Thomas Sowell: Obama, Stop Intervening in the Economy

Thomas Sowell is a senior fellow at the Hoover Institution.

Some people are hoping that President Obama’s plan will get the economy out of the doldrums and start providing jobs for the unemployed. Others are hoping that the Republicans’ plan will do the trick.

Those who are truly optimistic hope that Democrats and Republicans will put aside their differences and do what is best for the country....

The grand myth that has been taught to whole generations is that the government is “forced” to intervene in the economy when there is a downturn that leaves millions of people suffering. The classic example is the Great Depression of the 1930s.

What most people are unaware of is that there was no Great Depression until after politicians started intervening in the economy.

There was a stock market crash in October 1929 and unemployment shot up to 9 percent — for one month. Then unemployment started drifting back down until it was 6.3 percent in June 1930, when the first major federal intervention took place.

That was the Smoot-Hawley tariff bill, which more than 1,000 economists across the country pleaded with Congress and President Hoover not to enact. But then, as now, politicians decided that they had to “do something.”...