawley tariff– designed to save American jobs by restricting imports– was one of Hoover’s interventions, followed by even bigger interventions by FDR.
In other words, the evidence suggests that it was not the “problem” of the financial crisis in 1929 that caused massive unemployment but politicians’ attempted “solutions.” Is that the history that we seem to be ready to repeat?…
Read it all. Sowell has always had a way of breaking down myths and putting facts on the table. You can decide for yourself if government involvement in the economy is a good thing. I know what I think.