We must consider the source when we consider the things we were taught growing up in public (government) schools. In a hypothetical true free society where government did not monopolize the school system, we would be much more likely to learn a fair and accurate presentation of facts. This is true of any subject but is most applicable when we’re talking about history. History is largely in the eye of the beholder. There are facts and dates that cannot be debated. But history is more about the why than the when. This is where the perspective of the presenter comes into play. Take 9/11 for example. Depending on who taught the subject, one may get very different explanations as to the cause. A pro-government leaning teacher may say we were attacked because the terrorists hated our freedom and our wealth. They attacked us out of jealousy basically. Another, more impartial teacher may say we were attacked as retaliation for our incessant meddling in the Middle East. Same event, same dates, same number of dead, but very different explanations of the most important lesson: the cause.

The standard account of the Great Depression we got (and still get) growing up illustrates just one of many inaccurate portrayals of historical events regurgitated in government schools. The popular, public school account goes something like this: the unfettered capitalistic, animalistic excesses of the 1920’s resulted in a horrific crash in 1929 that led to the Great Depression. And the do-nothing Herbert Hoover allowed the Depression to continue and worsen while the masses were starving. Roosevelt, with all of his grand programs, put Americans back to work and eventually pulled us out of the Depression. This story could not be more ridiculous if it said that FDR’s magical farts swept across the country (winds of change I call them) and intoxicated the masses, giving them hope and the motivation to dig this country out of the hole dug by the greedy capitalist robber barons.

According to David Stockman, former budget director under Reagan (who resigned in protest), in his masterpiece The Great Deformation, the Great Depression was a necessary liquidation of the excessive export market that exploded during WWI and the roaring 20’s. Austrian economists posit that the easy money policies of the Federal Reserve gave rise to the massive speculation of the 20’s, similar to the bubble roller coaster we get today from the Fed’s low interest rates and maniacal money printing. In other words, the crash of 1929 was not a naturally occuring bust inherent to capitalism as we are led to believe. Rather, it was government created… the unintended consequence of massive war spending and Fed monetary policy. The great Austrian thinkers like Mises, Hayek and Rothbard explain that booms and busts are not innate features of a free market. Governments and central banks distort markets causing booms and busts. I’ll explain in more detail in another piece but to keep it concise: when interest rates are artificially set below their natural market level, investors, citizens, business people, etc. make spending decisions they otherwise would not have. For example, investors may seek yield in risky assets because their savings account only gets them a hundred basis points or so. Also, governments can direct speculation into different areas based on policy (see the housing bubble of the 2000’s). When there is widespread massive overinvestment and massive leverage, a correction is necessary to clear the market. If you habitually run up your credit card debt without making payments for a sustained period of time, sooner or later the chickens are going to come home to roost. At some point the creditors come for their money and the party is over. This is what happens on a macro scale when we have an economic crash, and this is what happened in 1929.

Crashes were not unique to this era. Our country had suffered several government induced panics and crashes throughout her history prior to ’29. What was unique about this one was the way our politicians handled it. Most people don’t know we had a severe depression in 1920-21. In this case, President Harding responded by slashing government spending and drastically cutting taxes. The Federal Reserve did nothing. By 1922, unemployment had decreased almost 50% and the recovery was on. We took our medicine and it was over quickly. Like yanking off a bandaid, it hurt like hell for a spell but it was the right move. By the late 20’s we had abandoned this approach. Hoover, and then Roosevelt, took the opposite approach of Warren G. Harding (that song with him and Nate Dogg was the schnizzle back in like ’94). They were a precursor to the modern day mutation of bail outs and too big to fail.

There are some amazing books out there on the mishandling of the Depression. Not surprisingly, we don’t read those books in public school. Murray Rothbard’s America’s Great Depression and Robert P. Murphy’s The Politically Incorrect Guide to the Great Depression and the New Deal are wonderful accounts of the true story. Henry Hazlitt’s classic Economics in One Lesson is a sort of post Depression view of government policy and unitended consequences. Everyone should read at least one of these books in my estimation. It is shocking as you read to discover, “Wow, this is literally the exact opposite of what my high shool text book said!”

Upon even a cursory examination, one quickly learns that the “do nothing Hoover” was anything but a “do nothing”. He did things like propping up wages, making it prohibitively expensive for employers to hire… during a depression!!! Good move. He massively increased government spending and famously signed the Smoot-Hawley Tarrif Act which completely crippled American industry. Hoover didn’t “do nothing”. He deployed destructive duties which did disastrous damage, devastating the destitute derelicts of the depression… douchebag! Enter our savior, the great and powerful FDR.

Franklin Delano Roosevelt was the antithesis of Warren G. in regards to his handling of the depression. His solution was to massively increase government spending through a myriadic web of big government programs and policies known as the New Deal. In socialistic fashion, as was very en vogue among democrats of the day, including his famous “brain trust”, Roosevelt tried to micromanage every aspect of the economy. He declared a “bank holiday” whereby citizens could not transact with their bank. He confiscated all gold owned by private citizens taking us off the gold standard and devaluing the dollar. He implemented wage and price controls, destroying crops and slaughtering pigs to achieve the latter (while his citizens were starving). There was the National Recovery Administration who threw business owners in jail if they did not obey government mandated prices. There was the Emergency Banking Act, the Civilian Conservation Corps, the Federal Emergency Relief Act, the Agricultural Adjustment Act, the Public Works Administration, the National Recovery Adminstration, the Security and Exchange Commission, the Federal Deposit Insurance Corporation, the Social Security Act, the National Labor Relations Board, the Federal Housing Administration, the National Industrial Recovery Act (later ruled unconstitutional), and the Works Progress Administration. And this is just the tip of the iceberg. Never before or since in our history have we seen such massive expansion of government. Incidentally, not only do many of these programs still exist today, but they also set us on the path towards the biggest, most all-encompassing government the world has ever seen.

No time is a good time to dramatically increase government spending and thereby increase the tax burden on its citizens. But to do it during a severe depression? Lunacy. Not only was the spending crippling, but the programs it paid for were also devastating. The bumbling government always effs up everything it gets its hands on (look at the Post Office or Amtrak or the Obamacare website). Roosevelt, in all his hubris, thought he knew how to fix every aspect of our economy, so he marched out a massive program for each one. In reality, he achieved the opposite in typical government fashion. To me, the most harmful of these policies was the implementation of wage controls in the midst of prodigious unemployment. In an environment where all prices were falling, employers were forced to keep wages high, meaning they could not afford to hire more workers, exacerbating the unemployment problem. Roosevelt was a moron, but he gave a great speech and was a great politician so Americans, desperate for hope, bought into his bullsh%t.

The government has a vested interest in teaching us things like FDR was our greatest president or that unfettered capitalism is predatory and evil. In government controlled schools we will always get the government version of history and other subjects. FDR increased the size of our federal government at an alarming rate turning it into an all encompassing monstrosity. Americans lost more freedom under Roosevelt than any other President in our history. He managed to create a program or agency to control and regulate virtually every aspect of our lives. He was a tyrant. He imprisoned thousands of innocent Japanese-Americans in internment camps during the war. He stole our gold. Somehow the government textbooks say he was a great leader. Public schools will always teach us that we need government, that government saves us from the evils of the free market, and that we must give up freedom so they can keep us safe. They teach us that without them there would be chaos, rioting and looting. And they will always teach us that the leaders who increase their size and scope should be worshipped.


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