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1921 and Econlib and Fairness Doctrine

by Amity Shlaes
January 30, 2009

Over at econlib David Henderson has some great material on Harding and stimuli. Recall that in that era they let wages and prices fall. Ionides writes that more detail on this recession is in George Reisman, Capitalism. Got to check it out.

Someone asked me today what changed in the intellectual world that made it possible for skepticism about the New Deal to be expressed in the general public. I thought the question was a bit forced. One could always express skepticism! Even in the 1970s.

Still, some shift that has taken place. And that has to do with….

 a) The ending of the Fairness Doctrine

b) The resurgence of the Austrians and the rise of the public choicers

c) Their ability to use new media creatively — Russ Roberts, who puts econ in LOVE stories, how improbable. Reason TV, libertarians who do tv! Econlib is a superb source, I use it all the time. A lib that outdoes the old libs.  What a good job Liberty Fund, Russ, Arnold Kling, and a few others have done with econlib. Ditto for John Tamny at RCM,

 d) The strong economic growth of recent decades.

e)?? Add yours.


  • Posted by Murph

    Fewer Americans each year have direct memory of FDR leading the USA through World War II. One can’t underestimate the importance of this emotional attachment, felt by an entire generation (and passed down)… One can today critically analyize New Deal policies without committing lese-majeste…

  • Posted by Scott Weihrauch

    Check out

    Keeps the spirit of Ludwig Von Mises alive. Many of the Austrian classics can be purchased (or downloaded in pdf format)there as well as new articles published daily.

    Great site for Austrians! Long live Austrians ! ! !

  • Posted by TK in Texas

    It’s permissible because it’s a Republican talking point, just like the meme that Fannie and Freddie are the sole causes of the financial crisis. But you know this Amity. It’s your talking point.

  • Posted by Mike Krieger

    Amity, I agree with Scott. is one of the best websites on the web in matters relating to economics and politics. In addition, your incredible book will continue to educate the public about the dangers of an interventionist and overreaching public policy.

  • Posted by Luke Lea

    Ms. Schlaes:

    You are an attractive personality and obviously intelligent. But as one who has made his living with his hands and his feet — as do most Americans — I must question your reference to the widespread “prosperity” of the past 30 years (as one of the reasons it is ok to question the New Deal nowadays).

    I know the statistics all show that the median family income is as high now as a generation ago, and I don’t dispute the figures. But if you look at real disposable income per hour worked — which is the real measure of economic prosperity — there is not a lot to point to.

    There are reasons, of course, and not all bad. Modern household appliances have removed most of the drudgery of cooking and cleaning, but they also increased the supply of labor relative to demand and have led to a situation in which 40 hours of employment is no longer to support a family of four.

    Granted, our houses are bigger now and we have air-conditioning, and a lot of fantastic electronics. But I am reminded of that old quip that when a man marries his housekeeper the GDP goes down. A lot of the prosperity on paper is for childcare, an extra car so that two people can get to work, and higher real estate prices, not because the houses are bigger, but because twice as many wage-earners are bidding for the same limited spaces in our cities.

    Then, too, trading with China has certainly made our economic pie bigger and the prices are great at Walmart. But they also put me and my friends in wage competition with a lot of (a real lot of) low-skilled (or not so low-skilled) workers in China. I know that is good for my counterparts over there — and I do not begrudge them — and I accept that my wages may have to go down so that theirs can go up.

    I guess it comes back to supply and demand.

    Yet I can’t help remember that when labor-saving technologies revolutionized farming a hundred years ago, we eventually adapted by legislating the 8 hour day and the 40 hour week. True, that was an artificial way of restricting the supply of labor — but how else is labor to reap the benefit of labor-saving devices? And wasn’t it good for the family,

    And the gains of trade bother me. If it is true that trade with China causes the American pie to grow bigger even as it causes the wages of people who make there livings with their hands and their feet — maybe 90% — doesn’t that imply something?

    If there were a way to efficiently redistribute income from capital to labor — a big, big if I grant you — without destroying the incentives for enterprise on both sides of the equation would you necessarily be against it? Or would you just doubt that such a thing could possibly exist?

    These are not hostile remarks. Please forgive the typos.

  • Posted by Aaron

    I agree with “Murph” in that fewer Americans have memory of FDR leading the USA through WWII. FDR was perhaps the greatest wartime president in the history of the USA, but he had terrible business sense.

    I also agree with the comments regarding Austrian Economics. Before Ron Paul, I had no idea about the school of thought, however I have since become a strong supporter.