Freedom Keys
a collection of amusing, 
fascinating, insightful, or 
 maybe even useful information

PRESIDENTS  DON'T  CONTROL 
THE ECONOMY,  STUPID
B----

Beware of the logical fallacy Post Hoc Ergo Propter Hoc,  Coincidental Correlation (The fact that two or more events occur at the same time, or one after the other, does NOT necessarily indicate ANY cause-and-effect relationship. There may be NO relationship whatsoever.).

   "Elected leaders tend to believe they are responsible for a lot more than they really are. Like the little boy on his first plane trip 'helping' the plane by flapping his arms as the Boeing 747 begins to ascend, legislators often seem to believe that somehow they run the economy and solve lots of problems." -- Curt Leonard, May 13, 2003 HERE

     "In general, presidents and congressmen have very limited power to do good for the economy and awesome power to do bad. The best good thing that politicians can do for the economy is to stop doing bad. In part, this can be achieved through reducing taxes and economic regulation, and staying out of our lives." – Dr. Walter E. Williams, Oct. 30, 2002 HERE     

    "How can academics, politicians, news media people and ordinary citizens get away with statements such as 'Reagan's budget deficits,' 'Clinton's budget surplus,' 'Bush's budget deficits and tax cuts' or 'Obama's tax increases'? .... Which branch of government has taxing and spending authority is not a matter of rocket science, but people continue to make these statements. The only explanation that I can come up with is incurable ignorance, willful deception or just plain stupidity; if there's another answer, I would like to hear it." -- Dr. Walter E. Williams, March 14, 2011, HERE  

    "...The individual legislator must remember that the elixir for all that ills is economic growth.  And economic growth is spurred by low taxes, limited regulation, equitable justice, and the ability to raise capital." -- Curt Leonard, May 13, 2003 again, HERE

   "What creates economic growth are billions of decisions all over the world, made according to a timeline that only vaguely coincides with the political calendar." -- Jonah Goldberg, Oct. 22, 2003, HERE

   "The economy is no longer the central issue on which electoral fortunes hinge. ... voters have learned that America's economy is influenced by global forces and international bankers who are way beyond the power of the president to control. To the extent that the political process has a lever with which to move the economic numbers, it's through the Federal Reserve Board and nobody tells Alan Greenspan what to do." – Dick Morris, Nov. 7, 2002 in the New York Post.

   "... But then who ever said that the president alone determines the economy or the stock market? It's Congress that makes the laws. The president just signs them. Based on congressional control, the study results look very different. ..." -- Donald Luskin, Sept. 11, 2008, HERE

    The condition of the economy is sometimes the result of surprise innovations in technology and changes in consumer demand over which few people have any influence at all (except in totalitarian dictatorships — but even there only for brief periods of time) — and are often the result of economic cycles over which no person or persons ever has control.*  These economic cycles can range in length from months and years to decades, and, yes, even centuries.  For examples, check out the chart of the Dow Jones Industrial Average's log scale HERE and its inflation- adjusted chart HERE.  Notice that the average length of a boom or of a period of stagnation has been a pretty regular16 to 20 years, nomatter what (or who) is involved.

     Also see the (roughly) 60-year (plus or minus about 16 years) Kondratieff Cycle HERE and the 200-300year "Grand Supercycle" HERE.  They give you a whole new perspective, don't they?

     Finally, Presidents CAN and DO have some real long-term influence on the strength or weakness of those cycles — and on their duration — by whether or not they help increase taxes and regulations (bad) or decrease them (good) — but NOT on the cycles themselves.  Their efforts may result in a short-term effect on stock and bond prices, some interest rates and even incomes, but it can take years for the overall economy to suffer or enjoy all the actual (sickening, healing or energizing) consequences.  One of the most remarkable ironies of the peculiar American system of (comparatively short and regular) 4-year Presidential election cycles is that many voters and politicians (and the all-too-common economically- illiterate journalists) blame or credit whoever's in office at the moment for the economic conditions of the moment, even though those conditions were heavily influenced, if not primarily caused, by the almost-untouchable Federal Reserve Board and/or by prior administrations, sometimes even 3, 4 or 5 administrations back.  Often enough, tax cuts enacted during one administration help cause a boom in later administrations, and likewise, tax hikes result in recessions way too late for short attention spans to correlate correctly.

"When the US government ended 'welfare as we know it' in 1996, it handed responsibility for reform to the states. In so doing, it also created a real-world test of two competing economic strategies used to fight poverty. The results are in and the lessons are clear:  Low tax rates lift up the lives of America's poor."
-- from The Christian Science Monitor, Dec. 15, 2006


UPDATE:  The current administration says the economic meltdown that started in 2007 was the result of George Bush's policies. They believe that Americans are economically illiterate enough to accept that nonsense as fact  The meltdown was caused primarily by the housing bubble which began with the "Community Reivestment Act" ("CRA") during the CARTER administration -- its acceleration during the Clinton adiminstration -- and the refusal of Congress to reign in Fannie Mae and Freddie Mac -- which enabled the governments' forcing of banks to make millions of loans to people with horrible credit histories. We're talking about the economic impacts of policies which weren't visible, essentially, until about THIRTY YEARS after the politicians' enacted their insane mistakes.


"Scratch the surface of an endemic problem -- famine, illness, poverty -- and you invaariably find a politician at the source." -- Simon Carr, in his review of The Mystery of Capital by Hernando de Soto


"... Given these plain facts, are politicians, pundits and media people -- who persist in talking about a president cutting or raising taxes, or creating a budget deficit -- ignorant, stupid or deceptive?" -- Dr. Walter E. Williams, HERE

* Some schools of economic thought, including the Austrian, say that if there were no central-bank monopoly on monetary controls (which is what the "Federal Reserve" has) the cycles would be limited to each very localized economy, economic sector, or bank group, and they would eventually grow out of sync with each other, "smoothing out" the total economic cycles of the nation, or even of the world.  Of course, this would give every person and business entity an opportunity to jump from one sector or bank to another, or to spread their banking risks out over several, making them much less vulnerable to the problems of any one banking system, whether it were influenced by politicians, or any other imbeciles, or not.

For a more comprehensive grasp of all these issues see the "autobiography of a pencil" HERE, a commentary by Murray N. Rothbard HERE, and these easy- reading introductions to Basic Economics HERE.


"Presidents don't create jobs." -- Thomas Sowell
"Politicians
Cannot Make Jobs" -- Tibor Machan
"Politicians cannot create jobs or wealth.  Such is axiomatic to straight thinkers." -- Greg Perry

Also see: "It's still the economy, stupid!" HERE.MORE about job creation
"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.'  But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance." – Murray N. Rothbard

"Economics is haunted by more fallacies than any other science known to man." – Henry Hazlitt in ECONOMICS IN ONE LESSON

"Today, in the Twenty-First Century, an age of jet aircraft, personal computers, wireless telecommunications, laser surgery, and incipient space travel, the mentality with which many presumably educated, intelligent people approach matters of economics and business is, however astonishing it may seem, still that of the Dark Ages." – George Reisman
"There is nothing more frightening than active ignorance." - Goethe

When you really stand back, you can see the "stagflation" of the '70s was much more the result of Lyndon Johnson's policies (which began in the '60s) than Jerry Ford's or Jimmy Carter's.  When you can see that the effect of the Reagan tax cuts and telecom deregulations in the '80s laid the groundwork for, and helped spur, the 18-year boom which didn't peak until the late '90s, you have to credit Ronald Reagan, the ONLY president EVER to have a degree in economics, for being so far-sighted.  (Despite the fact that his policies were vociferously blamed for the continuing stagflation before they were given any time to take effect).  Further, you have to find fault with the tax-and-regulate-and-spend Bushies and Clintonites who cynically claim credit for the Reagan boom and all its side effects, including the balanced budgets of the late '90s, while they actually did everything in their power to raise taxes and increase regulations, crippling the economic future of the country. 
>> See exactly who made health care expensive HERE. <<

"... regarding the Great Depression: You're right, we did it."-- what Federal Reserve Board Governor (now Chairman) Ben Bernanke finally said to Nobel Laureate Dr. Milton Friedman, at Milton's 90th birthday celebration, meaning that yes, indeed, the Great Depression WAS caused by, AND prolonged by, THE GOVERNMENT,-as Friedman had always said. [Financial Review, 12-9-2002] 
See: "Obama threatens to follow in FDR's economic missteps"-HERE.- Also 
check out the Burton Folsom speech on the Great Depression-HERE- and 
"Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years..." HERE.

Also see: The Forgotten Man: A New History of the Great Depression-HERE,- Rethinking the Great Depression HERE, America's Great Depression HERE,- Forgotten Lessons-HERE, Essays on the Great Depression HERE
the audio lecture,-The Cause and Consequence of the Great Depression (CD) HERE,
The Roosevelt Myth-HERE,  and 
FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression--by Jim Powell  HERE.

"There is no need here to attempt to explain FDR's economic reasoning, if such an explanation is even possible. Speaking of the President's acquaintance with economics, biographer John T. Flynn noted that 'it is entirely possible that no one knew less about that subject than Roosevelt.' [from The Roosevelt Myth]  What is important is that these economic fallacies would have terrible consequences. The President's faulty grasp of what had caused the Depression led him to introduce a system whose operation was quite similar to the old guild structure, with the explicit intention of reducing competition." -- Thomas E. Woods, Jr.,-HERE


HERE

   "Bad and discredited ideas, it seems, never die.  Neither do they fade away.  Instead, they keep turning up, like bad pennies or Godzilla in the old Japanese  movies." -- Murray N. Rothbard
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   "One of the most important reasons for studying history is that virtually every stupid idea that is in vogue today has been tried before and proved disastrous before, time and again." -- Dr. Thomas Sowell
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   "There is no error so monstrous that it fails to find defenders among the ablest men." -- Prof. John E. E. D. Acton
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   "The study of history is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us noble and plausible, have been tested before, not once but many times and in innumerable guises; and discovered to be, at great human cost, wholly false." -- Celebrated Historian Paul Johnson
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   "Those who cannot remember the past are condemned to repeat it." ~ George Santayana, The Life of Reason, 1906
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   "When Western countries in the past were as poor as Third World countries are today, these Western countries nevertheless had one big advantage: There was no large and influential class of the intelligentsia to impede their progress with unsubstantiated theories and counterproductive propaganda." -- Dr. Thomas Sowell
   "How a conflict-ridden, grossly over-populated place with no resources whatsoever gets rich is simple. The British colonial government turned Hong Kong into an economic miracle by doing nothing." -- P.J. O'Rourke in Eat the Rich

 "Remember, the wealth you see around you didn’t always exist; it was and is CREATED wherever the right CONDITIONS OF FREEDOM (including the rule of natural law evenly applied, with the rigorous protection of individual rights including property rights and respect for contracts, effective prosecution of the perpetrators of force and fraud, and the ease of engaging in trade without the interference or "permissions" of politicians and bureaucrats) are established and guaranteed." -- Rick Gaber, HERE


"Never — and I mean never — blindly trust the statistics you read about the economy." -- Don Luskin, HERE

"Most Americans don’t know enough about basic economics to fill out one fortune cookie." -- Neal Boortz, HERE

"If we fixed a hangnail the way our government fixes the economy, we'd slam a car door on it." -- Cullen Hightower

Checking out a college?  Maybe you should avoid UC-Berkeley. Elsewhere, if the Econ 101 text is by THIS GUY -- just keep looking.

PROOF that economics has entered the realm of the cool:  CLICK THIS!

This page in revisions since November, 2002
 
 





"Whenever you come across a screw-up this big, you know the government is behind it." - Ann Coulter