Here’s a letter that I sent this morning to the Wall Street Journal:
Calling for “new New Deal” (“America Needs a New New Deal,” Sept. 27) Katrina Vanden Heuvel and Eric Schlosser offer a potted history of the old one and the problems that it allegedly solved. For example, the bank failures that prompted the 1933 Emergency Banking Act were emphatically not the result of laissez faire policies. Rather, they were caused by the Fed’s disastrous contraction of the money supply and by government restrictions on branch banking – restrictions that prevented banks from sufficiently diversifying their portfolios.
Ms. Vanden Heuvel and Mr. Schlosser contradict not only history, but also themselves. After asserting that the Great Depression was “preceded by years of laissez-faire economic policies,” they write, a mere two paragraphs later, that “direct government intervention has played a central role throughout American economic history.”
Such poor history and lousy logic ought not be taken seriously.
Sincerely,
Donald J. Boudreaux
