Shlaes is the author of "The Forgotten Man: A New History of the Great Depression".
Fantasic article. Here are his 5 points (explantions in parentheses are mine):
1. Giving in to protectionism (tariffs are punitive and economically bad)The salient quotes:
2. Blaming the messenger (blaming the stock market is a distraction)
3. Increasing taxes in a downturn (taking more money from people is bad)
4. Assuming bigger government will bring back growth
(big government projects, much hailed by the left, only put off better solutions
and discourage private industry, long-term solutions)
5. Ignoring the cost of inconsistency (crazy tariff laws and other laws give bad signals to foreign investors)
"Perverse monetary policy was the greatest cause of the Great Depression."
"The proximate danger today is a repeat of the 1970s, not the 1930s. But if lawmakers don't remember the old missteps, they might find that their new recovery legislation imperils our recovery," said Shlaes."
Essentially, the government (Republican Hoover, than Democrat FDR) raised taxes and tariffs
at a precarious economic moment. This reduced money that would've otherwise circulated throughout the economy, and the tariffs raised the cost of goods that everyday consumers needed to buy.
I still can't believe that the top tax bracket in this country used to be 90%!!!!!!!!
Shlaes points out that this occurred under FDR. (Reagan, by the way, finally changed it.)
Hat tip, NewsBusters.org. Here's their link to the article, with their comments.
A good point that newsBusters makes:
Today's network news media have hyped similarities between the Great Depression and our current economy more than 40 times in the first four months of 2008. An analysis of two major weeks in stock market history - the week of the stock market crash in 1929 and the week of the Bear Stearns collapse in 2008 - found a dramatic different between the news coverage.
During the week of the 1929 stock market crash, daily news stories reported positive news more often than negative by a 4-to-1 ratio. The week that the Bear Stearns fall occurred, coverage was the complete opposite. Negative stories on ABC, CBS and NBC outnumbered positive 6-to-1.