The New Republic recently published an article by Jim Powell called
Not-So-Great Depression How Warren G. Harding got us out of it.
Jim Powell wrote:
Which U.S. president ranks as America’s greatest depression fighter?
America’s greatest depression fighter was Warren Gamaliel Harding….
Harding inherited Wilson’s mess — in particular, a post–World War I depression that was almost as severe, from peak to trough, as the Great Contraction from 1929 to 1933 that FDR would later inherit. The estimated gross national product plunged 24 percent from $91.5 billion in 1920 to $69.6 billion in 1921. The number of unemployed people jumped from 2.1 million to 4.9 million.
If there had been another 20th century recession nearly as severe as the 1930s Great Contraction I’m sure I would have hear of it. But this is written strangely, isn’t it. It is almost as if Powell did not want you to see data you could put in perspective.
First, the 24% plunge in GDP he cites is nominal GDP, not real GDP. The drop in real GDP was about 5%, as compared to the 26% drop in 1929-33. Second, what does 4.9 million unemployed people mean to you the reader. Are you able to put it in perspective and compare it to other recessions? In 1922 the 4.9 unemployed people worked out to an unemployment rate of 11.7% as compared to the 25% rate FDR inherited in 1933 and the 10.8% rate at the end of 1982 – the peak post WW II unemployment rate. Finally, the 1920-21 recession lasted 18 months versus 43 months in 1929-33 and 16 months in 1981-82.
As you can see on the chart, the 1920-21 recession was hardly comparable to the 1929-33 economic collapse. It was a severe one, but hardly almost as severe as the 1929-33 recession as Powell would have you believe. It was more like the 1974 or the 1981-82 recessions. But the way Powell wrote his article you would be hard pressed to know this.
As many of you know I’m a semi-retired business economist and began my professional career as a CIA economist back in the old cold war days. In those days the CIA and KGB engaged in a practice called disinformation, where the intelligence agencies would plant distorted and/or false article in the press as propaganda or to mislead others. But this is exactly what this and other Cato article are, pure disinformation. Maybe we would be a lot better off if all these Cato authors were employed by the CIA to spread disinformation about al-Qaeda and bin Laden rather than by wealthy conservatives to spread disinformation about the United States.
What really surprises me about this and other Cato studies is not that they publish such dishonest analysis. After all, that is what they are paid to do. What really surprises me is how such fellow travelers as the libertarians uncritically accept these findings without a second though. They really appear to have no intellectual integrity. But remember what Lenin called fellow travelers, useful fools.