Dr. Mark Hendrickson
The Flint Hills Center for Public Policy today sponsored a luncheon near the Plaza in Kansas City, MO where Dr. Mark Hendrickson talked about “The Next Great Depression and the Attack of the Watermelons?”
Hendrickson is a professor of economics and international business at Grove City College in Pennsylvania and is a contributing scholar with the Center for Vision & Values think tank.
Dr. Hedrickson admitted the title of his talk was chosen to attract some attention.
“I don’t think we’re doomed to a second Great Depression, although I do think it’s possible.”
“Things aren’t that bad.”
Using a baseball analogy: “The would-be political planners — the elitists who want to gain more control over our lives, and who will inflict greater poverty on us if they succeed in doing that — they have the ‘lead’ right now. But I always view the American people as the home team. We get the last at bat. Even though the other team might be in the lead, I think we can overtake them.
Causes of a depression?
“The world does operate … on a cause-effect system, or relationship.” The orthodoxy says market failure causes depression since markets failed in the 30s.
Markets simply — through price mechanisms — balance supply with demand. Everything adjusts.
Hendrickson explained that President Obama’s statement that “doing nothing” should not have been an option as a justification for the “stimulus” program. This was exactly the wrong lesson to learn from history. “This man does not know history.”
What about the depression of 1920-1921?
Hendrickson explained there was a very brief and severe depression as the market reacted to the misallocations in the economy after World War I. The unemployment rate exploded over about a six month period from 2.3% to over 11%. Production in the country declined by about a fourth. There was “huge shrinkage.”
What happened? Harding was President and did nothing! Adjustments in the market took place, people went back to work and production increased. This was during a time that federal spending was cut by almost half. “The solution was a market solution…. Markets do work — if they are allowed to. The market made the adjustment and we were off to the races as the federal government was shrunk.”
The Great Depression
The opposite approach was taken by Presidents Hoover and Franklin Roosevelt, which led to the Great Depression. “Markets didn’t work then because they were not allowed to work. They were mugged. They were handicapped. They were straight-jacketed by constant, repeated, government interference — perhaps born of the best of intentions. … Government created this unnatural phenomenon called the Great Depression. There is no natural reason … for the economy to be depressed for 12 years. It can only happen if government does it to an economy.”
Today
Today, are we making the same mistakes? There are some interesting parallels between today and the Great Depression.
The Great Depression started with the collapse of the stock market. Recently we’ve had a financial cataclysm. This financial crisis has government’s fingerprints all over it.
What do you do? Hoover made things worse by causing the reduction in world trade. In the last year protectionist voices are getting very loud. President Obama has not been a real friend of trade. We are seeing today a disintegration of world trade. That should concern us because they accompanied the early stages of the Great Depression.
Hoover increased taxes. Roosevelt did the same. When the Bush tax cuts expire next year there is already a huge tax increase built into the system if nothing is done by Congress. But Obama wants to increase taxes on top of that. This is not what you do in a depression. When the economy is down, you don’t saddle it with more taxes. “You don’t kick an economy when it’s down.”
Roosevelt spent money like crazy with the New Deal programs. Did you notice that today that federal spending is accelerating a lot now? Same old thing.
During the New Deal years Roosevelt spent as much as all the presidents before him. Obama is going to double the debt of the United States. Obama’s plans may result in as much debt being incurred in the next eight years as all presidents before him. There’s a very strong parallel here with the Great Depression.
We’re a long way from 12 years of depression now, so if we wake up and change the policies we won’t have the effects of the Great Depression. If we continue to replicate the mistakes of the past, we possibly could replicate the Great Depression.
Other things that happened during the Great Depression
Roosevelt used the Justice Department to persecute large firms under the anti-trust laws. Obama’s deputy attorney general for antitrust recently suggested we should ramp up enforcement of anti-trust laws.
Roosevelt used excise taxes on many things that everyone needed in daily life. Today, “Cap and Trade” threatens to be a similar excise tax. Taxing carbon dioxide will raise prices of everything, because our economy is based on energy. This will be devastating in both the short and long term.
Attack of the Watermelons
Watermelons are the environmentalists: “green” on the outside but “red” on the inside. The have a liberal ideology.
But “big government” people should be called “illiberals” instead of “liberal” or “progressive” since they want to go backwards to the time elitists were planning the economy.
All “illiberals” oppose the basic rights of men and women enshrined in the founding documents of our country: our rights to life, liberty and property.
There’s a fourth target of “illiberals’: the truth. Think of the Soviet propaganda machine. Think of lies like the “markets failed us during the Great Depression.”
There’s a lot of dishonesty in the green movement today. Their biggest fear is carbon dioxide. But think about it. Carbon dioxide is the basis of our food chain. Plants need carbon dioxide to live. Animals and humans need plants. Carbon dioxide is part of our food chain, yet EPA has declared it a pollutant.
“I believe in a just society, but I’m not a socialist.
I believe in a harmonious, friendly community, but I’m not a communist.
I believe in a safe environment, but I’m not an environmentalist.”Once these ideologies become “isms” then they become part of the political agenda. And it’s always the agenda of illiberalism: mutilating the truth as a pretext for taking away life, liberty or property.
What the most common greenhouse gas? Water! You’ve got many people thinking it’s carbon dioxide, which has been declared a pollutant and a danger to the climate. If EPA is going to be consisted, water should be declared a pollutant and a hazard, too. “Water vapor is 98% by volume, and between 80 and 90% by impact, of all the greenhouse effect that there is.”
Paleoclimatologists have found the coldest period in the last half-billion years on earth was when the concentration of carbon dioxide was 10 times what it is today!
Why are we going after carbon dioxide?
Carbon dioxide is emitted from burning fossil fuels. Our economy — our whole way of life — depends on fossil fuels. If you accept the premise that the government has the right to control the amount of carbon dioxide that can be released, you’re saying you want to control and ration energy. That’s another way to say you want to control and regulate the economic lives of people.
We could end up with the situation where the government decides who gets to drive how many miles, who is allowed to fly, which factories can run a full power and which ones have to cut back, how much you should be allowed to cool your house in the summer time. We’re talking about a near doubling of electricity bills … a near doubling of the price of gasoline.
Economic Suicide
We’re talking about committing economic suicide. We’re talking about enslaving the American people for a myth. That ought to concern all of us.
Al Gore wrote in his book, Earth in the Balance, back in the early 90s that he was in favor of slower economic growth. Slower economic growth will kill people on the margins of poverty. The most dangerous environment for human beings is poverty — not smoky air or anything like that. These people want to impoverish us. They think it’s for the good of the world.
Personally, I’m opposed to that kind of a blood thirsty agenda. I’m certainly opposed to the surrender of our freedom. … They’re trying to throttle the economic life and freedom out of us for the sake of their own elitist agenda.
The antidote for error, lies, fallacy … is always Truth. The number one weapon in the arsenal of the illiberals is to obscure the truth. The number one weapon in our arsenal is to shine the light on the Truth.
I believe the American people are going to be free. I think the American spirit is going to stand up and resist these encroachments against our Liberty, and I think we’re going to use the Truth to accomplish that.
Tags: Center for Vision & Values, Dr. Mark Hendrickson, Flint Hills Center for Public Policy, Great Depression, Grove City College
