Great Depression Myths

John Stossel's latest column builds on an interview with economist Donald Boudreaux to challenge anticapitalist myths about the Great Depression and the Great Recession that are rearing their ugly heads yet again.

One myth that I hadn't seen debunked before was that World War II helped end the Depression:

The Depression continued for more than a decade, until, according to the Library of Congress, "Mobilizing the economy for world war finally cured the depression."

That's a myth, too, says Boudreaux.

"Unemployment fell. That's not hard to do when you conscript 2.5 million men into the military. But If you look at the actual performance of the economy, that didn't recover until the late 1940s."

It recovered, says Boudreaux, because "Republicans won the 1946 election, and they were more pro-investor, pro-business than the Democrats." And FDR died. "Harry Truman was less vigorously opposed to capitalists ... .So investors were finally confident to come back into the playing field."

That unemployment myth showed up in caricature form yesterday with Vladimir Putin's touting of sharply lower unemployment in Russia, whose economy is in the toilet. The 1.4 million fewer unemployed just happens to match losses in Russia's invasion of Ukraine.

Americans have little room to laugh, though. Our schools push these myths, and policy proposals based on them are popping up again, as they always will among a poorly-educated body politic who are kept unaware of that unknown ideal, capitalism.

-- CAV