Tax day has brought us a nice crop of correctives to rightwing tax delusions--at least in the blogosphere. But what about the deeper background assumption that regulation is bad and "free market" economics is not just good, but, natural and what God intended?
Well, God's already weighed in pretty clearly what with that whole camel & the eye of the needle thing, at least from where I sit. Get rich in this life, burn for eternity in the next. It's the ultimate short-term investment strategy, I guess.
But as for natural, well, there's nothing more natural for human beings than making stuff up that didn't exist in nature before. Markets are one such thing. And market regulations are another. And, historically, you can't really have one without the other. Markets are made by regulating behavior, starting with the creation of special times and places when people got together to barter and trade--and later, once money was created (another regulating activity) to buy and sell.
So that leaves us with good. And a quick look at the Wikipedia page listing US recessions makes it perfectly clear just how chaotic and uncertain our economy was before the New Deal financial regulations were put into place. I condensed Wikipedia's information, and did some sub-totalling to make things clearer. Wikipedia divides this history into three large time periods. Although the first was dominated by the Federalist's central bank, and the second was largely a private affair under relatively loose and diverse state regulation, recessions were quite commonplace in both of them, as can be seen by direct inspection or by looking at the summary figures showing that the US spent more than 40% of the time in recession during these idyllic pre-New Deal periods:
[Note: the times in this period are mostly approximate and the total months are about 10% to0 high as a result, but there's no reason to think that there's a bias in the figures. The figures are more exact in the next period--on the flip--and the percentage of time in recession is only slightly different, slightly higher in fact.]
This was a period of incredible economic growth. But with a booming population of immigrants and an entire continental landmass to exploit, how could it not be? But what didn't have to be--given how much natural wealth and abundance of labor there was, along with foreign investors--was the constantly recurring periods of economic stagnation, and downright reversal.
In contrast to the above, once the Great Depression had been overcome, recessions were relative brief and infrequent compared to previous history of the US:
The above chart could be considered a bit misleading, although accurate, since the Great Depression lasted a good deal longer in terms of mass unemployment than it lasted in terms of negative GDP growth. But not only is GDP growth the standard measure economists use, we simply lack any sort of employment measures stretching back to the earlier periods. Still, if one were to look only at the period after employment had recovered from the Great Depression, the record is similar. If one starts with the Recession of 1945, the average duration of a recession is 10.9 months, and the time between recessions is 59.3 months. The percentage of time in recessions is just 16%. All these figures are better than the total for the entire period.
In short, the New Deal reforms worked spectacularly in stabilizing the American economy, cutting the amount of time spent in recessions to well less than half what it had been under the previous much more laissez-faire system. No one alive today has any idea what it was like to live under such a dysfunctional economic system, which regularly bankrupted large numbers of business and threw much of the workforce out of work. It is, quite simply, unimaginable for us. And that's a very real problem for us: people don't generally do a very good job of preparing for or avoiding dangers that they can't imagine, much less foresee.
Once again, reality is precisely the opposite of the dominant narratives circulating in Versailles.
