Unnatural Disaster
by Thomas E. Woods, Jr.
Median home price increased by 150 percent from August 1998 to August 2006. Over the next two years, home prices fell by 23 percent. Foreclosures skyrocketed. The stock market has followed a similar course. When the New York Stock Exchange closed on Oct. 9, 2007, the Dow was 14,164.53, the highest close ever. Thirteen months later, it closed at 7,552.29, a drop of 46.7 percent. Retirement portfolios have been eviscerated. Unemployment has increased. When the figures are compiled the way government calculated them in the 1970s, the unemployment rate in November 2008 was 16.7 percent. These personal dimensions of busts are used to justify government intervention, whether creating a safety net or drawing up regulations aimed at smoothing out the cycle supposedly inherent in the free market. But is this inevitable? Is the market economy really prone to sudden, inexplicable episodes of massive business error – or could something outside the market be causing it? If politicians
are honest in seeking a culprit, they will find that it’s not
capitalism. It’s not greed. It’s not deregulation. It’s
an institution created by government itself.
March 6, 2009 Thomas E. Woods, Jr. [send him mail] is senior fellow in American history at the Ludwig von Mises Institute. He is the author of nine books, including the New York Times bestseller The Politically Incorrect Guide to American History and, most recently, Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. Visit his new website. Copyright © 2009 The American Conservative
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