Charles Koch, Chairman and CEO of Koch Industries, Inc., wrote an article in a recent company newsletter that explains the similarities between today and the early 1930s, and how our present government leaders aren’t following the lessons we should have learned. The article may be read by clicking on Perspective.
One of the myths surrounding the Great Depression is that Hoover did nothing to intervene. It was Roosevelt who swept in, and through massive intervention, ended the depression. Koch dispels that myth: “Hoover launched the most interventionist economic program in U.S. history. Hoover supported record income tax hikes and devastating import tariffs. He also initiated an explosion in government power by creating massive new programs. Far from helping, these programs created a destructive uncertainty that discouraged investment and entrepreneurship and contributed to the decline.”
Koch documents Roosevelt’s massive expansion of government power, regulation, executive orders, and intervention, which didn’t help.
What about the responses our government is making today? It’s making the same mistakes, Koch says. Expansionist monetary policy, bailouts, takeovers, make-work programs, expanding government agencies and regulation — this reliance on government to fix things is not likely to work.
Then, as now, free markets were blamed for our problems, which means that we may not rely on what can get us out of trouble: “It is markets, not government, that can provide the strongest engine for growth, lifting us out of these troubling times. If we are foolish enough to ignore some of the most painful lessons of history, then we will almost certainly make the same mistakes on a devastating scale.”